Value investors search for companies that are bargains. In order to avoid purchasing a value trap one of the factors we search for is sustainable competitive advantages.
Information Systems and Strategy, Session 3, Michael Porter and Competitive Advantage [Return to Session 3 ] Porter and Competitive Advantage The information revolution and the tales of competitive advantage have certainly altered how managers throughout business see the role of Information Systems.
Where it was once perceived to be only part of the operating of a business, there is now an increasing recognition of the value of information. Robson,p. Porter's ideas about competitive advantage can be used to examine how Information Systems affect the performance of a business organization by changing the relationships within the five forces that shape its competitive environment.
The Concept of Value and Competitive Advantage Porter's analysis of the competitive advantage stems from two fundamental questions. These are firstly, how attractive, from the viewpoint of long-term profitability, are different types of industry, and secondly what is an enterprises relative Airasia sustaining competitve advantage essay in that industry?
He bases his analysis on the twin concepts of value and competitive advantage. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset higher prices.
Creating value for buyers that exceeds the cost of doing so is the goal of any generic strategy.
Value, instead of cost, must be used in analyzing competitive position Porter postulates two basic types of competitive advantage: These two basic types of competitive advantage, combined with the scope of the activities open to a particular firm, lead to three basic strategies for pursuing competitive advantage: Cost leadership Cost leadership is intuitively the easiest strategy to understand.
The firm sets out to become the lowest cost producer in its particular industry rather than one of several firms vying for that position.
We encourage you to apply what you have learned about competitive advantage to your career. Spend a few minutes looking at yourself to discover your own competitive advantage. If you have previous work experience, these questions should be from a work environment perspective. According to Porter () all generic competitive strategies have different way of cresting sustainable competitive advantage. And a company must always choose a strategy or else it will be stuck in the middle without coherent strategy (Acquaah & Yasai – Ardekani, ). Strategy Analysis of Harley Davidson 1. 25th March Devendra Bhandari Saliha Sahin David Huckschlag Amani Alkaddah 2. Outline 1. Harley–Davidson at a Glance 2. Harley–Davidson’s Strategy 3. Comparison of Harley-Davidson‘s and Honda‘s Resources and Capabilities 4. Establishing Competitive Advantage 5.
To be a cost leader the company must do more than simply move down the learning curve. It must seek out and exploit every source of potential cost advantage. Typically, cost leaders sell a basic product or commodity and are concerned with pursing economies of scale and absolute cost advantages.
While the product may be relatively unsophisticated, the company must comply with the industry norms i.
A cost leader must therefore maintain some degree of parity with its competitor's performance in other areas while out performing them based on price.
Differentiation The second generic strategy is differentiation. Here a firm seeks to be the best performer in its industry grouping along some dimension or dimensions of the product or service other than cost. Its singular position will then be rewarded by a premium for its distinctive product or service.
The premium is paid for the company's uniqueness, although the company must also maintain some degree of parity with its competitors cost levels in order that the cost of "uniqueness" does not begin to exceed the premium that the customer is prepared to pay. Unlike cost leadership, several different firms can simultaneously pursue successful differentiation strategies in the same industrial sector - if sufficient scope exists.
Focus This strategy is not based on the selection of desirable attributes for a product or service across the whole of an industry grouping but upon the selection of a particular segment or group, within the industry as a whole, which is to be targeted, i.
A company whose strategic advantage lies in focus will select its niche and, having found it, will tailor its strategy specifically to serve the needs of that particular client group. The focuser seeks competitive advantage in its own segment, although it need not possess an overall competitive advantage.
To be successful the focuser must exploit the under-performance of its more broadly based competitors in that niche based either on cost or of differentiation. Each strategy is a fundamentally different approach to creating and sustaining a competitive advantage.
Usually a firm will need to make a choice about which it will pursue. Implementing differentiation and cost leadership strategies simultaneously is usually impossible for a company. For example, it is difficult to be a cost leader while pursuing a differentiation strategy because differentiation costs money.
Although simply reducing costs may not adversely effect differentiation, a cost leader will eventually reach the point where pursuing a cost advantage will inevitably mean a sacrifice of scope.OE is a competitive advantage: it translates to increased production flexibility, improved customer responsiveness, and cost minimization involving all aspects of business operations.
This is a presentation about business analysis of Harley Davidson. To illustrate what business model Harley Davidson use and the strategy of their business model, it includes comparison of Honda business value chain, risk faced by Harley, and solutio.
AirAsia Company Analysis airline industry for the coming 5 to 15 years.
Presently, Air Asia using the low cost strategy to compete with the competitors to gain more market share either in local market or international market.5/5(5).
Sustainable business advantage is the policies put in place to maintain and improve any enterprise’s competitive position in the organizational market.
This is an advantage which enables an enterprise to survive over a long period of time. This is the same scenario when it comes to professional sports. Apple Inc.'s Sustainable Competitive Advantages Apple's closed ecosystem and brand appeal will protect its core iPhone business from hungry rivals.
Leo Sun May 18, at PM. (Garud and Kumaraswamy ) Resources can create and sustain competitive advantages, however only a few of the many possible resources generate sustained competitive advantages. (Wade and Hulland ) Barney () altered the VRIO -- value, rarity, imitability and operability -- framework of firm resource attributes.