ABSTRACT
This chapter deals with two main topics. The first is the concept of the Extended Organization - the linked Value Chains at which level the customer buys. The second topic is the nature of pricing, its objectives and strategies and its relationship to the cost drivers identified by the Value Chain Analysis. The Value Chain is a useful tool for identifying where an organization can add value or save cost. It will, however, be different for different types of organizations. In making strategic pricing decisions, it is extremely important to know what factors affect a firm's reaction in the face of a pricing attack. The firm must understand its own objectives, strategies, strengths and weaknesses as well as those of its competitors. Linkages between elements of the Value Chain, and the effectiveness of links to the Value Chains of other organizations are important because customers typically buy at the level of the linked Value Chains.
