Assalamualaikum . Hi . Last Monday, my lecturer had starts a new chapter which is Chapter 2: Identifying Competitive Advantages . As you guys know, this chapter quite interesting because it's about an organization can survive and thrive after create a competitive advantage . So guys, let's go through this chapter .
Chapter 2: Identifying Competitive Advantages
What is competitive advantages?
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 .
share by being first to market with a competitive advantage .
Organizations watch their competition through environmental scanning .
Environmental Scanning is the acquisition and analysis of events and
trends in the environment external to an organization .
trends in the environment external to an organization .
There are three common tools used in industry to analyze and develop
competitive advantages include:
competitive advantages include:
- Porter’s Five Forces Model
- Porter’s three generic strategies
- Value chains
- Porter’s Five Forces Model
Porter’s Five Forces Model determines the relative attractiveness of an industry .
- Buyer power
- Supplier power
- Threat of substitute products or services
- Threat of new entrants
- Rivalry among existing competitors
Buyer Power
(high when buyers have many choices of whom to buy from and low when their
choices are few)
choices are few)
There are two ways to reduce buyer which are through loyalty programs and switching
cost.
cost.
Loyalty program - rewards customers based on the amount of business they do with a
particular organization
particular organization
Switching costs - costs that can make customers reluctant to switch to another
product or service
product or service
Supplier Power
(high when buyers have few choices of whom to buy from and low when their choices
are many)
are many)
Supplier power is the converse of buyer (customer) power.
A supplier organization in a market will want buyer (customer) power to be low.
The supplier wants to be able to set any price it wants for its goods, and if buyers
(customers) have low power, then they do not have any choice but to pay the high
price since there are only one or two suppliers.
price since there are only one or two suppliers.
What is an example of an organization with “high” supplier power?
Microsoft, Government regulated products such as energy markets and
telecommunication markets in some countries
telecommunication markets in some countries
Supply chain consists of all parties involved in the procurement of a product or raw
material.
material.
Organizations that are buying goods and services in the supply chain can create a
competitive advantage by locating alternative supply sources (decreasing supplier
power) through B2B marketplaces.
Business-to-Business (B2B) marketplace – an Internet-based service that brings
together many buyers and sellers
Two types of business-to-business (B2B) marketplaces:
Private exchange – a single buyer posts its needs and then opens the bidding
to any supplier who would care to bid
Reverse auction – an auction format in which increasingly lower bids are
solicited from organizations willing to supply the desired product or service
at an increasingly lower price
Will continue with next outcomes .
~MRS. FROGGY~
