~What is competitive advantages?
* A product or service that an organization's customer place a greater value on than similar offerings from a competitor.
* Unfortunately, CA is temporary because competitors keep duplicate the strategy.
* Then, the company should start the new competitive advantage.
* To attract people to buy our products or services.
Competitive intelligence is the process of gathering information about the competitive environment, including competitor's plans, activities and products to improve a company's ability to succeed.
Managers use three common tools to analyze competitive intelligence and develop competitive advantages including:
* The Five Forces
* The Three Generic Strategies
* Value Chain Analysis
1) The Five Forces :-
Michael Porter analyzes the competitive forces within the environment in which a company operates to assess the potential for profitability.
# Buyer Power
. If buyer power high, customers can force a company and its competitors to compete on price, which typically drives price down.
. to reduce buyer power by switching cost and loyalty programs.
. eg: used loyalty programs (Tesco card - being a members to get discount)
# Supplier Power
. The suppliers ability to influence the prices they charge for supplies.
. If supplier power is high, the supplier can influence the industry by:
-charging higher prices
-Limiting quality or services
-shifting cost to industry participants.
# Threat of New Entrance
. is high when there are many alternatives to a product or service
. then the company should practices best IT than other company.
# Threat of Substitute
. to extent that customers can use different products to fulfill the same need, the threat of substitute exists.
. For an example is electronic product with same function but different brands.
. Furthermore, switching cost to a cheaper one can make customer attract to buy the product.
# Rivalry among existence competitors
. high when competition to enter a market
. So, the company must do something different that can make customers more attracted.
. For instance is a new bank must offers online paying bills.
2) The Three Generics Strategies
i- Cost leadership
~becoming a low-cost producer in the industry allows the company to lower prices customers.
~competitors with higher costs cannot afford to compete with the low-costs leader price.
ii- Differentiation
~create competitive advantage by distinguish their products on one or more features important to their customers.
~Example is i-care by Proton
iii) Focused strategy
~Target to a niche market
~Concentrate on either cost leadership or differentiation.
3) Value Chain
~to identify these competitive advantages, Michael Porter created value chain analysis, which views a firm as a series of business processes that each add value to the product or service.
That all for today,, thank you :)
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