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Business-Level Strategy

Business-Level Strategy. BUSI 7130/7136 Chris Shook. Overview of Business Level Strategy What is Strategy Geometry of Competition. Agenda. How to create competitive advantage in each business in which the company competes. Business-Level Strategy. Generic Business Level Strategies.

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Business-Level Strategy

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  1. Business-Level Strategy BUSI 7130/7136 Chris Shook

  2. Overview of Business Level Strategy What is Strategy Geometry of Competition Agenda

  3. How to create competitive advantage in each business in which the company competes. Business-Level Strategy

  4. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness

  5. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Broad Target Market Breadth of Competitive Scope Narrow Target Market

  6. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

  7. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Broad Target Market Breadth of Competitive Scope Narrow Target Market

  8. Cost LeadershipBusiness Level Strategy Key Criteria Relatively standardized products

  9. Cost LeadershipBusiness Level Strategy Key Criteria Relatively standardized products Features acceptable to many customers

  10. Cost LeadershipBusiness Level Strategy Key Criteria Relatively standardized products Features acceptable to many customers Lowest competitive price

  11. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Narrow Target Market

  12. Differentiation Business Level Strategy Key Criteria Value provided by unique features and value characteristics

  13. Differentiation Business Level Strategy Key Criteria Value provided by unique features and value characteristics Command premium price

  14. Differentiation Business Level Strategy Key Criteria Value provided by unique features and value characteristics Command premium price High customer service

  15. Differentiation Business Level Strategy Key Criteria Value provided by unique features and value characteristics Command premium price High customer service Superior quality

  16. Differentiation Business Level Strategy Key Criteria Value provided by unique features and value characteristics Command premium price High customer service Superior quality Prestige or exclusivity

  17. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

  18. FocusedBusiness Level Strategies Focused Business Level Strategies involve the same basic approach as Broad Market Strategies

  19. FocusedBusiness Level Strategies FocusedBusiness Level Strategies involve the same basic approach as Broad Market Strategies However..... Opportunities may exist because: Large firms may overlook small niches *

  20. FocusedBusiness Level Strategies FocusedBusiness Level Strategies involve the same basic approach as Broad Market Strategies However..... Opportunities may exist because: Large firms may overlook small niches * Firm may lack resources to compete industrywide *

  21. FocusedBusiness Level Strategies FocusedBusiness Level Strategies involve the same basic approach as Broad Market Strategies However..... Opportunities may exist because: Large firms may overlook small niches * Firm may lack resources to compete industrywide * * May be able to serve a narrow market segment more effectively than industrywide competitors

  22. FocusedBusiness Level Strategies FocusedBusiness Level Strategies involve the same basic approach as Broad Market Strategies * Focused Differentiators may thrive by selecting a small market that is underserved by large players

  23. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

  24. Generic Business Level Strategies Source of Competitive Advantage Cost Uniqueness Cost Leadership Differen- tiation Broad Target Market IntegratedLow Cost/ Differentiation Breadth of Competitive Scope Focused Differen- tiation Focused Low Cost Narrow Target Market

  25. What is Strategy? Porter, 1996

  26. What does the article say about OE ?

  27. What does it say about unique activities?

  28. What about trade-offs?

  29. Is Growth Always Good?

  30. Fit

  31. Geometry of Competition

  32. Competitive advantage is very rare. Most competitors don’t have a competitive advantage Despite Good products Good customer relations Excellent capabilities Competitive position is very real. Summary

  33. Alternate Paths to Outperforming Industry Average Ind Avg Price Ind Ave Cost

  34. Low cost producers have a cost savings greater than its price reduction Differentiated producer commands a price premium in excess of its added costs

  35. Where are you in relation to your competitors? Two types of multidimensional positioning Positioning related to capabilities Positions related to offerings Geometry of Competition

  36. Capabilities drive offerings Assets & Activities ->Capabilities ->OfferingsA firm must have Competitive offerings Frontier capabilities A fit between the two Positioning Related to Capabilities

  37. Advantage Curve for Steinway and Yamaha Steinway Yamaha

  38. Stuck in the Middle A B C

  39. Win in the Middle A C B

  40. Change the offerings (i.e. move the dot) Create new capabilities (i.e. shift the curve) Influence customer preferences Change dimensions of competition (change the axis) A Guide to Action

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