Value Creation & Conflict Resolution in Management

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Managerial Economics: Creating and Capturing Value

Businesses create value by making certain decisions and taking specified actions to increase the worth of goods or services. Value could be created by lowering the cost of production and changing the prices of substitutes to increase demand (Brickley, Smith, & Zimmerman, 2015). Additionally, customers buy if they think they are getting more value than their expenditure (Peterson, Riesterer, Smith, & Geoffrion, 2015), and thus organizations could use this strategy to create perceived value.

Capturing value means retaining part of the created value in every transaction. However, most companies create value but fail to capture it. Organizations should maximize value capturing by setting the right price points for their goods and services. If prices are too high (which maximizes value capture), consumers might fail to buy goods and services. On the other hand, if prices are too low, businesses may not be profitable. Therefore, the right pricing is the first step to capturing value.

One good example of a firm that has created value in the current market is Facebook. The company has created value by creating a platform through which individuals interact and businesses execute their operations. It has lowered the cost of advertising and the overall cost of doing business. However, Facebook has not optimally captured the value that it has created. The platform focuses mainly on creating internal communities as opposed to monetizing it maximally.

The company has not changed its business model to capture the value that it has created for millions of users around the globe over the years. As such, the company should create a way of capturing enough value and generate sufficient revenues for long-term sustainability and profitability.

Conflict Resolution

During my time in the military working as a supervisor of troops, I experienced numerous instances of conflicts among servicemen. However, in most cases, I managed to resolve the issues to the satisfaction of the involved parties. According to Proksch (2016), conflict is inevitable in the workplace, and thus managers should be equipped to handle cases as they emerge. For instance, at one time, I was leading a group of servicemen, and they were required to fill out a lot of paperwork before they embarked on training. However, the person who was supposed to facilitate the delivery of the paperwork was always late, thus causing inconveniences to the rest of the team. Members of the team started complaining and the conflict escalated quickly after the accused person failed to change his ways of work. However, I used my conflict resolution skills and addressed the issue satisfactorily.

As a manager, I can employ proven tactics to steer conflict into a productive rather than destructive direction. The first step is to diagnose the cause of the conflict by listening to the involved parties (Burns, Bradley, & Weiner, 2012). This approach helps managers to understand the nature of the conflict in a bid to come up with the appropriate resolution strategy. A manager will be in a position to determine whether the conflict is caused by behavior, differing opinions, or external factors. The second step involves facilitating a resolution. One of the best ways of resolving a conflict is to let the involved parties come up with a solution. A manager’s role should be facilitating not dictating what should be done. If the conflicting sides cannot agree on a solution, a manager can apply different tactics, such as refocusing the discussion on the set objectives.

References

Brickley, J., Smith Jr., C. W., & Zimmerman, J. (2015). Managerial economics & organizational architecture (6th ed.). New York, NY: McGraw-Hill Education.

Peterson, E., Riesterer, T., Smith, C., & Geoffrion, C. (2015). The three value conversations: How to create, elevate, and capture customer value at every stage of the long-lead sale. New York, NY: McGraw-Hill Education.

Burns, L., Bradley, E., & Weiner, B. (2012).Shortell and Kaluzny’s healthcare management: Organization design and behavior (6th ed.). New York, NY: Cengage Learning.

Proksch, S. (2016). Conflict management (Management for professionals). New York, NY: Springer.

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