A firm's competitive advantage over its competitor is best described by the
Difference between buyers' willingness to pay (WTP) and suppliers willingness to sell (WTS) is greater than the competitor's difference between the WTP and WTS
In the value-creation approach, competitive advantage exists when a firm creates a larger gap between buyers’ willingness to pay and suppliers’ willingness to sell than its competitors do. Willingness to pay is the buyer’s maximum acceptable payment; willingness to sell is the supplier’s minimum acceptable compensation. Their difference measures total economic value created, rather than just the firm’s profit.
Important Questions from Competitor Analysis - Teaching
Consider the following statements with reference to Porter's five forces model of competitive analysis :
(a) As rivalry among competing firm intensifies, generally industry profits decline or in few cases, industry becomes inherently unattractive.
(b) Whenever new firms are allowed to enter a particular industry, the intensity of competitiveness among firms becomes haphazard.
(c) Generally competitive pressures arising from the substitute products decrease as the relative price of substitute products decline.
(d) Bargaining power of suppliers affects the intensity of competition.Codes :
