CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGE


learning outcome:

• knows how the competitive advantages are typically temporary
• can list and explain the Porter's Five Forces Model
• compare Porter's three generic strategies 
• can describe relationship between business processes and value chain

what is competetive advantage? 

• its an environmental scanning throughout external nor internal
• the concept of what makes your products / services are different from others 
• PESTEL

competitive advantage: 

• porter's five forces model
• porters 3 generise strategies
• relationship between business process and value chain 

the five forces model:

1. BUYER POWER

• in the process to produce low buyer power ( at the same time create competitive advantage ), an organization must make it more attractive to buy it from the company, not from the competitors
• one of the best way is to practices of it

     2.  SUPPLIER POWER

• supply power us the converse of buyer power
• suppliers ---} organization ( organization wants supplier power low here)
• organization ---} customers (organization wants supplier power high here)
• low : when buyers choices are many
• high : when buyers have few choices of whom to buy

     3.  THREATS OF SUBSTITUE PRODUCTS & SERVICES 

• to understand, when customers can use different products to fulfill the same need, the threat of substitue exist
• switching cost which makes customer changes from using the certain product to using another brand of product.
• high: when are many alternatives of product
• low: when only few alternatives to choose 

     4.  THREARS OF NEW ENTRANTS 

• many threats comes from unexist company or have a presence in a given industry or market
• it makes the top management to follow the trends, especially in technology that might give rise to news competitors.
• high: when its easy to enter a market
• low: when there are barriers to enter market

      5.  RIVALRY AMONG EXISTANCE COMPETITORS

• existing competitors are not much of the threats because normally every firm have its own niche(specialty)
• however, in changing of management, ownership, or rules can give rise of the threats for a long time survival frim existing firm
• high: when competition is fierce in market
• low: when co,mpetition is more complacent   

the porter's 3 generis strategies

• cost leadership
• differentiation
• focused strategies

relationship between business and value chain

• add value to its products and services that support a profit margin for the firm