Final answer:
Customer service and innovation are key value drivers for managerial focus in businesses, with companies excelling in these areas often achieving superior market positions and profitability. Dedication to these aspects can lead to cost reductions and an increased competitive edge. Firms must balance innovation strategies with the market's price elasticity of demand.
Step-by-step explanation:
Customer service and innovation are two of the value drivers that managers can utilize when trying to improve a company’s services and products. Exceptional customer service leads to positive feedback and can increase job satisfaction, which is vital for a firm's internal dynamics. Moreover, investing in innovation can give a company a temporary edge over competitors, leading to above-normal profits. Market competition often stimulates firms to find new technologies to produce products more cheaply or with desirable features, enhancing their competitive position and potentially leading to cost reductions.
Thus, managers must focus on improving customer service and continuously pursue innovation to ensure the firm stays ahead in the market. Companies like Amazon and Samsung are noted for their effective strategies in these areas. Furthermore, reducing production costs may also result in higher profits, but the firm must consider the price elasticity of demand when adjusting prices in response to cost changes.