Friday, July 5, 2013

MGT300- CHAPTER 2 (IDENTIFYING COMPETITIVE ADVANTAGE)

WHAT IS COMPETITIVE ADVANTAGE?
·         A product or services that an organization’s customers place a greater value on than similar offerings from a competitor.
·         Unfortunately, CA is temporary because competitors keep duplicates the strategy.
·         Then, the company should start the new competitive advantage.
INTRODUCTION
·         Michael porter’s Five Forces Model is useful tool to aid organization in challenging decision whether to join a new industry or industry segment.
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- loyalty program in travel industry (e.g. rewards on free airline tickets or hotel stays)
SUPPLIER POWER
·         High- when buyers have few choices of whom to buy from.
·         Low- when their choices are many. (Best practices of IT to create competitive advantage.)
·         Supplier power is the converse of buyer power.
Suppliers > organization > customers
THREAT OF SUBSTITUTE PRODUCTS & SERVICES
·         High- when there are many alternatives to a product or services.
·         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 substitute of their product or services.
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.
·         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.
RIVALRY AMONG EXISTENCE COMPEITORS
·         High- when competition is fierce in a market.
·         Low- when competition is more complacent.
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 cost cannot afford to compete with the low cost leader on price.
·         Differentiation
-          Create competitive advantage by distinguishing their products on one or more features important to their customers.
-          Unique features or benefits may justify price differences and/or stimulate demand.



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