Applying The Value Creation Model in tire industry

Abstract

Understanding of the relationship between the costs of the firm and the value the firm provides to its customers is the key to the ability of the firm to reach its profit potential. The objective of this research is to determine how to identify the relationship between costs and value by introducing and applying the value creation model (VCM). This research is a case study in which we have use a survey. In this study on the basis of value creation model, the firm cost structure has been define in terms of value added, non-value added but required activities, as well as of waste. Also, the trade-off between what the customer is willing to pay for a product/service bundle (value) and the cost the firm bears to provide what the customer desires was assessed and according to this trade-off the value multipliers were computed for each bundle. There is of study help firm manager to determine the activities which should be focused on to develop the competitive advantage. More there, this article while be a part of emerging literature on strategic cost management, extends the existing knowledge of the relationship between costs and value.

Keywords

• value creation
• strategic cost management
• customer satisfaction
• profit potential