Question
Below is the cost structure of the two firms. Firm 1 Total internal Operation cost $5 Retailing price $10 raw material cost $2 ---------------------------------------------------------------------------------------------------------------------------------------------- Firm
Below is the cost structure of the two firms.
Firm 1 Total internal Operation cost $5 Retailing price $10
raw material
cost $2
----------------------------------------------------------------------------------------------------------------------------------------------
Firm 2
Total internal Operation cost $2.5 Retailing price $4
raw material
cost $ 0.5
Calculate the following (show the process of your calculation like A-B=C):
a. What are the value creation and value capture of each firm? (5 points)
Value created:
Firm1:
Firm2:
Value captured:
Firm1:
Firm2:
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Management
Authors: Warren R. Plunkett, Gemmy S. Allen
10th edition
1111221340, 978-1111221348
