Exam 2 Study Guide All material in Chapters 4, 5, & 6 including Value creation can be done in 2 ways, by lowering cost, or by making product more attractive, since consumer will put higher value on it and might pay more for that. (V- C value to consumer – cost) Consumer surplus- (V- P value- price) Profit margin- (P-C price – cost) (higher price translates to higher profits) Return on invested capital – (P-C)/capital Building blocks of competitive advantage – figure 4.3 (efficiency, quality…
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