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Basics of Strategy (How can firms increase profits? (By adopting…
Basics of Strategy
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Strategy, value creation & value chain
Strategy has been defined variously as long-term goals, plan a set of actions and allocation of resources necessary for carrying out these goals.
Not all strategies work and some aspects may be dropped (unrealized strategy). Strategies may emerge in the course of events, as managers response to circumstances, take opportunities or have to react to unexpected events (emergent strategy).
Value creation is the creation of superior value of a product for a customer that will enhance competitive advantage in the long-run
The Value chain approach says that firms only create superior value if they organise their operations efficently.
Porter proposed a value chain that companies can use to examine its activities, how they are connected and examine sources of value for the organisation to determine what affects cost and profits.
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