How We Define Value Creation And How It Is Related? Competitive Advantage?

Low-cost leadership means offer the lower price to customers and operate the organization in the lowest costs (Laudon, 2014, pp. 126). It is believed that the information system urged the organizational structure to be flattened, while the scope of information dissemination information will be expanded, the lower staffs will be authorized and the efficiency of management will be enhanced by the information

Value creation can lead to higher sales. In terms of competitive advantage, a product could offer more value to the customer for the same or lower cost. There are two ways this can be broken down: 1. Lower prices to generate demand in the market or 2. Increasing price to reflect higher value.

Riordan’s organization sells heart valves, plastic bottles, fans, and medical stents. Clearly, Riordan has a large variety of products. Organizations use a competitive strategy with cost leadership, which seeks tight cost controls. Cost controls pursue efficient ways to cut cost and be more efficient than the competition. Decreasing business costs every way

The basic principle in defining the value chain, according to Michael Porter (Porter, 1985), is that the activities include a variety of disaggregations from the below three perspectives. First, they have different economics, implying that these activities are functioning in different segments of the market. Second, even though the economics differentiation is not that evident, isolated activities should have a potential impact for it. Third, value-adding activities have significant input scale.

1. What is competitive advantage, and how does it relate to a company’s business model?

Competitive advantage(CA) is an advantage competitors gain by providing or offering customers or consumers greater value for their money through product and service differentiation or through lower prices. Maintaining competitive advantage is crucial to many businesses or organizations' success in order to survive in the market. Competitive advantage is characterized by superior performance which could be an attribute to outperform the competitors whether current or potential; or gaining a higher market share in a particular industry thereby ensuring market leadership; or ultimately, maximization of profit.(JOBBER 2010)

Successful companies are successful because of their ability manage the intrinsic concept which develops and evolves their value chain and competitive advantage. The purpose of this paper is to provide the reader with a compelling argument as to why an effective value chain creates competitive advantage. The author will also discuss and provide an analysis of the following: three critical concepts when thinking about how a value chain creates competitive advantage in relation to the value chain, competitive advantage, and customer delight. The

Company gained competitive advantages through real or actual value to customers that they provided. The organizations must know their products, services, customers, competitors, industry, related industries, and environment forces in determining how IT can provide them with competitive advantage. Not to mention, they also need to have understanding about how IT can boost value for each of the areas. There are three characteristics of resources that give the firm potential in gaining competitive advantage. The three characteristics are value, rarity, and can be obtained.

The organizations that endeavour to wind up the least cost makers in an industry can be alluded to as those taking after a low cost procedure. The organization with the least expenses would gain the most elevated benefits in the occasion when the contending items are basically undifferentiated, and offering at a standard business market cost. Organizations taking after this methodology place accentuation on cost diminishment in each action in the value chain. Note that an organization may be a cost pioneer however that does not inexorably infer that the organization 's items would have a low cost. In specific occurrences, the organization can for occasion charge a normal cost while applying the low cost leadership strategy and put the earnings made back into the business

Value Chain Analysis is a tool that used to identify the company’s primary and support activities that can creates value for the product to the customers, to analyze the activities to be cost leadership or differentiation strategy and eventually to develop a competitive advantage and create shareholders value. By simply explaining of creating value, a company takes raw inputs (timber) and to add “value” (designing and manufacturing) to them by converting them into something of worth to people for paying money for it (furniture).

ii) Include all primary and support activities that pertain to the organization in the value chain analysis. The activities included will depend on the organization.

Competitive advantage means more than merely surpassing what competitors can do. It also means discovering what a firm’s customers want and then adequately satisfy and exceed their expectations. The competitiveness of a firm is generated by how successful it is in achieving that which is most valuable, most important and most efficient. In other words, firms want to identify its most valuable customers, its most important products/markets and wants to perform the activities that are most efficient (Poppelaars, 2013). To achieve these goals, firms should utilize the value chain as a tool of process

The value chain analysis (shown in appendix) was also generated by Michael Porter. This model is referred to “identifying ways to increase the efficiency of the chain” (Investopedia, n.d.). Furthermore, the overall objective is to produce maximum value with minimum total cost and establish a competitive advantage.

In order to achieve competitive advantage, a firm must perform one or more value-creating activity that is more superior compared to other competitors. Superior value is created through lower costs or superior benefits to the buyers.

A successful cost leadership strategy usually provides the entire firm with high efficiency, low overhead, limited perks, intolerance of waste, intensive screening of budget requests, and wide span of control efforts. However, some risks of pursuing this strategy are that competitors might imitate the strategy, thus, driving overall industry profits down; that technology breakthroughs in the industry may make the strategy ineffective; or that buyer’s interest may swing to other differentiating features besides price.