Five Forces that Affect Competitive Advantage

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There are several obstacles to be cleared for a business organization to increase the profit and work in a successful manner. These hurdles are described as five forces which are causing the impediments in the way of achieving competitive advantage.

Competition Factors Within the Same Industry
For most of the business the demand among customers for a particular product is within limits. Beacuse of this reason business organizations compete each other for achieving desired results through targeted customers. Customers often prefer good quality or reasonable price as a matter of factor while choosing a product.

Substitute Products Options
The choice of customers vary and he may choose an entirely new product or seek a substitute for an existing product. When a new product is entered into the market it creates competition and the introduction of a third choice creates confusion among existing companies. Even for companies have the firm base and monopoly trade face competition to penetrate into their market at times.

New Companies and Products
New companies entering the market have a competitive advantage and can create a challenge for existing companies. Some companies also try marketing new products and utilize existing customer database for the marketing purpose. Introduction of a product for an existing company gives an edge over competitors by diversification of their products

Influence of Customers
Sometimes customers force existing products to lower their price and increase the services in order to meet the buying criteria. If the expectations are not met customers go for companies in other localities or other regions.

Influence of Suppliers
Sometimes the business organization will find it difficult to find suppliers with feasible margin having requisite qualities. Small business organizations will find it difficult to deal as the bulk order cannot be done due to space limitations and budget.

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