Value Creation Case Study

Value creation is the overall total value of a product. It includes everything from the cost of raw materials all the way through getting it out to the customers. A product has a true cost; what the cost is to just produce the product. There is an expected profit the company wants to make per product, and the value of what the consumer is expecting from there purchase. Value creation is related to competitive advantage based off of business strategies. If a brand it known to be of higher quality, customers will expect the price to be higher than cheaper alternatives. This can also apply to the internal processes of the organization, especially if they are manufacturing anything. Having a lower production cost per unit, or better logistics than other competitors will give an advantage.

2. What is a value chain? Why is efficiency so important in an organizations value chain?

Value chain describes how the different sections/departments of an organization work together, or what they need from one another to function. Efficiency is important to lower operational costs inside the organization. For example, if a

Economies of scale are prone to disorganization due to its size, employee count, hierarchy, or efficiency caps. With large organizations, communication becomes increasingly important do to long chains of command and a world that perceives that everything be quick and 1 push of a button. This also applies to organizations with hard to navigate employee hierarchy structures or long value chains. Efficiency is also a factor; Two or three locations but be more advantageous than one big location. Maybe having a presence in multiple time zones would be an advantage over one location. Economies of scale can also be used to maintain a competitive advantage. If the cost of a competitor to enter the industry is high, they are more likely not to enter and vice