Chapter 2 Identifying Competitive Advantages

CHAPTER 2 

2.1    Explain why competitive advantages are typically temporary

2.1.1 Explain why competitive advantages are typically temporary

§  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.

2.2    List and describe each of the five forces in Porter’s Five Forces Model

2.2.1 List and describe each of the five forces in Porter’s Five Forces Model

§  Buyer power – high when buyers have many choices of whom to buy from and low when their choices are few, Supplier power – high when buyers have few choices of whom to buy from and low when their choices are many, 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

2.3    Compare Porter’s three generic strategies

2.3.1 Compare Porter’s three generic strategies

Organizations typically follow one of Porter’s three generic strategies when entering a new market.  (1) Broad cost leadership, (2) broad differentiation, (3) focused strategy.  Broad strategies reach a large market segment.  Focused strategies target a niche market.  Focused strategies concentrate on either cost leadership or differentiation

2.4    Describe the relationship between business processes and value chains

2.4.1 Describe the relationship between business processes and value chains

A business process is a standardized set of activities that accomplish a specific task, such as processing a customer’s order.  The value chain approach views an organization as a chain, or series, of processes, each of which adds value to the product or service for each customer.  The value chain helps an organization determine the “value” of its business processes for its customers.