Competitive Advantage

Five Forces Model

Five Forces Model consist of:
1) Threat of new entrants
2) Bargaining power of customers
3) Treat of substitutes
4) Bargaining power of suppliers
5) Rivalry among competitors

Buyer Power

• High - when buyers have many choices of whom to buy.
• Low - when their choices are few.
• To reduce buyer power (and create competitive advantage), an organization must make it more attractive to buy from the company not from the competitors. 
• Best practices of IT-based. 

Supplier Power

• High - when buyers have a few choices of whom to buy from.
• Low - when their choices are many.

Threat of Substitute Products & Services

• High - when there are many alternatives to a product or service.
• Low - when there are many few alternatives from which to choose.
• Ideally, an organization would like to be on a market in which there are few substitutes of their product or services.

Threat of new entrants

• High - when it is easy for new competitors to enter a market.
• Low - when there are significant entry barriers to entering a market.
• Entry barriers is a product or service feature that customers have come to expect from organizations and must be offered by entering organization to compete and survive.
• Best practices of IT.

Rivalry among existence competitors

• High - when competition is fierce in a market.
• Low - when competition is more complacent.
• Best practices of IT.

The end. Thank you.