Hai guyss..okay today Wednesday 06 December 2015 03:00p.m i like to share with you guys what i have learn today is CHAPTER 2 MGT300: IDENTIFYING COMPETITIVE ADVANTAGE.
my lecturer explain what we need to know about this topic . So, what is competitive advantage? Competitive Advantage
is a product or service that an organization’s customers place a greater value
on than similar offerings from a competitor. Unfortunately, CA is temporary
because competitors keep duplicate the strategy. Then, the company should start
the new competitive advantage.
The Michael Porter’s Five Forces Model is a useful tool to
aid organization in challenging decision whether to join a new industry or
industry segment. Here is the list for the Five Forces Model:
1. Buyer power
2. Supplier
power
3. Threat of
substitute products or services
4. Threats of
new entrants
5. Rivalry among
existing companies
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 advantage:
-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. Supplier power is the converse
of buyer power.
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 brands
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 service feature 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 Practices 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 Three Generics Strategies
1. Cost Leadership
-Becoming a low-cost producer in the industry allows the
company to lower prices to customers.
-Competitors with higher costs cannot afford to compete with
the low-cost leader on price.
2. Differentiation
-Create competitive advantage by distinguishing their
products on one or more features important to
their customers.
-Unique features or benefits may justify price differences
and/or stimulate demand.
-Example: i-care by Proton
3. Focused Strategy
-Target to a niche market
-Concentrates on either cost leadership or differentiation.
The Value Chains - Targeting Business Processes
Supply Chain - a chain or series of processes that adds
value to product & service for customer.
Add value to its products and services that support a profit
margin for the firm
A chain or series of processes that adds value to product
& service for customer
