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Value Creation

In: Business and Management

Submitted By Kayfad
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2.9 Definition and Meaning of Value Creation

Value creation is the primary objective of any business entity. It is obvious that most successful organisations understand that the purpose of any business is to create value for its customers, employees, investors as well as its shareholders. Because the customers, employees and investors are linked up together, no sustainable value can be created for one unless for all of them. The first point of focus should be that of creating the value for the customer, remember, customers are always right. Value creation for customers will help in selling the services provided. This can only be achieved when the right employees are employed, developed and rewarded as well as when investors keep receiving consistent attractive returns. However, from a financial point of view, value is said to be created when a business earns revenue which surpasses expenses.

Value creation simply put occurs when there is an additional value being added to the bottom line of a business thanks to the creation and use of new methods to maximize the shareholders wealth. Value creation from the customer point of view entails the provision of services that customers will find consistently useful. In today's business world, such value creation is typically based on constant process innovation as well as constantly understanding the customers needs with the ever changing business world. This can be achieved thanks to the commitment, energy and imagination of the employees. In order for these employees to work effectively and committed, they need to be motivated and the best way of doing this is by creating values for the employees as well.

Value creation for employees will include employees to be treated respectively, the provision of continuous training and development as well as the employees participating in decision making processes. Bear this

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