briefly describe value creation and the two strategies used by companies to obtain a competitive advantage
Value creation is a term used to describe the value being created by a business organization. Any business organization can create the value of its organization by improving the overall performance of the business activities. If the business is able to change the way of workings in the business in an efficient manner then it is possible that the value of the goods or services provided by the organization will also improve. Value has to be created by the business. It doesn't get improve by itself only. It requires certain actions to be taken by the management of the organization so that the different activities in the organization can be done in a more productive manner. Value creation has a direct link with the performance of the business organization. As the performance improves, the value also gets affected in a positive manner.
Value creation really benefits a business a lot. Profits of the business increase. The business is able to earn a good reputation in the market. Even customers are more satisfied with such a business.
As we all know that the competition in the market is increasing day by day and every business wants to survive in such a competitive market. Every business aims to capture a bigger market share than that of its competitors. For this, a business can make the use of various strategies to survive in a competitive market such as the business can sell the same quality of goods and services to its customers at a lower price than that of its competitors. This will help the business to attract more and more customers. For doing this the business must be able to use it's various resources in a very proper manner so that there should not be any wastage in the organization. Also for applying this strategy the business needs to find different ways in which it can produce the goods at a lower cost so that the profitability of the business should not get affected.
Another strategy which the business can use is strategic alliance. In this, two businesses can combine together for a common goal and can share resources to achieve that goal. Such an alliance can also help the businesses gain a competitive advantage over the other businesses. In this the risk can be divided between the two businesses. The production gets increased because the workers involved get increased because of the two businesses. Also, when production is done at a larger scale it helps in getting cost advantage to both the business organization. Ultimately both the businesses are able to enjoy various benefits by combining together. But one thing is very important to understand in this concept and that is the businesses that are involved in strategic alliance support each other are only for a particular period of time till the goal is achieved for which they both have joined together. After the goal is achieved, both the business organizations again become independent.
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briefly describe value creation and the two strategies used by companies to obtain a competitive advantage
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