Note for Chapter 2..

After I learning this chapter last week, what the main point that I understand?? The reason why competitive advantages are typically temporary. It is because competitors often seek ways to duplicate the competitive advantage. Before that what the meaning of competitive advantage? It is a product or service that an organization’s customers place a greater value on than similar offerings from a competitor. Besides, the five forces in Porter’s Five Forces Model there are:

·         Buyer power = bargaining power of channels and end users. If the buyer power is high, they can make a company or competitors to reduce the prices. Factors the assess buyer power based on no. of customers, size of order, sensitivity of price and others.

·         Supplier power= bargaining power of suppliers. If supplier is high the supplier can directly influence the industry by charging higher prices, limiting quality or services and shifting costs to industry participants.

·         Threat of Substitute Products or Services = is high when there are many alternatives to a product or service and low when there are few alternatives from which to choose. For examples, airline and firefly industry. The airline industries have many choices of traveling inside and outside of Malaysia compared with firefly industry only have choice of traveling in Malaysia.

·         Threat 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. For example, insurance company.

·         Rivalry among existing competitors = is high when competition is fierce in a market and low when competition is more complacent. Product differentiation occurs when all competitors or companies compete to produce or develop products that have unique function for attracts and influences customers. Companies use product differentiation to reduce a rivalry.

                          Example of the competitive advantages product

That’s all that I can share my little knowledge about identifying competitive advantages with all of you. Thanks to you all because take just a little minute to read my note. Bye!!!  :)