MGT300-CHAPTER 2 : IDENTIFYING COMPETITIVE ADVANTAGES


     




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       LEARNING OUTCOMES :
  • Explain why competitive advantages are typically temporary
  • List and describe each of the five forces in Porter's Five Model
  • Compare Porter's three generic strategies
  • Describe the relationship between business processes and value chain
                                   
                                    Identifying Competitive Advantages
            -Competitive advantages is a product or services that an organization's customers                                   lace a greater value on the similar from competitor. Furthermore, competitive                                       advantages are temporary because they have keep duplicate the strategy.


                                      3 Common Tools used in industry    
  1. Porter's Five Forces Model
  2. Porter's Three Generic Strategies
  3. Value Chain
                          
                                                    Porter's Five Forces Model


Image result for porter's five forces

  1. Buyer Power

  • High when buyers have many choices
  • Low when their choices are few
-Way to reduce buyer power is through loyalty programs
  •    Loyalty program is the rewards customers based on the amount of business they do with a particular organization. Example is rewards on free online tickets.
  •    Switching costs is can make customers reluctant to switch to another product or service. 
   
      2. Supplier Power
  • High when buyers have few choices of whom to buy
  • Low when their choices are many which mean have many supplier
 -Best practices of IT to create competitive advantages
-Example, B2B marketplace is a private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who would care the bid. Reverse auction is an auction format in which increasingly lower bids.

                                      -Supplier power is the converse of the buyer power

                                                                                  

      3. Threat of Substitute Product or Service
  • High when there are many alternatives to a product or service.
  • Low when there are few alternatives fro, which to choose.
  • Switching costs- costs that can make customers reluctant to switch to another product or service.
      4. Threat of New Entrants
  • High when it is easy foe new competitors to enter a market.
  • Low when there are significant entry barriers to entering a market
  • Example; Astro & Air Asia
       Entry Barrier :
        - a product or service feature that customers have come to expect from organization in a                         particular industry.
        - must be offered by an entering organization to compete and survive

      5. Rivalry among existing competitors.
  • High when competition is fierce in a market
  • Low when competition is more complacent
  • Need to know how how to create the best selling in industry
  • Example: Maxis & Digi

                                                   Porter's Three Generic Strategies


Image result for porter's three generic strategies
(i) Cost leaderships
    - Becoming a low cost producer in the industry allows the company to lower prices to customer.
    - Competitors with higher costs cannot afford to compete with the low costs leader on price

(ii) Differentiation
    - Create competitive advantages by distinguishing their products on one or more features important to their customer.
    - Unique features or benefits may justify price differences and stimulate demand.

(iii) Focused strategy
      - Target to a niche market
      - Concentrates on either cost leadership or differentiation.

        Value Creation
 -Value chains is the targeting business processes
 -Supply chain is a chain or services of processes that adds value to product and service for customer. 
 - Add value to its products and services that support a profits margin for the firm



THANK YOU ;)



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