WHAT IS COMPETITIVE ADVANTAGE??
Competitive advantage is a feature of a product or service on which customers place a greater value than they do on similar offerings from competitors. Unfortunately, competitive advantage is temporary because competitors keep duplicate the strategy. Then, the company should start the new competitive advantage. Organization watch their competition through environmental scanning. Environmental scanning..??
There are 3 common tools that used in
industry to analyze and develop competitive advantages. The 3 common tools are
:
Porter’s Five Forces
Model
Buyer power - high
when buyers have many choices of whom to buy from and low when their choices are few. One way to reduce buyer power is
through loyalty programs. Loyalty programs means rewards customers
based on the amount of business they do with particular organization.
Supplier
power - high
when buyers have few choices of whom to buy from. But supplier power will
be low when their choices are many.
Organizations that are buying goods and services in the supply chain can create
a competitive advantage by locating alternative supply sources (decreasing
supply power) through B2B marketplaces.
Business-to-business (B2B)
marketplace - an internet-based service that brings together many
buyers and sellers. there's 2 types of (B2B)
marketplaces which is "private exchange" and "reverse exchange"
Supplier power is the converse of buyer power
:
Buyer power - high when buyers have many choices of whom to buy from and low when their choices are few. One way to reduce buyer power is through loyalty programs. Loyalty programs means rewards customers based on the amount of business they do with particular organization.
Supplier
power - high
when buyers have few choices of whom to buy from. But supplier power will
be low when their choices are many.
Organizations that are buying goods and services in the supply chain can create
a competitive advantage by locating alternative supply sources (decreasing
supply power) through B2B marketplaces.
Business-to-business (B2B)
marketplace - an internet-based service that brings together many
buyers and sellers. there's 2 types of (B2B)
marketplaces which is "private exchange" and "reverse exchange"
Supplier power is the converse of buyer power
:
Threat
of Substitute products or services -
high when there are many
alternatives to a product or services and low
when there are few alternatives from which to choose. Ideally, an
organization would like to be an a market in which there are few substitutes of
their product or services. For example : electronic product-same function different
brands.
Threat
of new entrance -
high when it is easy for new competitors to
enters a market low when there are
significant entry barriers to entering a market. Entry barriers is a product or services feature that customers have
come to expect from organization to compete and survive. For example: new bank
must offers online paying bills, accounts monitoring to compete.
Rivalry
among existence competitors -
high when competitors is fierce in a market
and low when competition is more
complacent. For example: Walmart and
its suppliers using IT-enabled system for communication and track product at aisles
by effective tagging system.
Threat of Substitute products or services - high when there are many alternatives to a product or services and low when there are few alternatives from which to choose. Ideally, an organization would like to be an a market in which there are few substitutes of their product or services. For example : electronic product-same function different brands.
Porter’s three generic
strategies
Organizations typically follow one of Porter’s 3 generic strategies when entering a new market.
Cost Leadership
- Becoming a low-cost producer in the industry allows the company to lower prices to customers
Differentiation
- Create competitive advantage by distinguish their products on one or more features important
Focused strategy
- Target to a niche market
Relationship Between Business Process And Value chains
.
Once an organization chooses its strategy, it can use tools such as the value chain to determine the success or failure of its chosen strategy.
Value chain - views an organization as a series of processes, each of which adds value to the product or services for each customer.
Supply chain - a chain or series of processes that adds value to product and service for customer
Once an organization chooses its strategy, it can use tools such as the value chain to determine the success or failure of its chosen strategy.
Value chain - views an organization as a series of processes, each of which adds value to the product or services for each customer.
Supply chain - a chain or series of processes that adds value to product and service for customer
