Value Creation : A Competitive Advantage

1555 Words Sep 23rd, 2016 7 Pages
Value creation is creating value for the customers who are using the products or services of the company and also creating value for the shareholders of the company. The components that can be used to determine the value creation per unit are the value to customer, price and cost of production. If the prices of thee product or service is raised, then it automatically increases the value of that product and thereby there is a competitive advantage over other companies by generating much profit.
Competitive advantage can also be achieved by creating demand for a product or service by decreasing the cost. It helps many consumers to go for the product or service there by again achieving the competitive advantage over other companies with huge profits. Hence the value creation is related to competitive advantage by changing the pricing options based on the cost of production and demand for the products or services.
Value chain is the activities, the Primary activities which include Research and development, Production, Marketing and sales and Customer Service and the Support activities which include company infrastructure, Information systems, Materials Management and Human resources, carried out by a company to create value to its customers.
Value chain analysis helps the company in getting maximum efficiency in all the areas identified. By analyzing all the area above, the organizations efficiency and profitability can be increased. There by creating value to its customers.…
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