Positioning the company will enable the firm to analyze its profitability and will help in setting the firm’s goal higher. Sustainable competitive advantage is the foundation of having an above average performance in the firm (Porter, M. E., 1985). There are two functions that a firm can possess for competition: Low cost or differentiation. Having a full understanding of the five forces help to achieve those two functions. Therefore to achieve a sustainable competitive advantage, the pursue of the three generic strategies is important in an industry: cost leadership, differentiation and focus.
Threat of New Entry – It is easy for a new company to enter in the market, however the competition in the market is increasing so rapidly. There are many factors which can restrict the new entrants to enter the market. ii. Suppliers Power – The companies are in pressure because of their suppliers. If anyone supplier is supplying more than 50% of the raw material to the company, than the supplier has very much power for the company.
3.2 RANGE OF STRATEGIES THAT CAN CONTRIBUTE TO A BUSINESS COMPETITIVE ADVANTAGE When a business thrives in gaining competitive advantage, it often sets eyes on a manifold of strategies that aim to em-better its image and its competitive positioning. It focuses on strategies that may help increase its rate of consumers acquisition, retention and satisfaction; strategies of industry and competitors analysis. Moreover, it sets eyes on those strategic process to build strong investments portfolios ( Liquidity) that can help establish longevity and leadership in the market. Competitive advantage inevitably leads to faster, continual exponential growth, increased sales, market share gains and overall business profitability. Competitive
To survive in the increasingly competitive business and corporate environment, firms must identify the right direction and long-term objectives then strategize with the most effective strategies, resources, and competencies to achieve the required market advantages. A firm's corporate and competitive strategies must therefore include its long-term direction, scope of activities, competitive advantages, competencies, values, aspirations, and resources. There are several types of analyses and business techniques that organizations carry out to identify all or some of the above mentioned aspects and elements of competition. These analyses include SWOT, Pestle, and Ansoff matrix among others. This paper explores and explains the meanings of some
When capital markets are enables to offer funds, increase the risk of competitive entrants. The industry will becomes a magnet to new if a firm have a very high profit. Unless got way we can solve this problem if not the competition and competitor will increase. Firms in an industry try to keep the new entrants low by barriers to entry, first is economies of scale. An economy of scale is when an industry is characterized by large economies of scale for new firms to enter and participate, if they are willing to accept a cost disadvantage.
A company needs to go through extensive regulatory approval, licensing, high financial backing and investment, an effective distribution network, brand patents and strong brand presence make it a difficult industry to enter or exit. This is why the threat of a new entrant is low to moderate to existing companies. Based on factors mentioned above. But now many pharmaceutical companies are progressing in the market by shifting from traditional business approach to emerging new business approach. The new business technique includes contract research (drug discovery and clinical trials), contract manufacturing and co-marketing alliance.
The given individual company’s performance may be better or worse than the industry it belongs as a whole. Understanding the industry or multiple industries where the company competes is essential to develop a baseline for understanding the external conditions and competitions the company is facing currently and in the future. This can be analysed by using Michael Porters’ five forces framework. The five forces analysis simplifies an industry’s competitive environment and it’s profitability. The five basic forces are: (1) Bargaining Power of Customers.
Thus, the firm’s technological lead is sustainable. The technological change shifts costs or uniqueness drivers in favour of a firm. Pioneering the technological change translates into first mover advantages besides those inherent in the technology itself. The technological change leads to improvement in overall industry structure. Sources of Competitive Advantage: There are many sources of competitive advantage that can result from the development and application of new technology.
Firms can take measures to diminish buyer power, for example, actualizing a loyalty program. The buyer power is high if the has many alternative and low when there are few alternatives. • Supplier power Supplier power is also describe as the market of input. The supplier of raw material, component and service to the organization that can be a
What affects sustainable competitive advantage for a firm are external and internal environmental conditions that allows for a high levels of performance and for above- average returns. The external environment based on Industrial organization (I/0) model assumes that external forces are favouring high level performance of a firm strategies. A firm needs to pay attention to the industries that it chooses to compete. Those affect sustainable competitive advantage: Economies of scale, barriers of maturity entry, diversification, product differentiation and degree of concentration of firms in a particular industry. The external environment imposes pressures and constrains that determine strategies leading to above- average returns.