Competitive Advantage

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Supplier Power

high when buyers have few choices of whom to buy from and low when their choices are many; Power of a supplier to be able to impact a price of a product.

Buyer Power

high when buyers have many choices of whom to buy from and low when their choices are few; the ability of buyers to directly impact the price of the product

Support Value Activities

higher up things such as firm infrastructure, human resource management, technology development, etc. An example of this is IT making a human resource structure that rewards good employees more efficiently and will reduce costs.

Entry Barrier

Is 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.

Competitive Advantage

Is a product or service that an organization's customers place a greater value on than similar offerings from a competitor.

Porter's 5 Forces

1. Buyer Power: Buyer has the power to reduce the prices, HIGH when there are multiple choices of whom to chose from 2. Supplier Power: Supplier's ability to influences the prices, high when buyers have FEW choices to choose from 3. Threat of Substitute Products or Services: High when there are MANY alternatives to a product/service 4. Threat of New Entrants: High when it is easy for a company to enter a new market 5. Rivalry Among Existing Competitors: HIGH when competition is fierce, low when competition is complacent

Compare the 3 generic strategies

1. cost leadership (broad market/low cost) 2. broad differentiation (broad market/high cost) 3. focused strategy (narrow market)

Supply Chain

All parties involved in making a new product. This can include people who produce the product and also the customers.

Why are competitive advantages temporary?

Because eventually, your competitors will come up with similar products

Describe the relationship between business processes and value chains

Business process (standardized set of activities) adds value to a company.

Value Creation

Creating value from doing certain tasks called business processes. Makes a company more competitive

Threat of New Entrants

Low when there are high barriers of entry into a new market.

First-Mover advantage

Occurs when an organization can significantly impact its market share by being first to market with a competitive advantage.

Supplier Power

Power of a supplier to be able to impact a price of a product; Is high when buyers have few choices of whom to buy from and low when their choices are many. It is converse of buyer power.

Primary Value Activities

Receive and store raw materials, Make the product or service, Deliver the product or service, and Market and sell the product or service Service after the sale. By having IT it will reduce the costs

Loyalty Programme

Rewards customers based on the amount of business they do with a particular organization. Can be used to trace customer purchases and recognize patterns

Switching Costs

The disadvantage that is placed on the customer when he/she switches companies. Are costs that can make customers reluctant to switch to another product or service. A switching cost doesn't need to have an associated money value.

Threat of Substitute Products

When there are many substitutes to a specific product, the threat is high; when there are few substitutes, the threat is low. If there is a high threat, the company has the risk of going bankrupt


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