Digesting Chapter Two

  Good day everyone, at the last lecture we have completed the second chapter: Identifying Competitive Advantages. In this chapter we were explained why competitive advantages are typically temporary, described each five of the forces in Porter’s Five Forces Model, comparing all the generic strategies and described the relationship between business processes and value chain.  In order for a leader to run a company these days, the leader must ensure that all of his employee are heading in the right direction and completing their goals and objectives.

Identifying Competitive Advantages.

   From what I understand, competitive advantages are a piece of product or service that customer place a greater value than they do on similar offerings from competitor. Competitive advantages provide the same product or service either at a lower price or with added value that can fetch the best price. However, competitive advantages are typically temporary as competitors often seek ways to compete. Another advantage is First mover advantages which means when an organization can significantly influence its market share by being first to market with a competitive advantage. For example, FedEx created a first mover advantage by developing its customer self-service software that allows people to request parcel pickups and track parcels online. Other company quickly began building their own online company. Also, organizations watch their competition through Environmental scanning which means the acquirement and analysis of events and trends in the environment external to an organization.

The Five Forces Model

   In this model, it formally analyses the competitive forces within the environment in which a company operates to assess the possibility for profitability.

The Three Generic Strategies

Organization follows this strategic when entering a new market.

o   Broad market and low cost – The business strategy is to be low cost provider of goods for the cost conscious consumer.

o   Broad market and high cost – its business strategy offers a variety of specialty and upscale products to affluent consumers.

o   Narrow market and low cost – Offer specific product at low prices.

o   Narrow market and high cost – its business strategy allows it to be a high cost provider of premier product to affluent consumer.

Value Creation

Lastly, once an organization chooses its strategy, it can use tools such as the value chain to determine the success or failure of its chosen strategy.

Thank you for reading! Hope you enjoyed it and understood what I wrote. Till next chapter.