COMMERCE 4SA3 Chapter 11: Chapter 11

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Profit growth: the percentage increase in net profits over time. Value creation: 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. However, firms charge typically less than what the customer values because of consumer surplus caused by the many competing firms in the market. For a potential buyer or consumer, it is the maximum value the buyer is willing to pay in order to buy a good. For a potential seller or producer, it is the minimum value the seller is willing to accept in order to sell a good. Operations: the various value-creation activities a firm undertakes. Company infrastructure: or the context within which all the other value-creation activities occur. The infrastructure includes the organization structure, control systems and culture of the firm. Strategy of firm is implemented through organization.

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