Advantages Of Value Creation

And the customer are sensitive to the price since those products are using only few times and need to be change all the time.

Efficiency: Whatever idea, thought, plan or action we do, must be efficient enough to make us reach our set goal.

This report looks at the fundamental generic building blocks of competitive advantage and talks in detail about one of the major factors, which is superior efficiency. The report identifies what superior efficiency is and how it could benefit an organization in generating competitive advantage. Finally the report will evaluate the methods in which the company could achieve superior efficiency.

Define value creation and the components that can be used to determine value creation per unit. How is value creation related to competitive advantage?

B. Efficiency: A process characteristic indicating the degree to which the process produces the required output at minimum resource cost and ask “are we doing things right?

Effective value chain as a competitive advantage can contribute significantly to the prosperity of a firm in the competitive arena, but it can cause dire situations if not operated properly (Guy, 2011). However, there are conflicts among companies as to how stakeholders think they gain competitive advantage. Porter (1996) suggests: A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at lower cost or do both.

The cost-efficiency implies that the company introduces changes that allow the company saving costs without harmful effects of such changes on the quality of products and services of the company. For instance, the company can optimize internal business processes through their automation (Clarke, 2000). The automation of internal business processes saves time of employees which they can use more effectively, for instance, to increase their productivity. In such a way, the company enhances its performance and increases its revenues while its costs drop.

As the price of the products is comparatively low, that will increase the purchasing power of the customer and they will buy in larger quantity and thus the company gains the profit. (Soni, P. (2016))

What is efficiency? According to Farrell efficiency is production of maximum amount of outputs from given amount of input or alternatively minimum input quantities producing a given amount of output (Farrell, M.J.

Technical efficiency is the effectiveness with which a given set of inputs is used to produce an output. A firm is said to be technically efficient if a firm is producing the maximum output from the minimum quantity of inputs, such as labor, capital and technology (National Institute of Health, 1999).

Efficiency can be defined under many context, for example, how efficient is a machinery will depend on how many inputs are required to produce a certain amount of output, the less input used, the more efficient the machinery is.

Harvard Business School invented the concept and believed that competitive advantage cannot be understood by looking at a firm as a whole. The disadvantages of a value chain could include a company becoming too segmented and result in a construed conception of the company’s most important values. Thus, the importance of a successful value chain lies within the linkage of the different processes it incorporates. All in all, the value chain can provide organizations a strategic framework for managing the hundreds of activities that go into making the final product.

Quality in my view is meeting or exceeding customer expectation in terms of products and services rendered.

Efficiency is to fulfil the needs and wants of consumers by making optimal use of scarce limited resources. There are several meanings of efficiency and all are linked to how well a market shares scarce resources to satisfy consumers. The two of the terms within efficiency going to illustrate are allocative efficiency and dynamic efficiency.

A product with a successful consumer value proposition is directly linked to a products actual and sustained performance versus competition. The two main attributes that allow consumers to differentiate among products are price and quality. Finding the correct balance between these two attributes usually leads to a successful product. If a company is able to produce the same quality product as its direct competition but sell it for less, this provides a price value to the consumer. Similarly, if a company is able to produce a superior quality product for the same or a slightly higher but acceptable price, the value to the consumer is added through the quality of the product. A product must offer value through price and/or quality in order to be successful.