Competitive Advantage
Competitive advantage is another model from Porter, which is to gain customers’ value or generate greater sales over their competitors. There can be many types of competitive advantages including the firm’s cost structure, niche dominance, market share, and product differentiation. The more sustainable the competitive advantages, the more difficult it is for competitor to counteract the advantage. 
There are two main ways that a firm can secure competitive advantage. The first one is Cost Leadership. That means a firm has an ability to sell its goods, generate larger margin on sales, or provides services at a lower price than its competitor. To win a cost leadership in an industry, the actual costs of the products or services have to be low. Two good examples are Jet Blue and Wal-Mart. A component to Jet Blue’s success is the ability to keep costs down. After completion of flights, even the pilots help clean the planes. In addition, all flight tickets from Jet Blue are electronic so there is no paper wasted. This saves the company thousands dollars on paper and labor hours. Therefore, the price of the ticket remains low compared to the other airline flying the same route. Round-trip tickets range anywhere from $98-$498. 
Another good example to illustrate cost leadership as a type of competitive advantage is Wal-Mart. Their slogan is, “Always the Lowest Price.” Wal-Mart has very successful in improving the revenues and markets shares and eliminating the competitors by selling at lowest prices. It has become the largest retailer in the world. They have vast distribution centers loaded with automated equipment and whiz bang technology, employ thousands of people, and own a fleet of trucks. Wal-Mart doesn’t order products for a short period of time; rather, they order quantities a region full of stores will need for a long period of time. Most of the products were imported from Asian countries. This lowers the costs of good sold.
Second type of competitive advantage is product differentiation. It is not easy to get into the cell phone industry because there are already many competitors. However, iPhone is succeeding even if it is expensive. There are some features that are unique. First, it has a multi-touch screen with virtual keyboard and buttons. When text messaging or writing an email, it automatic check and correct the spelling. Furthermore, similar to iPods, it has a built-in rechargeable battery that is not intended to be user-replaceable. Lastly, there are many applications on this phone, such as, text, calendar, photos, music, camera, YouTube, map, weather, calculator, and more. There are many cell phones on the market has some of these features, but iPhone has all the features in one phone. That’s the reason it succeeded. According to Apple Inc. Q3 2007 Unaudited Summary Data, Apple stores sold 270,000 iPhones in the first 30 hours on launch weekend. And in the first quarter of 2008, Apple already sold 2.315 millions of them.
7 comments:
After I read your entry, I also think that Jet Blue and Wal-Mart are the good examples of cost leadership. I had taken a Jet Blue airplane to Utah. This company doesn't not offer meals for short flies, but it offers snacks. I also believe that Wal-Mart has stood in customers side to think about setting up price for the products. Apple also takes advantage from product differentiation, such as Iphone. Even though the price for Iphone is expensive, but it contains many different applications or features. Also, its appearance is very cool and looks different from other competitors.
I agree that Wal-Mart has a competitive advantage over their competitors. As their slogan suggest "Always the Lowest price" makes it difficult for their competitors to match them. Consumers want goods of good quality and at a price that cannot be beat. This makes conumers more loyal to Wal-mart than they would to other competitors. Apple on the other hand is the dominant player in the cell phone industry. They are constantly coming out with products that are so unique and this gives them a competitive advantage in the industry. Even though their products are expensive consumers will still buy their products because the features and applications are up to date. Jet Blue will also have a competitive edge because they offer low prices for their flights and that is more desire to consumers.
Jet Blue is a good example of a cost leader. Cost leaders always seem to pop up when an industry is in its maturity stage. In the 1950's or 60's when it was prestigious to fight you would never see a cheap airline. Do you think this is always true? Or can cost leaders pop up at every stage of an industry?
I didn’t write about cost leadership as being a good way for a firm to have competitive advantage, but I definitely agree that it is. I also thought Wal Mart is a good example of a firm that uses cost leadership as a way to secure competitive advantage. Their campaign is low costs for their customers, but in addition to their low costs, they are able to manage their company strategically to minimize their own costs. The cost of supplies is low because products are not made in the United States, but outsourced to countries like China and their distribution channels are well equipped to support a system of low cost of goods sold. This is very important for a firm to have competitive advantage because cost of goods sold is perhaps the largest expense any firm can incur. Wal Mart has done this especially well and that is why they are the largest retailer in the world. Do you think other firms will be able to adopt Wal Mart’s cost leadership model and be as successful as Wal Mart has been?
awesome analysis on competitive advantage. i definitely agree with you on walmart and jetblue. i never personally flown jetblue. but i heard it does what its suppose to do and thats all you can ask for.
along with walmart, i believe they will always do well regardless of how the economy is doing because when the economy is doing worse and people look to start saving, they shop at walmart. everyday low prices, always.
I do like your choice of Jet blue , but lets look at Delta, I research it, and right now its leading the market share in the airline industry because it goes almost anywhere as opposed to these other airlines
Hello there,,
Check out Trade My Motor We buy any car the Uks Fairest Car Buyer and simple route to Sell carIf you wanted to sell a used car, then visit us as we buy any car.
Thnak you ....!!!
Post a Comment