Includes bibliographical references and index.

Acknowledgements -- Introduction -- Value creation and competition -- Value creation: the foundation of profitability -- Contributed value and unrestricted competition -- Appendix: the mathematics of unrestricted competition -- Willingness-to-pay and economic cost -- Appendi: using decision trees in wtp and economic-cost calculations -- Being better : winning the customer -- Competing for the customer : the value gap advantage -- Customer tastes and profitability -- Appendix: contributed value and value-gap advantages -- Being in demand -- Guaranteed profitability: the power of exclusion -- Appendix: monopoly power and supply/demand reasoning -- Envy is a form of exclusion -- Non-constant marginal costs -- Market-price effects -- Being in demand : guaranteed and potential profitability -- Appendix: supply and demand revisited -- Profitability under unrestricted competition -- Your firm's game -- Buyers and competitors -- Suppliers -- Larger games -- Economic value : relative and subjective -- Changes in the game -- Sustaining profitability -- Strategic moves : changing the game -- Appendix: game matrices for game trees -- Strategic moves : restrictions -- Conclusion: a coherent story -- Notes -- Index.

This book teaches readers to understand profitability in a systematic way, equipping them to provide logically coherent answers to questions about whether a new venture will be profitable, if changes in business strategy will generate an increase in profits, or if "staying the course" will result in continued profitability. Unlike books by business gurus that offer one-size-fits-all advice, this book starts from the premise that you, the reader, are in the best position to make difficult judgments about your business. It shows how to turn these judgments into coherent analysis, presenting state-of-the art theory for understanding business strategy from an economic perspective. The basic building block is the value that is created when the buyer and seller make a deal. In simple terms, if a company is to be profitable, it must make a favorable deal with each and every customer. After setting out key principles and applying them to market situations, the book teaches readers to apply the analysis to their own businesses -- in other words, to create their own business game, the main ingredients of which are people and the value that they can create. It addresses how to integrate strategic moves into the book's theory of value creation and competition in order to address the sustainability of a company's profits, the effectiveness of the "invisible hand," and restrictions to competition. Optional appendixes explain the relevant mathematics. -- Provided by publisher.

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