Drexel University

HRMT 200

WHEN WE TALK ABOUT PLANNING STRATEGY AND CONDUCTING STRATEGIC ANALYSIS, FOR THE PURPOSE OF BUSINESS OUR UNIT OF ANALYSISTHE FIRM IN BUSINESS, STRATEGY IS:A PLAN OF ACTION FOR OUR FIRM BASED ON WHERE WE’VE BEEN, WHERE WE ARE, WHERE WE WANT TO GO, AND HOW WE BELIEVE WE CAN GET THERE. THE MORE VALUE CUSTOMERS PLACE ON THE FIRM’S PRODUCTS, THE _________ THE PRICE THE FIRM CAN CHARGE FOR THOSE PRODUCTS.HIGHER THE FORMULA THAT SHOWS THE VALUE CREATED BY THE FIRM IS:V=P-C FIRMS CAN INCREASE PROFITS BY ADDING VALUE TO A PRODUCT SO THAT CUSTOMERS ARE WILLING TO PAY MORE FOR IT AND/OR BY LOWERING THE COSTS.TRUE THERE ARE TWO BASIC STRATEGIES FOR IMPROVING A FIRM’S PROFITABILITY. ONE OF THE TWO STRATEGIES IS:LOW COST THE OTHER BASIC STRATEGY IS:DIFFERENTATION WHEN WE BREAK THE FIRM DOWN INTO ITS VALUE-CREATING FUNCTIONAL AREAS TO ANALYZE IT, THIS DISAGGREGATED FIRM IS CALLED:THE VALUE CHAI