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20 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Porter’s 5 forces
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Threat of Entry
Threat of Substitutes Buyer Power Supplier Power Degree of rivalry (middle) |
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Threat of entry sub-points
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Capital requirements
Absolute cost advantage Access to channels of distribution Legal and regulatory barriers Retaliation |
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Threat of substitutes sub-points
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Inclination to substitute
Switching Costs |
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Buyer Power sub-points
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Concentration
Forward Integration Cost to buyers |
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Supplier Power sub-points
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Supplier Concentration
Firm's switching Costs Firm's ability to backward integrate Commodity Products Concentrated purchasers Product is essential to firm |
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Degree of Rivalry sub-points
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Diversity of competitors
Excess capacity Exit barriers Economies of scale Fixed to variable costs |
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Why resource based approach?
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-Resources and capabilities are the engine of profitability
-Need to evaluate resources and capabilities and determine whether or not they generate profit on the bottom line |
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How do you identify the brand advantage?
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How much more people are willing to pay for the brand product
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The McKinsey Value Chain
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Technology → Product Design → Manufacturing → Marketing → Distribution → Service
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Porter Value Chain - Primary Activities
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Primary Activities:: Inbound Logistics → Operations → Outbound Logistics → Marketing & Sales → Service
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Porter Value Chain: Support Activities
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-Firm Infrastructure
-Human Resource management -Technology development -Procurement |
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Framework for analyzing resources and capabilities
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Identify very specifically the capability that that resource generates
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External Sources of Competitive advantage
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-Customer demand shifts
-Changing prices -Technological change -Some are faster & more effective at making change |
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Internal Sources of Competitive advantage
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-Greater creative & innovative capabilities
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Sources of competitive advantage
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Cost & Differentiation
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Definition of differntiation
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Providing something unique that is valuable to the buyer beyond simply offering a low price
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Sources of differentiation
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Value added activities
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Certain types of activities
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Drivers of cost advantage
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- Economies of scale
- Economies of Learning - Production Techniques - Product Design - Input Costs - Capacity Utilization - Managerial/Organizational Efficiency |
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Key Stages in Applying the Value Chain to Cost Analysis
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- Find all value activities
- Assign all costs to each part of the value chain - Identify cost drivers for each value activity on the value chain - Identify Linkages |
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Three tests for core competence
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- Potential access to a wide variety of markets - the core competency must be capable of developing new products and services
- A core competency must make a significant contribution to the perceived benefits of the end product. - Core Competencies should be difficult for competitors to imitate. In many industries, such competencies are likely to be unique |
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