CHAPTER IV
BUSINESS-LEVEL STRATEGY
STRATEGY – (DEF)
analyze ext env., i.d. opportunities in that env., determine which
internal resources & capabilities are core competencies (strengths),
& select an appropriate strategy to implement
importance of collecting & analyzing info
“
of developing & exploiting core competencies
BUS-LEVEL STR – (DEF)
focus is on the firm’s position w/in the industry in relation to
competitors (e.g. low-cost, high quality, focus)
I)
CUSTOMERS: WHO, WHAT, & HOW
Must build relationships w/ C’s by providing total satisfaction (C
delight) of their needs w/ superior value
1)
2)
3)
4)
A) WHO:
must SPECIFICALLY i.d. C’s (market segments) based on, for ex.
1)
2)
3)
4)
5)
6)
Increasing Market Segmentation – (individuals w/ similar needs)
Firms have been able to further segment mkts w/ better data, effort,
etc. The result has been increasing customization of
products/services to meet increasingly specific needs.
B) WHAT:
along w/ i.d. who the firm will serve, must i.d. their needs that can
be satisfied
must also:
anticipate future needs
assist potential C’s in recognizing current needs
create future needs
C) HOW:
use of core competencies to implement value-creating strategies to
satisfy C needs (w/ products that C’s value)
II)
TYPES OF BUS-LEVEL STRATEGIES (5)
again, focus is on the firm’s position w/in the industry in relation
to competitors (e.g. low-cost, high quality, focus)
Firm must decide if its intended actions will allow it to perform
activities differently or to perform different activities than its rivals
No one strategy is inherently better then others. The attractiveness
of each is contingent on opportunities & threats of the ext env &
internal resources, capabilities & core competencies
1) Cost Leadership Strategy – (DEF)
must not ignore means of differentiation that C’s value (e.g.
service after the sale, minimum level of quality, etc)
most appropriate for no-frills, standardized products
Req.’s a continuous focus on lowering cost, relative to competitors
(efficient scale-facilities, control of overhead, service, R & D, etc)
value chain analysis can be used to i.d. areas for cost control
Protection Against 5 Industry Forces: p. 140-141
Risks of the L. C. Strategy:
1.
2.
3.
2) Differentiation Strategy – (DEF)
focus on setting your product/service apart from the competition
by continuously investing in & developing features (other than
price) which C’s value (quality, service, name brand, prestige)
power of perception
Protection Against 5 Industry Forces: p 144-146
Risks of the Differ. Strategy :
1.
2.
3.
Focus Strategies (2) - (DEF)
find a niche (under-served mkt segment) and serve it better than
industry-wide competitors can
focus is on becoming an expert at serving the unique needs of a
particular mkt
either low-cost or differ. may be developed & implemented
3) Focused Low Cost
\
difference is in the source of comp adv.
4) Focused Differentiation /
Risks of Focus Strategies – same as cost leader & differ., plus:
1.
2.
3.
5) Integrated Low-Cost/Differ. Strategy – combo
may be esp. critical in global-mkts
successful differentiation can lead to premium prices while the low
cost position provides potential for greater margins
generally, less differentiation than firms focusing only on
differentiation & low prices, but not as low as firms focusing only
on low cost
multiple forms of competitive advantage
imp of flexibility (3 techniques)
1) Flexible Manufacturing Systems –
computer controlled process used to produce a variety of products
in moderate, flexible quantities w/ a minimum of manual
intervention
imp as firms move away from mass production & toward
customization
2) Info networks Across Firms - links among manufacturers,
suppliers, distributors, & C’s designed to increase flexibility &
responsiveness (dec cycle times)
3) TQMS – increase Q & productivity through-out
4 key assumptions:
1) the costs of poor Q is greater than the costs associated w/
producing high quality
2) empees care about their work & will attempt to improve it
3) orgs are systems of highly interdependent parts which req.’s
integrated decision processes
4) responsibility for TQM rests w/ upper-level mgrs
Risks of the Integrated L.C./Differ Strategy
Stuck in the Middle – inability to develop any comp adv.