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Friday, June 28, 2013

Identifying Competitive Advantage

What is Competitive advantage ?

  • A product or service that an organization's customers place a greater value on than similar offerings from a competitor.
  • Unfortunately, CA istemporary because competitiors keep duplicate the strategy.
  • Then, the company should start the new competitive advantage.
Five Forces Model by Michael Porter - useful tools to aid   organizations in challenging decision whether to join a new industry or industry segment. 

  1. Buyer power
  2. Supplier power-Supplier power is the converse of buyer power.  
  3. Threat of Substitute products & Services
  4. Threats of new entrants
  5. Rivalry among existence competitors. 

The 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 low cost leader on price.
  • Differentiation - Create competitive advantage by distinguish their products on one or more features important to their customers. Unique features or benefits may justify price differences and/or stimulate demand. Ex: i-care by Proton
  • Focused Strategy - Target to a niche market, concentrates on either cost leadership or differentiation.

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