1.The actions that managers take to attain the goals of the firm are referred to as a firm's strategy.
2.Profit growth is measured by the percentage increase in net profits over time.
3.The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
4.The price a firm charges for a good or service is typically more than the value placed on that good or service by the customer.
5.Consumer surplus captures some of the value of a product thereby reducing the price a firm can charges for it.
6.The greater the consumer surplus, the lower the value for the money the consumer gets.
7.The higher the firm’s profit per unit sold is, the greater its profitability will be, all else being equal.
8.A strategy that focuses primarily on increasing the attractiveness of a product is referred to as a low-cost strategy.
9.Superior value creation relative to rivals requires that the gap between the value and cost of production achieved by a company be lesser than the gap attained by its competitors.
10.Diminishing returns imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires only minimal additional costs.
11.According to Michael Porter, all positions on the efficiency frontier are viable.
12.The various value creation activities that a firm undertakes are referred to as operations.
13.For services such as banking or health care, production typically occurs when the service is being designed by in-house professionals.
In terms of attaining a competitive advantage, support activities can be as important as the primary
activities of the firm.
The human resource function controls the transmission of physical materials through the value chain.