Question

To increase the value captured, the firm should identify activities that raise costs more than the activities increase Willingness to Pay (WTP) and eliminate these activities.
a. True
b. False

Answer 1

Answer:

A) True

Explanation:

Willingness to pay (WTP) is the maximum amount a customer is willing to pay for a product or service. This makes willingness to pay a crucial factor when finding the best price to sell a product at, for both the seller and buyer

If an activity increases costs beyond the amount which customers are able or willing to pay for such product or services, then such activity needs to be reduced or cut off outrightly.

A value-adding activity is any action taken that ups the benefit of a good or service to a customer or that increases customers Willingness to Pay.

A business can vastly increase its profitability by recognising which activities increase value, those which do not, and stripping away the non value-added activities.

Cheers!

Answer 2

Answer:

True

Explanation:

Willingness to pay (WTP) is the maximum amount an individual is willing to hand over or pay to procure a unit of a product or service. Willingness to pay a vital in finding the best possible price a product should be sold for and help to reach a compound for the price between both the seller and buyer.

An increase in activity costs that exceed amounts that customers are willing and able to pay for a commodity, product, goods or services should warrant the need for the reduction in price of such product.

A value-added activity is any action taken that increases the benefit of a good or service to a customer, it is the value that a product or services have to customers at any given period in the production and supply cycle and this increases customers Willingness to Pay for the product.

Businesses organizations can greatly increase the profit that they make by taking notice of such activities that increases the value of the product or services they render or offers, and those that do not add or have good valuation from the consumer, and then having to do away and discontinuing the rendering of production of products or services that are non valueable to the consumer.