CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGE

CHAPTER 2: IDENTIFYING COMPETITIVE ADVANTAGE




                                                                    

                                                                 

1.   BUYER POWER

             # Hight - When buyers have many choices of whom to buy.

             # Low   - When their choice a few.

             # To reduce buyer power ( and create competitive advantage), an organization must                    make it more attractive to buy from the company not from the competitors.

             # Best practice of IT based

    

     2.   SUPPLIER POWER

             Hight - When buyers have a few choice of whom to buy from.

             

             Low    - When their choice are many.
           
             Organizations that are buying goods and services in the supply chain can create a competitive advantages by locating alternative supply sources (decreasing supplier power) through B2B marketplaces

1) Business to Business (B2B) marketplace - an internet based service that brings together many buyers and sellers.

Two types of business to business (B2B) marketplaces

1)  Private exchange - a single buyer posts its needs and then opens the bidding to any supplier who would care to bid

2) 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.

Threat of Substitute Products or Services

Threat of Substitute Products or Services - high when there are many alternatives to a product or service and low when there are few alternatives from which to choose

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

Threat of new entrants

Threat of new entrants - high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market

Entry barrier - a product or service feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive.

Rivalry among Existing Competitors

Rivalry among Existing Competitors - high when competition is fierce in a market and low when competition is more complacent.

Although competition is always more intense in some industries than in others, the overall trend is toward increased competition in just about every industry.

The Three Generic Strategies - Creating a Business Focus

Organizations typically follow one of Porter's three generic strategies when entering a new market