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Questions and Answers
Understanding the economic value creation of a company and how strategy determine the value creation. Understanding how sales margins and sales growth but also the capital turnover are the key drivers of value creation. Being able to calculate and interpret the different measures and ratios but also provide strategic advice. Simple framework for value creation and value capture Value is created by calculating
willingness to pay (WTP) - costs
Value captured consists of
Value created
Value captured by consumers (Consumer surplus)=Producer surplus
Price - costs
Indicators of value creation:
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Study Notes
Understanding Value Creation
- Value creation is determined by a company's strategy, which directly impacts its economic performance.
- Three key drivers of value creation are: • Sales margins • Sales growth • Capital turnover
Value Capture and Creation
- Value capture consists of: • Value captured by the company (Producer surplus) • Value captured by consumers (Consumer surplus)
- Value creation is calculated by adding these two components.
Key Performance Indicators (KPIs)
- Indicators of value creation include various measures and ratios that help evaluate a company's performance.
- The ability to calculate and interpret these KPIs is crucial for providing strategic advice to a company.
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Description
Test your knowledge about the drivers of value creation in business, including economic value, sales margins, sales growth, and capital turnover. This quiz covers understanding the strategies that determine value creation, calculating and interpreting measures and ratios, and providing strategic advice for value creation and capture.
