Competitive Advantages
Competitive advantages are
typically temporary because competitors often seek ways to
duplicate the
competitive advantage. In turn,
organizations must develop a strategy based
on a new competitive advantage.
Five forces in
Porter’s Five Forces Model
a) Buyer
power:
High when buyers have many
choices of whom to buy from and low when
their choices are few
b) Supplier power:
High when buyers have few choices of whom to buy from and low when their
choices are
many
c) Threat
of substitute products or services:
High when there are many alternatives to a product or service and low when
there are few
alternatives from which to choose
d) Threat
of new entrants:
High when it is easy for new
competitors to enter a market and low when there are significant
entry barriers
to entering a market
e) Rivalry
among existing competitors
High when competition is fierce in a market and low when competition is more
complacent
Porter’s three generic strategies
Organizations typically follow one
of Porter’s
three generic strategies when entering a new
market.
1. Broad cost leadership
2. Broad
differentiation
3. Focused strategy
Broad strategies reach a large market segment. Focused strategies target a niche
market. Focused strategies concentrate
on either cost leadership or differentiation.
The relationship between business
processes and value
chains
A business process is a
standardised set of activities that accomplish a specific task, such
as
processing a customer’s
order. The value chain approach
views an organization as a
chain, or series, of processes, each of which adds
value to the product or service for each
customer. The value chain helps an organization
determine the “value”
of its business
processes for its customers.
•Competitive
advantages are important for an organization
•It
is even more important to understand that competitive advantages are typically
temporary
since competitors are quick to copy competitive advantages
1. Example of companies that achieved success through competitive advantages:
a) United was the first airline to
offer a competitive advantage with its frequent flyer mileage
(this first-mover
advantage was temporary)
b) Sony had a competitive advantage
with its portable stereo systems (this first-mover
advantage was temporary)
c) Microsoft had a competitive
advantage with its unique Windows operating system
No comments:
Post a Comment