Lecture About Profit Pools

LECTURE THREE: VALUE MIGRATION AND PROFIT POOLS

|Subject |Page |

|Value Creation |2 |

|Value Migration |3 |

|The Transitional Stages of Competitiveness |4 |

|Profit Zones / Profit Pools |5 |

|Summary |7 |

|Discussion Questions |7 |

|References / Reading List |7 |

1. Value Creation

Walters (2002) suggests that the organisation’s value chain become merged with those of other value chain members. An important feature is the role of information management that provides a coordinating activity. Other authors have made contributions. Of particular interest is that of Norman and Ramirez (1993) who suggest “strategy is the art of creating value…the way a company defines its business and links together with only two resources that really matter in today’s economy: knowledge and relationships on an organisation’s competencies and customers”.

The see the value chain as an analytical tool that facilitates strategy “…strategy is primarily the art of positioning a company in the right place on the right value chain – the right business, the right products and market segments, the right value-adding activities”.

They go on to add:

“Their focus of strategic analysis is not the company or even the...