Saturday, July 13, 2013

chapter 2

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.

-Competitive advantages are typically temporary because competitors often seek ways to duplicate the competitive advantage.  In turn, organizations must develop a strategy based on a new competitive advantage.






Buyer power – assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item
Supplier power – assessed by the suppliers’ ability to directly impact the price they are charging for supplies (including materials, labor, and services).
Threat of substitute products or services – high when there are many alternatives to a product or service and low when there are few alternatives from which to choose
Threat of new entrants – high when it is easy for new competitors to enter a market and low when there are significant entry barriers to entering a market

Rivalry among existing competitors – high when competition is fierce in a market and low when competition is more complacent

Buyer power – assessed by analyzing the ability of buyers to directly impact the price they are willing to pay for an item
-Buyer power can also be called customer power
•Calling buyer power customer power sometimes helps students understand the difference between buyer power and supplier power
•To reduce buyer power (and create a competitive advantage), an organization must make it more attractive for customers to buy from them than from their competition

Ways to reduce buyer power includeSwitching costs – costs that can make customers reluctant to switch to another product or service Loyalty program – rewards customers based on the amount of business they do with a particular organization


chapter 1

Chapter 1 – Business Driven Technology