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


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  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


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(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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