(C2) Identifying Competitive Advantages

How to analyze and develop competitive advantages in the industry?

Three common tools - Porter’s Five Forces Model
- Porter’s three generic strategies
- Value chains

1. Porter’s Five Forces Model

 Buyer power - HIGH (customers have many choices of whom to buy from)
(as a seller) - LOW (few choices)

How to lower - Loyalty programmes
- Switching cost

 Supplier power - HIGH (buyers have few choices of whom to buy from)
(as a supplier) - LOW (buyers have more choices)

 Threat of substitute products or services - HIGH (many alternatives to a product or service)
(as a seller) - LOW (less alternatives to choose)

 Threat of new entrants - HIGH (easy for new competitors to enter market)
(as a seller) - LOW (there are barriers to enter market)

 Rivalry among existing competitors - HIGH (competition is fierce)
(as a seller) - LOW (competition is more complacent)

2. Porter’s three generic strategies


3. Value chains

- views an organization as a series of processes, each of which adds value to the product or service 







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