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Unformatted text preview: rcentage increase in net profits over time Determinants of Enterprise Value
Determinants of Enterprise Value
► To increase profitability and profit growth, firms can add value lower costs sell more in existing markets expand internationally Figure 12.1 p 403 The Value Chain of the firm
The Value Chain of the firm
Inputs to support primary activities Fig 12.4 p 406 Value-adding activities STRATEGY in INTERNATIONAL STRATEGY in INTERNATIONAL BUSINESS ► Two basic strategies for creating value and attaining competitive advantage (Michael Porter): lower costs of value creation and/or differentiate the firm’s product offering through superior design, quality service, functionality, etc. in order to increase perception of value by the customer ► Companies must choose a strategy and position themselves accordingly. In order to implement the chosen strategy, firms must: configure internal operations to support that position have the right organization structure in place to execute the strategy STRATEGY in INTERNATIONAL STRATEGY in INTERNATIONAL BUSINESS Example: Clear Vision ► Clear Vision, manufacturer and distributor of eyewear
► Early 1980’s Clear Vision realized it had to lower its costs by importing;
► Started by importing from manufacturers in Asia but was not satisfied with product quality and delivery;
► Determined it had to have its own facilities, so settled on Hong Kong as a location due to: low labor costs, skilled workforce, and tax breaks offered by Hong Kong government. STRATEGY in INTERNATIONAL STRATEGY in INTERNATIONAL BUSINESS Example: Clear Vision ► After time, industrialization of Hong Kong caused labor shortage and increase in wages, so manufacturing plant was moved to mainland China. Objective: lower costs
► At same...
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This document was uploaded on 02/26/2014.
- Spring '13