MGT 300 - Chapter 2

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IDENTIFYING COMPETITIVE ADVANTAGE

INTRODUCTION

• 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.
- Then, the company should start the new competitive advantage.

Five Forces Model :

• Micheal Porter's Five Forces Model is useful tool to aid organization in challeging decision whether to join a new industry or industry segment.

There are Five Forces Model :

1. Buyer Power
2. Supplier Power
3. Threat of Substitute products & Service
4. Threat of new entrants
5. Rivalry among existence competitors

website : //www.mindtods.com/pages/article/newTMC08.htm

1. Buyer Products

• High - when buyers have many choices of whom to buy.
• Low - when their choices are few.

2. Supplier Power

• High - when buyers have few choices of whom to buy from.
• Low - when their choices are many.

3. Threat of Substitute products & Service

• High - when there are many alternatives to a product or service.
• Low - when there are few alternatives from which to choose.

4.Threat 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.

5. Rivalry among existence competitors

• High - when competition is fierce in a market.
• Low - when competition is more complacent.

THE THREE GENERICS STRATEGIES

1. Cost Leadership 

• Becoming a low-cost produce 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.

2. Differentiation

• create competitive advantage by distinguishing their products on one or more features important to their customers.

3. 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

THE END :)