Competitive Advantage
According to Michael Porter is the ability of a firm to outperform its rivals by delivering greater value to customers or creating comparable value at a lower cost.
What is competitive advantage?
The threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and industry rivalry.
What are the five forces that shape industry competition according to Porter?
Factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
What are the four main components of Porter’s Diamond Model?
Walmart offers products at lower prices through efficient supply chain management.
What is cost leadership as a competitive advantage?
The model is used to analyze the competitive forces within an industry and determine its attractiveness and profitability.
What is the Porter’s Five Forces model?
Cost leadership and differentiation are two basic types.
What are the two basic types of competitive advantage?
It examines the impact of the number of competitors in an industry.
What is industry rivalry?
They refer to the nature of home-market demand for the industry’s products or services, which can drive innovation and quality.
What are demand conditions?
Apple offers innovative and premium-quality products, like the iPhone, which are perceived as superior to competitors’ products.
What is differentiation?
BONUS! Tell us a joke!
Enjoy.
They can influence competitive advantage through factors such as factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
What can nations do?
It can reduce industry profitability by increasing competition, which forces prices down and increases costs for firms to maintain their market position.
How does the threat of new entrants affect industry profitability?
The presence of internationally competitive supplier industries and associated industries in a nation can drive competitive advantage by providing cost-effective inputs and fostering innovation.
What is the significance of "related and supporting industries" in Porter’s Diamond Model?
A company might build strong brand loyalty or increase economies of scale to create high entry barriers for potential new competitors.
How might a company leverage the "threat of new entrants" to maintain its competitive advantage?
A firm can use this model to assess the strengths of different nations in terms of factor conditions, demand conditions, related industries, and firm rivalry to identify where they might have a competitive advantage in expanding internationally.
What is the Diamond Model?
They refer to a nation’s position in factors of production such as skilled labor or infrastructure, which are necessary to compete in a given industry.
What are factor conditions?
Buyers with high _____ can demand lower prices or higher quality, which reduces the profitability of firms within the industry.
What is the bargaining power of buyers?
The way firms are created, organized, and managed, along with the nature of domestic rivalry, can strongly influence competitive advantage by encouraging innovation and efficiency.
How does "firm strategy, structure, and rivalry" contribute to a nation’s competitive advantage?
They promote research and development, protect intellectual property, or enhance infrastructure can strengthen the competitive advantage of industries.
What is government policy?
Bonus! Give us your comments about the class so far.
Thank you!
It can enhance national competitive advantage by creating an environment that supports innovation and competition through policies, regulations, and investments in education and infrastructure.
What is the role of the government?
The availability of substitutes, the relative price-performance of substitutes, and the switching costs.
What factors increase the threat of substitutes in an industry?
It explains competitive advantage based on the dynamic interplay between the components rather than relying solely on static factors like natural resources or labor costs.
What is Porter’s Diamond Model?
The automotive industry in Germany benefits from the strong presence of advanced engineering firms and high-quality parts suppliers, enhancing the competitiveness of German car manufacturers.
What are related and supporting industries?
Those like technology and globalization can alter the intensity of the five forces by changing the competitive landscape, creating new substitutes, lowering entry barriers, or shifting buyer and supplier power.
What are external factors?