CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGES

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?

Competitive advantages is 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 .

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 .

There are three common tools used in industry to analyze and develop
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)

There are two ways to reduce buyer which are through loyalty programs and switching
cost.

Loyalty program  - rewards customers based on the amount of business they do with a 
particular organization

Switching costs   - costs that can make customers reluctant to switch to another
product or service

Supplier Power 

(high when buyers have few choices of whom to buy from and low when their choices
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.

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

Supply chain consists of all parties involved in the procurement of a product or raw
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~