Lecture 4 Takeaways

• 4 Building Blocks of Competitive Advantage

• Achieving Superior Efficiency (economies of scale, learning effect, flexible
product technology, mass customization, JIT, customer defection
• Achieving Superior Quality (reliability, excellence, six sigma, TQM)
• Achieving Superior Innovation (high failure rates, reducing failures)
• Achieving Superior Customer Responsiveness
 [Hill. 2013]

Lecture 5
Business-Level Strategy
 Overview of Lecture

• Business-Level Strategy
• Differentiation-Low Cost Tradeoff
• Business-Level Strategy Choices
• Protection from Low-Cost and Differentiation Positions
• Blue Ocean Strategy
 Business-Level Strategy

• Business-Level Strategy
Which customer segment?
Which customer needs & desires to satisfy?
How to satisfy?

• Two ways to compete

Low-Cost
Differentiation
(Toyota vs GM)
Differentiation-Low Cost Tradeoff
 Differentiation-Low Cost Tradeoff
• Value Innovation
 Business-Level Strategy Choices

• Broad Low-Cost Strategy

• Broad Differentiation Strategy
• Focus Low-Cost Strategy
• Focus Differentiation Strategy
 Strategic Emphasis
Low Cost Differentiation

M Broad Broad Differentiation

Broad Low Cost
A (WalMart) (Coca Cola)
R
K
E Narrow Focus Low Cost Focus Differentiation
(Niche) (Costco) (Zurhem)
T
 Blue Ocean Strategy

https://www.youtube.com/watch?v=7o2Xr7PP_IE
 Lecture Takeaways
• Business-Level Strategy
• Differentiation-Low Cost Tradeoff
• Value Innovation
• Business-Level Strategy Choices (broad low cost, broad
differentiation, focused low cost, focused differentiation)
• Blue Ocean Strategy