Untitled Quiz

Business-Level Strategy

• Business-level strategy is an integrated set of commitments and actions to gain a competitive advantage by exploiting core competencies in specific product markets.
• It is a means of developing a generic strategy.
• Key Issues in Business-level Strategy: Who will be served? What needs will be satisfied? How will those needs be satisfied?

Types of Potential Competitive Advantage

• Low Cost: Achieving lower overall costs than rivals.
• Differentiation: Possessing the capability to differentiate a firm's product or service and command a premium price.

Competitive Scope

• Scope: The number of segments a firm chooses to target.
• Broad Scope: The firm competes in many customer segments.
• Narrow Scope or Niche Market: The firm selects a segment or a group of segments in the industry and tailors its strategy to serve them.

Types of Business-Level Strategies

• Based on the combinations of competitive scope (broad or narrow market) and basis for customer value (lowest cost or distinctiveness).
  • Cost leadership: Lower overall costs than rivals.
  • Differentiation: Providing unique products or services that are valued by customers.
  • Integrated cost leadership/differentiation: Combining features of both strategies.
  • Focused cost leadership: Low cost in a narrow market.
  • Focused differentiation: Differentiation in a narrow market.

Cost Leadership Strategy

• An integrated set of actions to produce goods or services at a low cost.
• Typically earns low margins but achieves high sales volumes.
• Economies of scale exist when firm's costs fall as a function of its production volume.
• Examples: Walmart, KIA, Lenovo, Southwest.

Differentiation Strategy

• An integrated set of actions to produce goods or services that customers perceive as different.
• Firms seek to be unique in attributes that are valued by customers.
• Examples: Apple, Mercedes-Benz, Saveco.

Functional-Level Strategy

• Financial, HR, marketing, operations, and IT strategies that support the corporate and business-level strategies.
• Important aspects of each:
  • Financial Strategy: Selecting funding source, developing own funds.
  • HR Strategy: Recruiting, organizing staff, compensation, training, and organizational structure.
  • Marketing Strategy: Pricing, promotion, distribution, brand image and public relations.
  • Operations Strategy: Production techniques, use of technology, processes, quality control.
  • IT Strategy: Using information technology to achieve firm goals, including current and future projects with timelines.

Strategic Business Unit (SBU)

• A homogeneous group of activities sharing the same technology, resources, skills, and facilities.
• It's an independent division with its own vision, mission, and objectives.
• An SBU focuses on a specific market(s) for its products or services.

Levels of Strategy

• Corporate-level strategy: Concerns strategic decisions affecting the entire organization; includes decisions about the markets to serve, resource allocation, mergers, and acquisitions.
• Business-level strategy: How a firm intends to compete in a particular product market.
• Functional-level strategy: Strategies adopted by each functional area (marketing, finance, HR, etc.) to support the business-level strategy.

Focused Strategies

• An integrated set of actions to serve the needs of a particular competitive market segment.
• Focus can be on a narrow product line, buyer segments, or geographic market.
  • Cost focus: A firm seeks a cost advantage in its target segment.
  • Differentiation focus: A firm seeks differentiation in its target segment.

Responding to Low-Cost Rivals

• Strategies to avoid losing customers to low-cost competitors.

Value-Chain Activities (Differentiation)

• Detailed examples of activities related to a differentiation strategy are shown and explained..

Strategy Clock

• The competitive strategies are positioned on a two-axis chart based on Price and Perceived value.