Book report analysis and summary

¶ … dynamic corporate environment competition has reached a peak intensity level. Companies much compete not only against the plethora of domestic players in the market, but faces immense pressure from foreign competitors and market forces to maintain and grow their market positions. The reason that I chose choose the theme of organizations is because current forces has pressured organizations to consistently change their value propositions. It is important to understand how such forces can be re-modeled to completely shift current logic towards a new imperative. The following discussion seeks to look at the current state of corporate organizations and how they must change on a fundamental level in order to meet the demands of the current marketplace.

For this topic, I chose the book "The Future of Competition: co-creating unique value for customers" by C.K. Parahalad and Venkat Ramaswamy. Both of these authors are professors at the University of Michigan, Ann Arbor. They have a solid track record for identifying the trends within corporate governance that contributes to the growing convergence of market forces. Their research within the past few years has spawned two books that covers how the competitive corporate landscape will shift within the coming years. Their current research suggests an emerging economic model of "value co-creation." They conceptualize the new dominant market as a wholly unique creation focused on relationship building between customers and companies. Consumers and companies are now routinely collaborating to create added value that is personalized for the individual.

The founding premise behind their book is the concept that while consumers have greater product variety now than ever before, and corporate management has more strategic options, both sides are unhappy with their product selection and output. The evolution of competition has taken the power of value creation out of the sole discretion of companies and create a distinct "firm and consumer convergence," where value creation occurs through a partnership of interests. The traditional model of "firm centric value creation" can no longer exist within a society where consumers are well connected and informed via the power of the internet. The essence of this book is that it presents a new approach to value creation. Within this framework, consumers and companies work through interaction and personalization to co-create value. The technical and social infrastructures that now define our society allow individual consumers to co-create value within a network of companies and consumer communities. Using this book as a platform, Prahalad discuss the building blocks of co-creation such as "dialogue, access, risk assessment, transparency." Prahalad concludes that in order for current companies to compete effectively, they must focus on building new strategic capital. Thus, they must enable managers to take ownership over company value creation by examining the business and its value propositions through the lenses of consumers. The book concludes by articulating the necessary conditions for success of future companies. A demand for "rapid new knowledge creation, access to competence on demand, flexibility and rapid reconfiguration of resources, and collaboration between customer and managers to co-create value through experience networks."

The focal purpose of this book is to discuss the organization of the new corporate culture. In essence, new corporations depend a fundamental shift from "internal value creation" to "co-creating value." This book is about organization primarily because it deals with how a company must integrate itself within the framework of consumer interactivity via new communication mediums. In this era of instantaneous communication and new depth of information immersion, it is necessary for companies to expand their infrastructure to take root within the virtual world. Their organization must be more transparent so that consumers can be part of the value-creation process, but also be more flexible and independent so that changes can be seamlessly implemented without corporate red-tape. Prahalad is arguing for the creation of a company focused constant shifting in their value paradigm and active involvement of outside factors. It is a new hybrid model of corporate organization that goes beyond what current companies are doing to be competitive within the marketplace.

There were two new words that I learned through this book, the first is the phrase "strategic capital." Strategic capital is defined as "capital expenditures that are required to expand production capacity above the previous year's level" (dictionary.com). We have to carefully define our strategic capital in order to monitor the direction and progress for next the next ten years. Another term that I learned through this book is the word "ubiquitous," which is defined as "existing or being everywhere, especially at the same time; omnipresent" (Dictionary.com). The ubiquitous fog surrounded our community at dawn and left everyone trapped within their homes.

The concepts within the book is directly connected to the concepts of the changing nature of business as a result of rises within modern economic, social and political factors. The most evident of these two factors is the rise of globalization and information-technology. Globalization has resulted in an expansion of the competitive landscape, which means that companies must now fight a multi-front war within the majority of industries. Therefore, in order to compete they must devise strategies that allows them to respond to consumer bases, and flexibly address the changes within their industry. Information technology is another huge factor in current corporate culture, because it has created a more intelligent consumer class who looks to the internet to understand, connect and personalize products. As a result, companies now must use relationship management rather than direct sales as the strategy for retaining and satisfying their core consumer group. Both of these concepts are present within our textbook, which describes the needs of modern corporations as they change from being "internally facing" to "externally facing." This is a key point that is emphasized through "The Future of Competition" as well.