1. How should strategic business units be designed?

First, each business units’ mission and focus must be different from all other organization SBUs.
Second, they should have an easily and clearly defined group of competitors. Third, its planning and
development should be carried out quite independently of any other business unity. Finally, each SBU
must have a separate manager with decision-making authority who is fully responsible for the
operation.

Once a company has defined its SBUs, management has to decide how the budget needs to be
allocated. Each SBU must therefore be assessed according to its value, which is based on potential
growth opportunities.

2. Briefly explain generic business-level competitive strategies.

The Cost Leadership Strategy
It means developing the "edge" that gets you the sale and takes it away from your competitors. There
are two main ways of achieving this.
Increasing profits by reducing costs, while charging industry-average prices.
Increasing market share by charging lower prices, while still making a reasonable profit on each sale
because you've reduced costs.

The Differentiation Strategy

Differentiation involves making your products or services different from and more attractive than those
of your competitors. How you do this depends on the exact nature of your industry and of the products
and services themselves, but will typically involve features, functionality, durability, support, and also
brand image that your customers value.

The Focus Strategy

Companies that use Focus strategies concentrate on particular niche markets and, by understanding
the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or
well-specified products for the market. Because they serve customers in their market uniquely well,
they tend to build strong brand loyalty amongst their customers. This makes their particular market
segment less attractive to competitors.

3. Define four business strategies of Miles & Snow.

Prospector: A type of company that seeks to exploit new opportunities, to develop new products
and/or services, and to create new markets. Typically its core skills lie in marketing and R&D and it
will tend to have a broad range of technologies and product types.

Defender: A mature type of company in a mature industry that seeks to protect its market position
through efficient production, strong control mechanisms, continuity, and reliability.

Analyser: A type of company that avoids excessive risks but excels in the delivery of new products
and/or services. Typically it concentrates on a limited range of products and technologies and seeks
to outperform other companies on the basis of quality enhancement.

Reactor: A type of company which have little control over their external environment, lacking the ability
to adapt to external competition and lacking in effective internal control mechanisms. They do not
have a systematic strategy, design, or structure.

4. How do competitive strategies differ from one another?

Prospector concerned with attaining growth through aggressive pursuit of new product-market
opportunities.

Analyser with strong core business to actively seeking to expand into related product-markets with
differentiated and low-cost offerings

Defender concerned with maintain a differentiated and low-cost position in mature market

Reactor with no clearly defined product-market development or competitive strategy.