Identify Competitive Advantage ( Chapter 2 )

IDENTIFYING COMPETITIVE ADVANTAGES

• Develope new product
• Entering new market
• Increasing costomer loyalty
• Attracting new customer
• Increasing sales
• Decreasing costs

THE 5 FORCE MODEL - EVALUATING INDUSTRY ATTRACTIVENESS

MICHAEL PORTER

• Knowledgeable customer can force down price by pitting rivals against each other
• Influential suppliers
• Competition can steal customer
• New market enterence can steal potential investment capital
• Subsitute products can steal customers 

Porter's Five Forces Model

• Barriers to Entry : The power of competitors to enter a market.
• Supply Power : The power of supplies to drive up prices of materials.
• Buyer Power : The power of customers to drive down prices.
• Threat of Substituted : The power of customers to purchase alternatives.

THE 3 GENERIC STRATEGIES - CHOOSING A BUSINESS FOCUS

• Broad cost leadership
• Broad differentiation
• Focus strategy

Porter's Three Generic Strategies

VALUE CHAIN ANALYSIS - EXECUTING BUSINESS STRATEGIES

Michael Porter created value chain analysis, which views firm as a series of business process that each add value to the product of service.Value chain analysis is a useful tool for determining how to create the greatest possible value for customer. The goal is to identify processes in which firm can add value for the customer and create the competitive advantage for itself, with a cost advantage or product differentiation. 

The Value Chain group a firm's activities into two categories, primary value activities and support value activities.

The Value Chain