Competitive Advantage

Welcome to the reader,this is my second post about what I study in MGT 300.Now I want to share some information what I learn on this week about Identifying Competitive Advantage.

Chapter 2 : Identifying Competitive Advantage.

On this Chapter there four learning outcome :
- To explain the competitive advantages are typically temporary.
- To list and describe each of the forces in Porter's Five Forces Model.
- To compare Porter's three generic strategies.
- Describe the relationship between business process and value chains.

Identifying Competitive Advantage.

- To survive and thrive an organization must create a competitive advantage.

• Competitive advantage - a product or service that an organization's customers place a greater value                                           on than similar offerings from a competitor. 
• First-mover advantage -  occurs when an organization can significantly impact its market share by                                             being first to market with a competitive advantage. 

- Organization watch their competition through environmental scanning.

• Environmental scanning - the acquisition and analysis of events and trends in the environment                                                      external to an organization.

- Three common tools used in industry to analyse and develop competitive advantage include :

• Porter's Five Forces Model.
• Porter's three generic strategies.
• Value chain.

The Five Forces Model - Evaluating Business Segment.

- Porter's Five Forces Model determine the relative attractiveness of an industry.

Buyer Power.

- Buyer power is high when buyers have many choices of whom to buy from and low their choices are few.

- One way to reduce buyer power is through loyalty programs.Example,reward customers based on the

   amount of business they do with particular organization.

Supplier Power.

- Supplier power is high when buyers have few choices of whom to buy from and low when their choices are

   many.

- Supply chain is consists of all parties involved in the procurement of a product or raw material.

Threat of Substitute Product or Services.

- Threat of substitute product or service is high when there are many alternative to a product or service and 

   low when there are few alternatives from which to choose.

- Switching cost is cost that can make customers reluctant to switch to another product or service.

Threat of New Entrants

- Threat of new product entrants is high when it is easy for new competitors to enter a market and low when 

   there are significant entry barriers to entering a market. 

- Entry barrier is a product or service feature that customers have to come to expect from organizations in a 

   particular industry and must be offered by an entering organization to complete and survive.

Rivalry Among Existing Competitors.

- Rivalry among existing competitors is high when competition is fierce in a market and low when competition    is more complacent.

The Three Generic Strategies-Creating a Business Focus.

- Organizations typically follow one of Porter's three generic strategies when entering a new market.

The Three Generic Strategies(Example)

Value Creation

- Once an organization chooses its strategy,it can use tools such as the value chain to determine the success 

   or failure of its chosen strategy.

• Business process is a standardized set of activities that accomplish a specific task,such as processing a customer's order.
• Value chain is views an organization as a series of process,each of which adds value to the product or service for each customer.

Okay that all for today,thank you for reading this blog.