Identifying and Implementing Competitive Advantage

1. 1. Porter's Five Forces
   1. <----------3.Rivalry Among Existing Competitors------------>

      Annotations:

      • What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength. - 
      1. Threat of Substitute Products or Services \/

         Annotations:

         • This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.
         1. How easy will it be for other people to enter my market
            1. The easier it is for competitors to swoop in the harder it will to find a profit
         2. Switching Costs
      2. /\ 4. Threat of New Entrants

         Annotations:

         • Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it. 
         1. How easy it is for customers to find another to get what I am offering
            1. the EASIER it is the LESS power I have
         2. Entry barrier
            1. – a product or service feature that customers have come to expect from organizations in a particular industry and must be offered by an entering organization to compete and survive
      3. 1.Supplier Power--->

         Annotations:

         • Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are. - See more at: http://www.mindtools.com/pages/article/newTMC_08.htm#sthash.8m1L9ELc.dpuf
         1. Bargaining power of suppliers
            1. How easy it is for them to drive up prices
               1. if you have ALOT of options to choose from then Supplier Power is LOW
               2. FEW suppliers means FEWER options: SUPPLIERS HAVE MORE POWER OVER YOU
         2. B2B

            Annotations:

            •    –Business-to-Business (B2B) marketplace – an Internet-based service that brings together many buyers and sellers  •Auctions and reverse auctions   
            1. Just know that the internet is a great way to bring buyers and sellers together. B2B decreases supp power
      4. <-------2. Buyer Power

         Annotations:

         • Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you. 
         1. Bargaining power of channels and end users
            1. How easy it is for customers to drive down prices
               1. A FEW powerful customers then THEY will be in control
               2. The MORE customers the MORE power
         2. loyalty programs are a common way to reduce buyer power
      5. How many competitors are there?
         1. Are their products or services as good as mine? Or, can I create a situation where I have a lot of competitive advantage
   2. Used to determine the relative attractiveness of an idustry
2. 2. Porters 3 Generic Strategies: Creating a Business Focus

1. What can we do better than anyone else and what kind of value does that deliver to a customer?
2. Value
   1. Value proposition: (customer focused)

      Annotations:

      • – Products and services that an organization’s customers place a greater value on than similar offerings from a competitor. Why customers buy from you instead of others
   2. Competitve Advantage: (Organization focused)

      Annotations:

      • The ability to do this better or cheaper than competitors

Annotations:

• – occurs when an organization can significantly impact its market share by being first to market with a competitive advantage

1. Does not last unless there are distinctive organizational capabilities and/or barriers to entry

1. 3.Value chain
   1. support activities are ones that support the business
   2. Primary deals with actually making the product
      1. In order to find if we need to change our percentages we survey customers
   3. To achieve a competitive advantage, the firm must perform one or more value-creating activities in a way that creates more overall value than do competitors
   4. , the competitive advantage decision is to: Target high value activities and further enhance their value Target low value activities and increase their value a lot Perform some combination of the two
   5. Think about how they relate because suppose if customers are wanting to buy only american made products. Than that would affect supplier power force and buyer power the raw materials and make product of the value chain.