eThesis - School of Business electronic theses

ABSTRACT Objectives This study explores value creation in the global nonwovens value chain. Specifically, this study aims to identify who creates value in the chain, and where value is created geographically. Owing to the fact, that the case company is not involved in manufacturing the case products, this study also focuses on identifying the value created by marketing and branding activities. As more countries have developed their capabilities in industrial activities, it is often argued that the primary drivers of sustained value in the value chain are found in areas outside of production. Drawing on the resource based theory (RBT) to explain sustained value creation and by adopting a value chain perspective to the RBT, this research aims to identify which activities in the value chain are able to sustain the value created and the activities that are subject to diminishing returns due to growing competition. Methodology This research uses the case study approach. Both qualitative and quantitative data was used in order to explore the research objectives presented above. Quantitative data was needed in order to calculate the value added for each chain member. For the value added analysis both financial statements as well as cost price data from the case company were used. Results The results show that value created in manufacturing activities is between 56% and 67% of the total value added depending on the end customer market, whereas the value created in non-manufacturing activities is between 33% and 44%. The results indicate that even though a country is not involved in manufacturing activities, it may still be attributed a substantial share of the value, provided that the headquarters of the company that owns the product brand are located in that country. It can be concluded that even with disposable products, where intuitively, the purchase decision is mostly affected by cost, a significant amount of value is still added after the physical transformation of the product is complete. The results show that manufacturing activities are subject to growing competition from global sources. Nevertheless even within production certain activities can constitute sustained value. Sustained value creation can also be achieved in the downstream segments of the value chain. In this part of the chain the source of sustained value is reflected in brand name presence. Furthermore, it is suggested that depending on their capabilities, firms should focus on either downstream activities or upstream activities of the value chain, instead of trying to succeed in both. Keywords: Value added, value creation, global value chain, sustained value, resource-based theory, nonwovens, branding, marketing