What Is Porter’S Theory Of Competitive Advantage?

What is Porter’s model of competitive advantage?

The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.

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What is the concept of competitive advantage?

Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.

What are the three basic types of competitive advantage?

There are three different types of competitive advantages that companies can actually use. They are cost, product/service differentiation, and niche strategies.

What is Porter’s Diamond model used for?

The Porter Diamond, properly referred to as the Porter Diamond Theory of National Advantage, is a model that is designed to help understand the competitive advantage that nations or groups possess due to certain factors available to them, and to explain how governments can act as catalysts to improve a country’s …

What are examples of competitive advantage?

Examples of Competitive AdvantageAccess to natural resources that are restricted from competitors.Highly skilled labor.A unique geographic location.Access to new or proprietary technology. … Ability to manufacture products at the lowest cost.Brand image recognition.

How do you identify a competitive advantage?

Identify your company’s competitive advantageCost Leadership. Typically, businesses attempt to gain cost leadership as their first competitive advantage. … Differentiation. The next strategy that companies often use for setting themselves apart from the competition is differentiation. … Strategic Alliances. … Quality. … Brand. … Service.

How do you gain competitive advantage?

6 Ways to Gain Competitive AdvantageCreate a Corporate Culture that Attracts the Best Talent. … Define Niches that are Under-serviced. … Understand the DNA Footprint of Your Ideal Customer. … Clarify Your Strengths. … Establish Your Unique Value Proposition. … Reward Behaviors that Support Corporate Mission and Value.

What are the 6 factors of competitive advantage?

The six factors of competitive advantage are: Price, location, quality, selection, speed, turnaround and service.

Why is Porter’s 5 forces used?

Porter’s Five Forces is a business analysis model that helps to explain why various industries are able to sustain different levels of profitability. The model was published in Michael E. … The five forces are frequently used to measure competition intensity, attractiveness, and profitability of an industry or market.

What is Coca Cola’s competitive advantage?

Coca Cola has competitive advantage so it is making it get bigger and bigger in terms of sales and market share. Coca Cola reputation has also competitive advantage and it is also pursuing environmental friendly product. Coca Cola many products are recyclable and Coca Cola is also going for the green effect.

What are the sources of competitive advantage?

What are the sources of competitive advantage?Strong research and development capabilities. … Access to intellectual properties. … Exclusive re-selling or distribution rights. … Ownership of capital equipment. … Superior product or customer support. … Low cost or high volume production. … Economic factors. … Superior database management and data processing capabilities.More items…•

What is Michael Porter’s theory?

Porter’s Five Forces of Competitive Position Analysis were developed in 1979 by Michael E Porter of Harvard Business School as a simple framework for assessing and evaluating the competitive strength and position of a business organisation. … Porter’s five forces help to identify where power lies in a business situation.