Anis Syahirah :Information Technologies In Business (mgt 300): CHAPTER 2

IDENTIFYING COMPETITIVE ADVANTAGE

Competitive advantages is a product or service that an organization's customers place a greater value on than similar offerings from a competittor. competitive advantage can be devided into three parts which is:

Porter's Five Force Model -

[ Buyer power] = in order to reduce buyer power, to create competitive advantage and as well to prevent customers from buying the competitors products, an organization need to be creative to attract those customers. Loyalty programs are best practice to reduce buyer power. Buyer power enable customers to grow large and powerful as result of heir market share , also many choices of whom to buy from and low when it comes to limited items.

[Supplier power] =

If supplier power is high the supplier can influence the industry by charging higher prices, limiting quallity services and shifting costs to industry.

[Threat of Substitute Products or Services] = It is high when there are many alternatives to a product or service and it is low when there are a few alternatives from which to choose. the threat of substitute are customers tend to use different product to fulfill the same needs and customers also tend to switch to another product because of the costs (switching cost)

[ Threat of New Entrant] = it is high when it is easy for new competitors to enter a market. It is low when there are significant entry barriers to entering a market. Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered the same for survival. E.g: a new bank must offer its customers a service like any other bank including online banking, bill payment through online services and many more.

[ Rivalry Among Existence Competitiors] = it is high when competition is fierce in a market, It is low when competition is more complacent. the best practice of IT in this are Wal- mart and its suppliers are using IT enable system for communication and track product at aisles by effective tagging system and reduce cost by using effective supply chain. Existing competitiors are not much of the threat: typically each firm has found its niche. However , changes in in management can give rise to serious threats to long term survival from existing firms.

Porter's 3 Generis Strategies

[ 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.

[ Differentation] = Create competitive advantage ny distinguishing their products on one or more features important to their customers. Unique features or benifits may justify price difference and stimulate demand. E.g: i-care by Proton

[ Focused Strategy] = Target to niche market. Concentrates om either cost leadership or differentation.