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Chapter 2
Competitive
Advantage
Agenda
•
•
•
•
•

Introduction
Competitive advantage
Porter ’s Model
Competitive advantage using e-commerce
Summary
The Competitive Environment
Threat of
New
Entrants
Bargaining Power
of Suppliers
Rivalry Among
Existing
Competitors
Threat...
Competitive Strategy?
• To survive requires the competitive
positions not less than the other company
within its market se...
Strategic Information Systems
• Any kind of information system that uses
information technology to help an organization
ga...
Porter’s Competitive Forces Model
To survive and succeed, a business must
develop and implement strategies to effectively
...
Porter’s Model of Competitive Forces
Porter’s Five Forces
Model of Competition
Threat of
Threat of New
New
Entrants
Entrants

Bargaining
Power of
Suppliers

Ri...
Threat of New Entrants
• The ease with which a new company or a company
in a different product area can enter a given trad...
Threat of substitution
• It’s a threat to a existing players where a new
product becomes available that supplies the same
...
Bargaining power of buyers
• There are number of competitors in the market or a
surplus of supply the buyer is in a strong...
Bargaining power of Suppliers
• E-commerce used to reshape the supply chain.
• Organization directly deal with small trade...
Bargaining power of supply
• The organization always trying to get adequate price
from its buyer will be looking to get fa...
Competition between Existing
Players
• The competition is to get the buyers and to trade at a
price that produces an accep...
E-commerce for competitive
advantage
Force

System

Competitive Advantage

New Entrants/
Substitution

Internet
E-Commerce...
Review
•
•
•
•

Competitive environment
Competitive Strategy
Strategic Information system
Porter competitive Forces

16
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1 hrly eb ch 02 competitive advantage

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1 hrly eb ch 02 competitive advantage

  1. 1. Chapter 2 Competitive Advantage
  2. 2. Agenda • • • • • Introduction Competitive advantage Porter ’s Model Competitive advantage using e-commerce Summary
  3. 3. The Competitive Environment Threat of New Entrants Bargaining Power of Suppliers Rivalry Among Existing Competitors Threat of Substitutes Bargaining Power of Customers
  4. 4. Competitive Strategy? • To survive requires the competitive positions not less than the other company within its market sector. • Technology can change the way businesses compete.
  5. 5. Strategic Information Systems • Any kind of information system that uses information technology to help an organization gain a competitive advantage, reduce a competitive disadvantage, or meet other strategic enterprise objectives.
  6. 6. Porter’s Competitive Forces Model To survive and succeed, a business must develop and implement strategies to effectively counter the: – Rivalry of competitors within its industry – Threat of new entrants into an industry and its markets – Threat posed by substitute products which might capture market share – Bargaining power of customers – Bargaining power of suppliers
  7. 7. Porter’s Model of Competitive Forces
  8. 8. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Power of Suppliers Rivalry Among Competing Firms in Industry Threat of Substitute Products Bargaining Power of Buyers
  9. 9. Threat of New Entrants • The ease with which a new company or a company in a different product area can enter a given trade sector. • Barrier to entry into market include the need of capital, knowledge and skills. • IT can be barrier to entry to a given market. Ether existing players in the sector are well or the converse is that development of IT may leave existing players. • Examples: Internet bookshops like amazon.com compare to traditional bookshops, Internet banks compare to branch bank.
  10. 10. Threat of substitution • It’s a threat to a existing players where a new product becomes available that supplies the same function as the existing product or services. • Example: replacing of glass bottles by plastic alternative in packaging industry. • IT industry has itself substituted of many products. • Example: replacement of typewriter by the word processor, downloaded music from the artist’s web site being substitute for conventional supply chains. •
  11. 11. Bargaining power of buyers • There are number of competitors in the market or a surplus of supply the buyer is in a strong position to bargain for a low price. • The braded products are defensive that the store will feel obliged to stock because customers expect it. Example: KFC • ICT facilitate a level of service that will keep the customer loyal. • Examples: short cycle times, quick response supply, and reliable services enabled by E-commerce technology.
  12. 12. Bargaining power of Suppliers • E-commerce used to reshape the supply chain. • Organization directly deal with small trade and members of the public using e-commerce that replacing the intermediaries. • Competitive advantage, in all three categories, can be achieved using e-commerce for direct sale. • This process of disintermediarisation can save cost of distribution, allow an organization to differentiate its products or focus its attention on selected segments of the market.
  13. 13. Bargaining power of supply • The organization always trying to get adequate price from its buyer will be looking to get favorable terms from its own suppliers at the nest stage along the value chain. • For supplier, the strategies of price and differentiation such as branding or quality of services give a strong competitive position. • Trade electronically is the factor in the quality of service and now it’s the requirement from the buyer organization.
  14. 14. Competition between Existing Players • The competition is to get the buyers and to trade at a price that produces an acceptable profit. • Competition won by the generic competitive advantage of price, differentiation or focus. • The use of E-commerce: – To reduces the administration costs of trading. – To reduce stockholding cause to increase logistic efficiency and greater reliability of supply. – To meet the requirements of trading partner that trade is conducting electronically. – To differentiate the product or services from the competitors. – To disintermediarisation. – To provide new market or service.
  15. 15. E-commerce for competitive advantage Force System Competitive Advantage New Entrants/ Substitution Internet E-Commerce •Reduces entry cost •New sales channel •New service opportunity Suppliers (& Trading Buyers) E-commerce Logistics (EDI) •Cost reductions •Quick response •Lockin Buyers (Consumers) Internet E-commerce •New sales channel •Disintermediarisation •Customer Information Competitive Revelry E-commerce •Cost leadership •Differentiation •Focus
  16. 16. Review • • • • Competitive environment Competitive Strategy Strategic Information system Porter competitive Forces 16

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