Chapter Two

Identifying Competitive Technology.


1. Competitive advantages are typically temporary.

-Competitive advantage a product or service that an organization's customers place a greater value on than similar offerings from a competitor.
-Competitive is temporary because competitors keep duplicate the strategy.
-The company should start the new competitive advantage.

2. The five forces in Porter's Five Forces Model.

a)Buyer power.
-High when buyers have many choices of whom to buy.
-Low when their choices are few.
-To reduce buyer power to and create competitive advantage an organization must make it more interesting and attractive to buy form company not from the competitors.
-Best practices of IT - based.
 - Loyalty program in travel industry (example: rewards on free airlines tickets or hotel stays)

b)Supplier Power.
-High when buyers have few choices of whom to buy from.
-Low when their choices are many.
-Best practices of IT to create competitive advantage.
-Example: 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 Reverse auction is an auction format which increasingly lower bids.

c)Threat for substitute products and services.

-High when there are many alternatives to a product or service.
-Low when there are few alternatives from which to choose.
-Ideally, an organization would like to be on a market in which there are few substitutes of their product or services.
-Example, electronic product -same function different brands.

d)Threat of new entrants.

-High when it is easy for new competitors to enter a market.
-Low when there are significant entry barriers to entering a market.
-An entry barrier is a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival.
-For example, a new bank must offer its customers an array of MIS- enabled services, including ATMs, and online bill paying ( Maybank and CIMB)

3. The three Porter's generic strategies.

Porter's three generic strategies.

a)Cost leadership 

-Becoming a low-cost producer in the industry allows the company to lower prices to customers.
-Competitors with higher costs cannot afford to compete with the low-cost leader on price.

b)Differentiation

-Create competitive advantage by distinguishing their products on one or more features important to their customers.
-Unique features or benefits may justify price differences.

c)Focused Strategy 

-Target to a niche market.
-Concentrates on either cost leadership or differentiation.

4. Value Chain Analysis - Executing Business Strategies.

a)Supply chain.
-A chain or series of processes that adds value to product & service for customer.
-Add value to its products and services that support a profit margin for the firm.