Creating value in goods gives sustainability to business
Designing and implementing appropriate strategies are fundamentals for a business to make profits and maintain sustainability. Strategies are planned actions to achieve goals.
Differentiation strategies result in more value creation in a product, which means the consumers are willing to pay more for the product than its actual cost. This essentially increases profits. A firm can make profit by lowering the cost of production but value creation is more sustainable.
A firm’s strategies must spell out the appropriate location of operations, market demands of the products and the right organisational structures to execute the strategies.
Value creation can be in different stages – production, marketing, material management, research and development, human resource, information system and the firm’s structure. This is called value chain. The organisational culture, skills of the employee, decision-making process have impact on how strategies are effectively implemented.
Market conditions, strategies, operations and organisational structure must be consistent with each other for a firm to achieve superior performance.
Strategies must be carefully chosen in case a firm operates internationally. Leveraging international market can help firm increase growth. The competency of the firm to reduce the cost of value creation determines the success of the firm in such circumstances. While looking for global expansion, a firm must consider the economic, political and cultural conditions and other relative factors that are helpful for the firm in value creation.
Strategies of a firm are results of the experiences, lessons learnt from the operations activities, possibilities of economies of scale and strategic significance. Firms must choose the best-fit strategies to them from among four basic strategies – Global Standardisation Strategy, Localisation Strategy, Transnational Strategy and International Strategy. It is also important that firm enter into strategic alliance to boost market expansion.