CHAPTER 2 : IDENTIFYING COMPETITIVE ADVANTAGE

What is competitive advantage?

• A product or service that an organization's customers place a greater value on than similar offerings from a competitor.

Three common tools used in industry to analyze and develop competitive advantages include:-

- Porter's Five Forces Model

- Porter's three generic strategies

- Value chains

 

THE FIVE FORCES MODEL

1. Buyer power
2. Supplier power
3. Threat of substitute products or services
4. Threats of new entrants 
5. Rivalry among existing companies

 THE THREE GENERICS STRATEGIES 

1. Cost leadership 
2. Differentiation 
3. Focused strategy 

 THE VALUE CHAINS

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