Competitive forces can be occurred when existence of rivalry of competitors within its industry, new entrants, substitute products that may capture market share and also bargaining power of customers and suppliers. Due to these forces, corporate leader of firms must plan strategies to penetrate the market and to minimize the differentiation quality of their product compared with their competitors. Developing an effective strategy required that executives and corporate leader have the strategic insight and comprehensive understanding of the product-market domain (s) they operate within (Frank Huber, 2001).
The existences of new entrants will create new competition. Competitions not only exist within the similar industry but it is also can be happen within different industries which have similar functionality. For example industry in spectacles and contact lens. Both of them are sharing the mission of their product but their products are totally different. Bargaining power of customers will give high opportunities for customers to be demand in making choices, make price become cheap and increasing level of services and quality. It occurred such as when the products are widely available.
Firms should have competitive strategies such as cost leadership, differentiation strategy, innovation strategy, growth strategy and also alliance strategy to ensure they are not left behind by their competitors. Firms can use IT to implement the strategies by substantially reduce the cost of business process, develop unique new markets and integrate into other products or services. The competitive advantage can be achieved if the organizations able to develop an overall cost leadership without ignoring quality and service (Hooshang M. Behesti, 2004). He describe that the competitive advantage of being the low cost producer of a product is that even in strongly competitive markets, the firm will earn above average returns.
This chapter give me wide exposed about the competitive advantages. In positive views competitive will help us to develop ourselves and push us to think the effect for short and long term to ensure successful in our life.
Hooshang M.B. 2004. Gaining and sustaining competitive advantage with activity based cost management system
Frank H., Andreas H., Robert E. M. (2001). Gaining competitive advantage through customer value oriented management. MCB University Press.
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