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The New Principles of Management


Andrzej Kozminski and Dariusz Jemielniak

The New Principles of Management is a textbook meant for European students of principles of management. Developed basing mainly on international cases as well as drawing from international examples of managerial practices, it attempts to address the needs of globalized companies better than other, typically US-centric textbooks. The New Principles of Management challenges many of the fossilized and outdated management notions and covers the topics most relevant for modern 21st century organizations, rather than their historic developments.


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CHAPTER THIRTEEN VALUE CREATION AND MANAGEMENT 322 Chapter Thirteen Key terms and definitions Theory Practical tips A selection of theories and beliefs Value chain Value network Value shop Value migration Case Studies Almost like Hugo Boss The mysterious ways of NIDA The Greens vs. Madagascar Value creation and management: Crossword Supplementary reading Value Creation and Management “Price is what you pay. Value is what you get.” Warren Buffett Key terms and definitions Value is something of worth, something that people desire, for which they strive and something that guides their actions. This leads to the conclusion that value is a subjective category: something that is a value for one person or organization does not necessarily have to be a value for another. Hierarchies of values, moreover, are subjective and individualized. Of course we can discern values and/or hierarchies of values that are characteristic of some groups of entities. For example, the French value free time more than extra income; the Polish are the other way around. Japanese companies maximize their market share, while American companies prefer to maximize earning capacity. However, such generalizations can be misleading. Some French people must look for additional income at the expense of their free time and some Japanese companies focus on the maximization of earning capacity, even at the expense of market share. The raison d’être of every organization is the creation of value for the most important stakeholders. Otherwise, they will terminate or limit their support for the company and withhold...

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