Strength: 1) Product range 2) Brand name 3) Product quality
| Weakness: 1) Inventory cost 2) Unstable supply 3) Labor retentions
| Opportunity: 1) High growth 2) Low Inflation 3) Political certainty
| Threat: 1) Strong competition 2) Regional disparity 3) Reduced tax benefits
| Sources of competitive advantage: Market position:
-The internal rivalry:
-Identify competitors: -firms making the same product or products to the same customers at a similar products to the same customers at similar prices, -firms making products that supply the same service. -Measure the intensity of rivalry: -number of existing competitors, -the industry growth rate, -the degree of product differentiation, -industry cost structure, -exit barriers, -excess capacity.
-Deter the new entrants:
-the established brand/reputation
-existing relationships with buyers and distributors
-location advantages; access to raw materials, gov favourable policies. -the experience curve as an entry barrier; the learning effect, -scale economies.
-Threat of substitutes:
-substitutes vs complements;
substitutes increase the intensity of rivalry; DVD adds pressure on all existing VCR manufacturers
substitutes increase the bargaining power of buyers
-seemingly strong substitutes may pose little threat if they are prices too high
-Bargaining power of suppliers:
-suppliers can squeeze industry profits if;
-suppliers are concentrated and there are few substitutes (monopolise/have greater bargaining power)
-suppliers pose a threat of forward integration (becoming distributor/retailer downstream)
-their customers are locked into relationships with them; highly specialised investment leads to high switching costs -supplier power should not be taken synonymous (equal) with the importance of an input to a firm
-Bargaining power of buyers:
-buyers have strong bargaining power if;
-buyers are concentrated or purchase in large volume
-buyers pose a threat of backward integration (becoming a supplier upstream)
-the products are standard or undifferentiated (they can switch/have multiple options)
-sellers make high transaction-specific investments
-buyer power is related to the intensity of internal rivalry; the higher the intensity of internal rivalry, the stronger the buyer power
-sources of competitive advantage: resources and capabilities;
-resources; firm-specific assets: the firm has access to, but don’t have to own
-tangible; -plant capacity, information systems, - patents and trademarks, -buyers, suppliers, partners.
-intangible; -brand-name, reputation, -org culture, -staff morale, customer loyalty, supplier commitment
-capabilities: activities that a firm does better than competitors; arising from using firm specific resources.
-Resource-based view (RBV): RBV of the firm;
-a heterogeneous (different) bundle of resources and capabilities -each firm is different and has its unique character -enables a firm to compete in the marketplace.
-resources and capabilitiescore competencies (firm specific, difficult to imitate and have developed over time)competitive advantage -the sustainability of a firms competitive advantage; depends on how costly it is for other firms to obtain the same resources and capabilities.
-The basis of sustainable competitive advantage: RBV
-How rare/valuable is the resource:
-value: only value-adding resources can possibly lead to competitive advantage. but what was previously a value-adding resource and capability may become obsolete. -rare: resource heterogeneity (different); the basic condition of competitive advantage: scarce. resources that are valuable but not rare are unlikely to become sources of competitive advantage.
-How mobile/tradable is the resource:
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