CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGE


MGT300
Chapter 2: Identifying Competitive Advantage 

  1. Explain why competitive advantages are typically temporary.
  2. List and explain each of the five forces in Porter's Five Forces Model.
  3. Compare Porter's three generic strategies.
  4. Describe the relationship between business processes and value chain.
What is competitive advantage?
  • A product or service that an organization's customers place a greater value on than similar offerings from a competitor.
  • Unfortunately, CA is temporary because competitors keep duplicate the strategy.
  • The, the company should start the new competitive advantage. 

FIVE FORCES MODEL
  • Buyer Power: 
    • High- when buyers have many choices of whom to buy
    • Low- when their choices are few.
    • To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors.
    • Best practices of IT-based
  • Supplier Power
    • High- when buyers have few choices of whom to buy from.
    • Low- when their choices are many.
  • Threat of Substitute Product & Services
    • High- when there are many alternatives to a product or service.
    • Low- when there are few alternatives from which to choose.
    • Ideally, an organization would like to be on a market in which there are few substitutes of their product or services.
  • Thereat of New Entrants
    • High- when it is easy for new competitors to enter a market
    • Low- when there are significant entry barriers to entering a market
    • Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive.
    • Best practices of IT
  • Rivalry Among Existence Competitors
    • High- when competition is fierce in a market 
    • Low- when competition is more complacent
    • Best Practices of IT
THE THREE GENERICS STRATEGIES
  • Cost Leadership
    • Becoming a low-cost producer in the industry allows the company to lower prices to customers
    • competitors with higher costs cannot afford to compete with the low-cost leader on price
  • Differention
    • Create competitive advantage by distinguishing their products on one or more features important to their customers.
    • Unique feature or benefits may justify price differences and/or stimulate demand
  • Focused Strategy   
    • Target to a niche market
    • Concentrates on either cost leadership or differentiation

The Value Chains- Targeting Business Processes
  • Supply Chain- a chain or series of processes that adds value to product & service for customer.
  • Add value to its products and services that support a profit margin for the firm.



26/9/2017
TUESDAY
   

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