CHAPTER 2

CHAPTER 2

IDENTIFYING COMPETITIVE ADVANTAGE

Competitive Advantage:

·                      A feature of a product or service on which customers place a greater value than they do on similar offerings from competitors.

·                     But, it is temporary because competitors keep duplicate the strategies.

·                     Then, the company should start the new competitive advantage. 

There are five forces model that introduced by Michael Porter. It is useful tool to aid organization in challenging decision whether to join a new industry or industry segment. 

1.                 buyer power 

2.                 supplier power 

3.                 threat of substitute products or services

4.                 threats of new entrants

5.                 rivalry among existing companies

Three Generic Strategies 

 

COST LEADERSHIP

·                      becoming a low-cost producer in the industry allows the company to lower prices to customers.

·                     competitors with higher cost cannot afford to compete with the low-cost leader on price.

DIFFERENTIATION

·                     create competitive advantage by distinguishing their products on one or more features important to their customers.

·                     unique features or benefits may justify prices differences and/or stimulate demand.

FOCUSED STRATEGY

·                     target to a niche market

·                     concentrates on either cost leadership or differentiation.

The Value Chains 

·                     supply chain - a chain or series of processes that adds value to product and service for customer.

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