MGT300 – CHAPTER 2 IDENTIFYING COMPETITIVE ADVANTAGE

MGT300 – CHAPTER 2

            IDENTIFYING COMPETITIVE ADVANTAGE

COMPETITIVE ADVANTAGE

Porter’s Five Forces Model

·         Rivalry among exiting competitor

• ·         Buyer power supplier
• ·         Supplier power
• ·         Threat of new entrants
• ·         Threat of substitute

Porter’s 3 generis strategies                

• ·         Cost leadership
• ·         Differentiation
• ·         Focused strategies
• 
  

Relationship between business process and value chain

Bargaining power of suppliers

- The power of suppliers to drive up prices of materials

Threat of substitute products or services

- The power of customers to purchase alternatives

Buyer power

- the power of customers to drive down prices

Threat of new entrants

- the power of competitors to enter a market.

1. 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)

2. 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 advantages.

E.g B2B marketplace - private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who would care to bid. Reverse auction is an auction format in which increasingly lower bids.

3. Threat of substitute 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 substitutes of their product or services.
• best practices of IT
• E.g. Electronic product - same function different brand

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.
•  Entry barriers is a product or services features that customers have come to expect from organizations and must be offered by entering organization to compete and survive.
• Best practices of IT
• E.g. new bank must offers online paying bills, acc monitoring to compete.

5. Rivalry among existence competitors

•  High- when competition is fierce in a market
• Low- when competition is more complacent
• Best practice of IT
• Wal-mart and its suppliers using IT-enabled system for communication and track product at aisles by effective tagging system
• Reduce cost by using effective supply chain

 

The Value Chains-Targeting Business Processes

• SUPPLY CHAIN - A chain or series of processes that adds value to product and service for customer.
• Add value to its products and services that support a profit margin for the firm.

THANK YOU~~~~

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