Chapter 2 : Identifying Competitive Advantage

• Competitive advantage - a product or service that an organization's customers place a greater value on than similar offerings from a competitor
• The five forces model
• buyer power 
• supplier power 
• threat of substitute products or services
• threats of new entrants
• rivalry among existing companies

The five forces model

1. Buyer power - to reduce the buyer power, an organization must make it more attractive to buy from the company not from the competitors
2. Supplier power - suppliers ability to influence the prices they charge for supplies
3. Threat of substitute products and services - an organization would like to be on a market which there are few substitutes of their product or services
4. Threat of new entrants - entry barriers is a product or service feature that customers have come to expect from organizations and must b offered by entering organization to compete and survive
5. Rivalry among existence competitors - high when competition is fierce in a market and low when competitors are more complacent

• The three generics strategies
• cost leadership - becoming a low-cost producer in the industry allows the company to lower prices to customer
• differentiation - create competitive advantage by distinguish their products on one or more features important to their customers
• focused strategy - target to a niche market
• Supply chain - a chain or series of processes that adds value to product and service for customer

Supply Chain diagram