Tuesday, May 7, 2019

Msesetz: How Information Systems used to establish competitive advantage

Firms with a competitive advantage over others typically have access to special resources that
others do not or are able to use resources more efficiently, resulting in higher revenue growth,
profitability, or productivity growth (efficiency), all of which ultimately in the long run
translate into higher stock market valuations than their competitors.

(Michael Porter's, competitive forces model) describes five competitive forces that shape the fate of the firm.

Traditional competitors: Existing firms that share a firm's market space

Substitute products and services: These are substitutes that your customers might use if your prices become too high. For example, Internet telephone service can substitute for traditional
telephone service. The more substitute products and services in your industry, the less you can
control pricing and raise your profit margins.

Customers: The power of customers grows if they can easily switch to a competitor's products
and services, or if they can force a business and its competitors to compete on price alone in a
transparent marketplace where there is little product differentiation and all prices are known
instantly (such as on the Internet).

Suppliers: The more different suppliers a firm has, the greater control it can exercise over
suppliers in terms of price, quality, and delivery schedules.