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Creating competitive Advantage.pdf - Creating competitive...

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Creating competitive AdvantageCompetitive advantageAn advantage over competitors gained by offering consumers greater value.Competitor Analysis- Identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, andreaction patterns; and selecting which competitors to attack or avoid.- This analysis include 3 steps:1. Identifying the company's competitors2. Assessingcompetitors’ objectives, strategies, strengths and weaknesses, and reaction patterns3. Selecting which competitors to attack or avoid1. Identifying competitors-At thenarrowest level, a company can define its competitors as other companies offering similarproducts and services to same customers at similar prices.-For Example:Ritz-Carlton might see the Four Seasons hotels as a major competitor, but not Holiday Inn, Hampton Innetc.-Atbroader level, the company might define its competitors as all firms with the same product or classof products.- Thus, the Ritz-Carlton would see itself as competing against all other hotels-Atmore broaderlevel, competitors might include all companies making products that supply the sameservice.-Here the Ritz-Carlton would see itself competing not only against other hotels but also againstanyone who supplies rooms for busy travelers-Finally,and still more broadly, competitors might include all companies that compete for the sameconsumer dollars.-Here the Ritz-Carlton would see itself competing with travel and leisure products and services, fromcruises and summer homes to vacations abroad.-Companies must avoid “competitor myopia.”Acompany is more likely to be “buried” by its latentcompetitors than its current ones. For example, Kodak didn’t lose out to competing film makers such asFuji; it fell to the makers of digital cameras that use no film at all
2. Assessing Competitors- Each competitor has a mix of objectives. The company wants to know the relative importance that acompetitor places on current profitability, market share growth, cash flow, technological leadership,service leadership, and other goals. - Knowing acompetitor’s mix of objectives reveals whether thecompetitor is satisfied with its current situation and how it might react to different competitive actions.-For example, a company that pursues low-cost leadership will react much more strongly to acompetitor’s cost-reducing manufacturing breakthrough than to the same competitor’s increase inadvertising.

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Term
Fall
Professor
S.M Saeed

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