Business-Level Strategy

Hassan Abbas – BS AnF (7)

Table of Contents

• Business Level Strategy

• Customers: Their Relationship with Business-Level Strategies
• The Purpose of a Business-Level Strategy
• Types of Business Level Strategies
Business Level Strategy

• Core Strategy
• Integrated and coordinated set of commitments and actions
• Gain a competitive advantage by exploiting core competencies in
specific product markets
• Customer at Core
• Who
• What Needs
• How
Customers: Their Relationship with Business-Level
Strategies

• Customers - Bloodline
• Satisfy Current Customer
• Attract new ones
• Challenging Economic Conditions
Effectively Managing Relationships with Customers

• Superior Value strengthens the Relation

• Difficult to gain loyalty
Reach, Richness, and Affiliation

• Reach
• Access
• Connection

• Richness
• Depth
• Detail of Communication

• Affiliation
• Facilitate
The Purpose of a Business-Level Strategy

• Differences between the firm’s position and those of its competitors

• Activities differently or to perform different activities
Types of Business Level Strategies

• Cost leadership
• Differentiation
• Focused cost leadership
• Focused differentiation
• Integrated cost leadership/differentiation
Types of Business Level Strategy
Cost Leadership Strategy

• Goods or Services acceptable to customers at the lowest cost

• Standardized
• Process innovations
• Production
• Distribution

• Sourcing strategies
• Logistics (Cost Leadership)
• Inbound - materials handling, warehousing, and inventory control
• Outbound - collecting, storing, and distributing products to customers
Support Function & Value Chain Analysis
• Rivalry with Existing Competitors
• Rivals hesitate to compete based on price

• Bargaining Power of Buyers (Customers)

• Cost leader to Reduce Prices but not force to exit

• Bargaining Power of Suppliers

• absorb its suppliers’ price increases

• Potential Entrants
• Low profit margin
• Economies of Scale

• Product Substitutes

• Competitive Risks of the Cost Leadership Strategy

• Obsolete
• Focus
• Imitation
Differentiation Strategy

• Different Product
• Little Costly – but more Value
• Product Innovation
• Capitalize on knowledge capital
• Constant Change in Product Line
• Unusual features
• Responsive customer service
• rapid product innovations and technological leadership
• Perceived prestige and status
• different tastes engineering design and performance
Support Function and Value Chain
Five Forces & Differentiation

• Rivalry with Existing Competitors

• Loyalty
• Keep Innovating
• Apple – Samsung
• Bargaining Power of Buyers (Customers)
• Reduced Sensitivity to Price
• Bargaining Power of Suppliers
• Vulnerable if Dependent
• Potential Entrants
• Loyalty
• Uniqueness
• Product Substitutes
• vulnerable to innovations from outside the industry

• Competitive Risks of the Differentiation Strategy

• Cost and benefit Analysis by Customer
• Xiaomi – Micromax
• Differentiate
• Counterfeiting
Focus Strategies

• Particular competitive segment

• a particular buyer group
• a different segment of a product line
• a different geographic market

• Target is the exploitation of a narrow target’s differences from the

balance of the industry
• Below the Radar
• Focused Cost Leadership Strategy
• Focused Differentiation Strategy
Competitive Risks of Focus Strategies

• Narrow Focus
• Possible entrants
• Change of Needs
Integrated Cost Leadership/Differentiation Strategy

• low cost and differentiation

• Adaptive
• Strong Network
• Flexible Manufacturing Systems
• computer-controlled process used to produce a variety of products in
moderate, flexible quantities with a minimum of manual intervention

• Information Networks
• linking companies with their suppliers, distributors, and customers
information networks provide another source of flexibility

• Total Quality Management Systems

Competitive Risks of the Integrated Cost
Leadership/Differentiation Strategy

• Difficult to maintain cost leadership and differentiation

• Stuck in the Middle

• https://www.youtube.com/watch?v=dJQn4DqzMVQ
Thank you
https://www.youtube.com/watch?v=0yHwUp87xcI