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Value creation=economic (Value creation (Surplus (Customer surplus…
Value creation=economic
Competitive advantage
create value
Capture value
Value creation
A
Inputs
Labour
Materials
B
Outputs
Products
Customer want/need
Value to customer
willing to pay?
Customer utility
Quality = pay >
Benefit
C
Costs to org
B > than C
Unit cost
quality > cost
Economic Value = B - C
Surplus
Customer surplus
Willing to pay
Max pay
Producer surplus
willing to sell at
Lowest price
but profitable
Must match
To benefit all
Value Capture
Value (profit) from every transaction