CHAPTER 2 (MGT300)

IDENTIFYING COMPETITIVE ADVANTAGE

Definition : A product or service that an organization's customers place a greater value on than similar offerings from a competitor.

PORTER'S FIVE FORCES MODEL

Definition : Usefool tool to aid organization in challenging decision whether to join a new industry or industry segment. 




1. Buyer Power
  • High- when buyers have many choices of whom to buy.
  • Low- when their choices are few.
  • Ways to reduce buyer power - loyalty programs
2. Supplier Power
  • High- when buyers have few choices of whom to buy from. 
  • Low- when their choices are many
  • The suppliers ability to influence the prices they charge for suppliers (including materials, labor and services). 
3. Threat of Substitue products & services
  • High- when there are many alternatives to a product or service.
  • 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 substitues of their product or services. 
4. Threat of new entrants
  • High- when it is easy for new competitiors to enter a market. 
  • Low- when there are significant entry barriers to entering a market. 
  • Entry barriers : A product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive. 
5. Rivalry among existence competitors
  • High- when competition is fierce in a market. 
  • Low- when competition is more complacent. 
  • Reduce cost by using effective supply chain. 
PORTER'S 3 GENERIC STRATEGIES

1. Cost Leadership
  • Becoming a low-cost producer in the industry allows the companyto lower prices to customers. 
  • Competitors with higher costs cannot afford to compete with the low-cost leader on price.
  • Superior profit
2. Differentation
  • Create competitive advantage by distinguish their products on one or more features important to their customers. 
  • Uniques features or benefits may justify price differences or stimulate demand. 
  • Ex : i-care by Proton 
3. Focused Strategy
  • Target to a niche market.
  • Concentrates on either cost leadership or differentiation. 



RELATIONSHIP BETWEEN BUSINESS PROCESS AND VALUE CHAIN

 The Value Chains- Targeting Business Process

  • Supply Chain- a chain or series of processes that adds value to product & service for customers.
  • Add value to its products and services that support a profit margin for the firm. 





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