The answer includes three issues - competitive advantage, value creation and profitability through the cost optimization. Competitive advantage leads ti superior profitability. At the most basic level, how profitable a company becomes depends on three factors: (1) the amount of value customers place on the company's products, (2) the price that a company charges for its products, and (3) the cost of creating that value. Note the important distinction between value and price. Value is something that customer assign to a product. It is a function of the attributes of the product, such as its performance, design, quality, and point-of-sale and after-sale service. For example, most customers would place a much higher value on a top-end Lexus car from Toyota than on a low-end basic economy car from General Motors, precisely because they perceive the Lexus to have better performance and superior design, quality, and service. A company that strengthens the value of its products in the eyes of customers gives it more pricing options: it can raise prices to reflect that value or hold prices lower, which induces more customers to purchase its product and expand unit sales volume.
Whatever pricing option a company chooses, however, the price a compnay charges for a good service is typically less the value placed on that good or service by the customer. This is so because the customer captures some of that value in the form of what economists call a consumer surplus. the customer is able to do this because the company is competing with other companies for the customer's business, so the company must charge a lower price than it could were it a monopoly supplier.
What is tax haven?
A tax haven is a place where certain taxes are levied at a low rate or not at all. This encourages wealthy individuals and/or firms to establish themselves in areas that would otherwise be overlooked. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies.
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Foreign country providing significant, permanent tax breaks to individuals and companies operating within it. In a tax haven country, foreigners may receive income or own assets and pay very low taxes. Many companies are situated or have subsidiaries in tax havens for Tax Avoidance reasons. There are two objectives for establishing a subsidiary in a tax haven: (1) a subsidiary can operate as a legitimate operation and generate profits while simultaneously enjoying the tax advantages; and (2) a parent may establish a subsidiary in a tax haven for the purpose of tax avoidance only. The major purpose is to shift income from a country with high taxes to a tax haven country by using a subsidiary as an intermediary.
Whatever pricing option a company chooses, however, the price a compnay charges for a good service is typically less the value placed on that good or service by the customer. This is so because the customer captures some of that value in the form of what economists call a consumer surplus. the customer is able to do this because the company is competing with other companies for the customer's business, so the company must charge a lower price than it could were it a monopoly supplier.
What is tax haven?
A tax haven is a place where certain taxes are levied at a low rate or not at all. This encourages wealthy individuals and/or firms to establish themselves in areas that would otherwise be overlooked. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies.
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