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Chapter 6: Business-Level Strategy

Chapter 6: Business-Level Strategy. Text by Charles W. L. Hill Gareth R. Jones. Multimedia Slides by Milton M. Pressley Univ. of New Orleans. Preview. What Is Business-Level Strategy? Choosing a Generic Business-Level Strategy Strategic Groups and Business-Level Strategy

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Chapter 6: Business-Level Strategy

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  1. Chapter 6: Business-Level Strategy Text by Charles W. L. Hill Gareth R. Jones Multimedia Slides by Milton M. Pressley Univ. of New Orleans

  2. Preview • What Is Business-Level Strategy? • Choosing a Generic Business-Level Strategy • Strategic Groups and Business-Level Strategy • Choosing an Investment Strategy at the Business Level

  3. What Is Business-Level Strategy? • Business-Level Strategy Defined • Customer Needs • Product Differentiation • Market Segmentation • Deciding on Distinctive Competencies

  4. Cost Differentiation Focus Leadership Low Product (Principally by Differentiation Price) Low Market (Mass Market) Segmentation Manufacturing Distinctive and Materials Competency Management Choosing a Generic Business-Level Strategy Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies

  5. Advantages and Disadvantages of a Cost Leadership Strategy Related to Threats From: Competitors Powerful Suppliers Powerful Buyers Substitute Products New Entrants Choosing a Generic Business-Level Strategy (Continued)

  6. Cost Differentiation Focus Leadership Low High Product (Principally by (Principally by Differentiation Price) Uniqueness) Low High Market (Mass Market) (Many Market Segmentation Segments) Manufacturing R&D, Sales Distinctive and Materials and Marketing Competency Management Choosing A Generic Business-Level Strategy (Continued) Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies

  7. Choosing a Generic Business-Level Strategy (Continued) • Quality • Innovation • Responsiveness to Customers Product Differentiation Is Achieved Principally Through:

  8. Advantages and Disadvantages of the Differentiation Strategy Related to Threats From: Competitors Powerful Suppliers Powerful Buyers Substitute Products New Entrants Choosing a Generic Business-Level Strategy (Continued)

  9. Cost Leadership and Differentiation Cost Leadership Benefits Differentiation Benefits Choosing a Generic Business-Level Strategy (Continued)

  10. Cost Leadership and Differentiation Choosing a Generic Business-Level Strategy (Continued) Flexible Manufacturing Technologies Cost Leadership Benefits Differentiation Benefits Combined Benefits

  11. Cost Differentiation Focus Leadership Low High Low to High Product (Principally by (Principally by (Price or Differentiation Price) Uniqueness) Uniqueness) Low High Low Market (Mass Market) (Many Market (One or a Few Segmentation Segments) Segments) Manufacturing Any Kind of R&D, Sales and Distinctive and Materials Distinctive Marketing Competency Management Competency Choosing a Generic Business-Level Strategy (Continued) Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies

  12. Choosing a Generic Business-Level Strategy (Continued) Figure 6.1: Types of Business-Level Strategies Offers Products to Only One Group of Customers Offers Products to Many Kinds of Customers Focused Cost-Leadership Strategy Cost-Leadership Strategy Offers Low- Priced Products to Customers Focused Differentiation Strategy Offers Unique or Distinctive Products to Customers Differentiation Strategy

  13. A Focused Company’s Advantages and Disadvantages Related to Threats From: Competitors Powerful Suppliers Powerful Buyers Substitute Products New Entrants Choosing a Generic Business-Level Strategy (Continued)

  14. Choosing a Generic Business-Level Strategy (Continued) MY FIRM HAS A COMPETITIVE ADVANTAGE MY FIRM HAS A COMPETITIVE ADVANTAGE STUCK IN THE MIDDLE

  15. Strategic Groups and Business-Level Strategy • Implications for Business-Level Strategy • Immediate Competitors Are Companies Pursuing Same Strategy in the Same Strategic Group • Different Strategic Groups Can Have A Different Standing with Respect to Each of Porter’s Five Competitive Forces • First Mover Advantage

  16. Choosing an Investment Strategy at the Business Level • Investment Strategy Defined • Competitive Position • Market Share • Distinctive Competencies • Life Cycle Effects

  17. Stage of Industry Strong Competitive Weak Competitive Life Cycle Position Position Share Building Share Building Embryonic Growth Market Concentration Growth Share Increasing Market Concentration Shakeout or Harvest/Liquidation Hold-and-Maintain or Harvest or Maturity Profit Liquidation/Divestiture Market Concentra- Turnaround, Decline tion, Harvest, or Liquidation or Asset Reduction Divestiture Choosing An Investment Strategy at the Business Level (Continued) Table 6.2: Choosing an Investment Strategy at the Business Level

  18. WHAT IS BUSINESS-LEVEL STRATEGY? CHOOSING A GENERIC BUSINESS-LEVEL STRATEGY STRATEGIC GROUPS AND BUSINESS-LEVEL STRATEGY CHOOSING AN INVESTMENT STRATEGY AT THE BUSINESS LEVEL Chapter Summary

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