A business strategy is a leadership plan that achieves a specific set ao goals or objectives.
COMPETITIVE ADVANTAGE
A feature of a product or service on which customers place a greater value thansimilar offerings from a competitor.
FIRST-MOVER ADVANTAGE
Occur when an organization can significantly impact its market share by being first to market with a competitive advantage.
COMPETITIVE INTELLIGENCE (ENVIRONTMENTAL SCANNING)
The process of gathering information about the competitive environment, including copetitor's plans, activities, and products to improve a company's ability to succeed
There are THREE COMMON TOOLS which are:
- Porter's Five Forces Model
- Porter's Three Generic Strategies
- Value Chains
The Five Force Model
Porter’s Five Forces Model determines the relative attractiveness of an industry.
BUYER POWER
The ability of buyer they must pay for an item.
Buyer power is High when buyers have many choices of whom to buy from and low when their choices are. Low when their choices are few.
Two ways to reduce boyer power:
LOYALTY PROGRAM- reward customers based on the amount of businesss they do with a particular organization.
SWITCHING COST- costs that can make customers reluctant to switch to onether product or service,
SUPPLIER POWER
Suppllier ower is High when buyers have few choices of whom to buy from and low when their choices are many and Low when their choices are many
Supply chain – consists of all parties involved in the procurement of a product or raw material
TREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Treat of sabtitute product ir servicrs is High when there are many alternatives to a product or service and Low when there are few alternatives from which to choose
TREAT OF NEW ENTRANTS
Treat of new entrants is 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
Rivalry among existing competitors is High when competition is fierce in a market and Low when competition is more complacent.
The Three Generics 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
DIFfRENTIATION
Create competitive advantage by distinguishing their products on one or more features important to their customers
Unique features or benefits may justify price differences or stimulate demand
FOCUS STRATEGY
Target to a niche market
Concentrates on either cost leadership or differentiation
Relationships Between Business Process and Value Chain
The Value Chains - Targeting Business Process
Supply Chain - a chain or series of processes that adds value to product & service for customer
Add value to its products and services that support a profit margin for the firm
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