Value

Week II Individual Work Business Policy and Strategy - 1 MAN4764-1 Professor O’Bryant DJ Funderburk July 26, 2012 Abstract This paper will cover the meanings of value, create value and value chain analysis. This paper will discuss what the firm gains when it successfully uses these tool. Body What is value' Why is it critical for a firm to create value' How does it do so' “Value is measured by a product’s performance characteristics and by its attributes for which customers are willing to pay”(Hitt, Ireland, & Hoskisson, 2012, p. 75). The importance of create value is the capabilities and the core competencies of a company just because it gives an advantage to lower the price of the merchandise or products that the company is selling out in the market place. It is also important that the company keep up with the external environmental changes that come up. Having a company that hires skilled associates till have a better chance of making the customers happy, by giving the employees additional training, respect and trust will make the employees happy and welling to work harder for the rewards that they will receive from the company. In the end the company will be more competitive and have a higher return on their money for the investors. What is value chain analysis' What does the firm gain when it successfully uses this tool' When looking at the value chain analysis companies have to keep track of the operations of the company to understand what really goes on in each and every department. If this does not happen then there is a large possibility the company will lose the above-average returns that they were hoping for in the beginning when they set up the missions. Every company or firm thinks about the competition or should; otherwise they could be beat out on productions and services by other competitors. It is also important that the company performs or makes the orders correctly so the products will sell. With this being said five steps are needed to achieve this process and they are as follows: “Step 1 explains how internal and external value chains can be used separately and in related ways. Step 2 shows how to construct a customer’s value chain. Step 3 shows how to identify the customer’s business strategy by examining this value chain and using other kinds of information. Step 4 explains how to use additional information and intelligence to leverage that understanding into strategic needs and priorities. Step 5 explains how a firm’s marketing function can best use this method of value-chain analysis as a new strategic capability.” (Crain & Abraham) When creating value for a customer, why is product differentiation so important' When taking product differentiation into consideration you also have to remember that it is part of the standard model of monopolistic competition. This gives companies a profit in the short run and in the long run the companies will have a low return from the industry equilibrium. Firms depend on the profitability to a degree on which products are more superior to the competitors. With the introduction of product differentiation into the economic model is determining the increase of the modeling market outcome between the different firms and corporations. As long as the government provides the rules and regulations that ensure a competitive and honest advertising the benefits will let the consumers have the opportunity to purchase and consume a variety of substitutes instead of a single product or brand. Conclusion In conclusion this paper did cover the meaning of value, create value and value chain analysis. This paper did discuss what the firm gains when it successfully uses these tool. Reference Crain, D. W., & Abraham, S. (n.d.). Using value-chain analysis to discover customers’ strategic needs. Retrieved July 26, 2012, from Online Home: http://s93063416.onlinehome.us/iloveaccounting/614/Crain-and-Abraham-2008.pdf Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012).  Strategic management: Competitiveness and globalization (10th ed.). Mason, OH:  South-Western Cengage Learning. O'Malley, P. (1998). The Systems Thinker, Vol. 9, No. 2. Retrieved July 26, 2012, from Pegasus Communication: http://www.pegasuscom.com/levpoints/valuecreate.html