Chapter 6 Business-Level Strategy and the Industry Environment PDF

CHAPTER 6 BUSINESS-LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  STRATEGY IN A FRAGMENTED INDUSTRY  Composed of a large number of...

CHAPTER 6 BUSINESS-LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.  STRATEGY IN A FRAGMENTED INDUSTRY  Composed of a large number of small- and medium-sized companies. Examples of fragmented industries include the dry-cleaning, hair salon, restaurant, health club, massage, and legal services industries.  Reasons for fragmenta9on:  Lack of scale economies -In the restaurant business, for example, customers o>en prefer the unique food and style of a popular local restaurant, rather than the standardized o@erings of some naAonal chain.  Brand loyalty in the industry is primarily local- a parAcular locaAon or region  Low entry barriers due to lack of scale economies and na9onal brand loyalty- the costs of opening a massage services business are minor and can be shouldered by a single entrepreneur  Focus strategy works best for a fragmented industry- All kinds of specialized or custom-made products—furniture, clothing, hats, boots, houses, and so forth— fall into this category, ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4  CONSOLIDATING A FRAGMENTED INDUSTRY THROUGH VALUE INNOVATION  Value innovator - De%nes value di.erently than established companies  O.ers the value at lowered cost through the crea;on of scale economies  Chaining: Obtaining the advantages of cost leadership by establishing a network of linked merchandising outlets  Interconnected by informa;on technology that func;ons as one large company  By expanding through chaining, a value innovator can quickly build a na;onal brand Example: Chaining: Red Lobster Corpora;on built and operates Chaining: Red Lobster ‫مثال على استراتيجية‬ Red Lobster Corporation: hundreds of stores across the USA and Canada.‫أكو;ت البحرية‬7‫سلسلة مطاعم متخصصة في ا‬ ‫قامت ببناء وتشغيل مئات الفروع في الو;يات‬.‫تحدة وكندا‬7‫ا‬ ‫جميع الفروع تعمل كشبكة واحدة مترابطة عبر‬ ‫علومات‬7‫تكنولوجيا ا‬ ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5  CONSOLIDATING A FRAGMENTED INDUSTRY THROUGH VALUE INNOVATION  Franchising: Strategy in which franchisor grants the franchisee the right to use the franchisor’s name, reputa7on, and business model  In return for a fee and a percentage of the pro