Discussion #4

Discussion #4

If a firm has created value, is it also always able to capture that value? How does a firm create value and then what must it be able to do to capture that value? In your answer, provide an example of a firm that has been able to create value. Then discuss whether or not you believe it has captured that value and if so how it was captured and if not why it was not able to do so.

Reference:

Brickley, J., Smith, C., & Zimmerman, J. (2016). Managerial economics and organizational

architecture (6th ed.). New York: McGraw Hill/Irwin.

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Discussion 4

Value Creation

            Value refers to the variations between the benefits, which clients perceive and the costs that firms incur to provide the satisfaction. Companies do not always capture the full value that they create. They capture a part of it through profits while the other section is captured by the clients through consumer surplus. According to Brickley, Smith & Zimmerman (2016), enterprises can create value through implementing strategies to lower their operational costs and creating the programs, which enable customers to develop a perception of increased quality of their commodities or services.

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