COMPETITIVE ADVANTAGE:
- A product or service that an organization's customers
place a greater value than similar offerings from a competitor.
- CA is a temporary because competitors keep duplicate the
strategy.
THE PORTER'S FIVE FORCES MODEL:
1. Buying power:
- high - when a buyers have many choices of whom to buy.
- low - when their choices are few.
- to reduce buyer power - an organization produce attractive product compared the competitors.
- example: loyalty program in travel industry (i.e. rewards on free airlines tickets or hotel stays)
2. Supplier power:
- high - when buyers have few choices of whom to buy from.
- low - when their choices are many
- example: business to business (B2B) marketplace - private exchange allow a single buyer to posts it needs and then open the bidding to any supplier who would care to bid.
3. Threat of Substitute products & services.
- high - when there are many alternatives to a product or service.
- low - when there are few alternatives from which to choose.
- an organization would like to be on a market in which there are few substitute of their products or services.
- example: electronic product - same function different brands
4. Threat of New Entrants
- high - when it is easy for new competitors to enter a market
- low - when there are significant entry barriers to enter a market
- best practices of IT, for example: new bank must offers online paying bills, acc, monitoring to compete.
5. Rivalry Among Existing Firms.
- existing competitors are not much of threat because each firm has found its 'niche'
- example: the airline industry faces serious threats from airlines operating in bankruptcy, who do not the debts while slashing fares against those healthy airlines who do not pay on debts. (MAS & AIRASIA)
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