Chapter 4 

Business Level Strategies

I. What is the business-level Strategy

a. The interconnected and coordinated set of actions and decisions a firm takes to
gain competitive advantage by expediting its core competencies for a specific
product market. The main purpose of business-level strategy is to give value to the
customer.
II. What is Market Segmentation (Different indicators to which the company segments its
market)
a. When a company divides its customers into different groups based on/ another
segmentation for industries is SIC ( Standard Industry Classification) :
 MARKET-BASED CONSUMER DIVISION
ii. Demographic: Age, Gender, Income level.
iii. Geographic: geolocation (Regional Differences), Religion, Culture (values,
rituals, and beliefs).
iv. Socio-Economic: lifestyle, Class level, life cycle (mortality rate).
v. Psychological: Personality traits (willingness to pay).
vi. Consumption: Heavy, moderate, low:
vii. Perceptual: Benefit from a specific segment
 Other types of indicators to divide customers:
a. Product type
b. Customer size
c. Technology based
III. Business Model (different models) (types)

When a company delivers, creates, and captures value for its customers. There are
five business models: a company can have multiple models.

I. Franchising: Exmp: Mcdonald’s, KFC/ Licensing: authorized to sell

product and more freedom than franchising.
II. Freemium: give you the free version of the product not including
everything. Youtube.
III. Advertising: Google Ads
IV. Subscription: Netflix, Amazon Prime,
V. Peer to peer: Airbnb, Booking.com, Uber, Karieem
IV. 5 Business level Strategies: two main objectives ( customer value and market segment)
1. Cost leadership (wide low cost)
a. Wider market
b. Low cost
2. Differentiation ( distinctiveness)
3. Focus cost leadership ( small market and low cost)
4. Focus differentiation ( distinctiveness but small market focused)
5. Integration (Cost Leadership+ Differentiation)
Market Segment (look Low Cost Distinctiveness
down)/Customer Value(look to
the right)
Wide Cost Leadership (the best one Differentiation ( Best Structure
for this is vertical structure is Horizontal where the middle
hierarchy, this one is also and lower management work
called centralized; in other together and then report to
words, only a few people can the top, it is also called
make decisions). decentralized)
Narrow Focus Cost Leadership: Focused Differentiation: when
Focused cost leadership but a company produces high-
for a smaller market (A quality products but for a
company can have smaller segment:
differentiation but still satisfy
the low cost for few
customers. When a company
can do both, this is called
Strategic flexibility)
When a company uses all of these at once, it’s called
Integration. They also combine both structures vertical and
horizontal.

 TQM: Apply different tools and techniques to produce products and services with the
best quality.
o PDCA cycle ( Plan Do Check Act):
 Quality Policy: For example “Customers come first”
 Planning
 Setting quality objectives
o Quality Program: any detail about the quality process,
the product composition, the necessary raw material,
and so on…
 Implementation (Do):
 Structure of the company
 Authority and responsibility: the higher the authority, the higher
the responsibility.
 Document control: Maintain the document record in case there
is a need to have access to them.
 Operational Control: the necessity of procedures maintenance
for the operation or the production of the necessary tools for
production.
 Monitoring (Checking):
 Auditing: auditors who check the quality and safety standards.
NCR (Non-Conformity Report), it helps in knowing what must be
modified to check if everything with the production is lacking or
not.
  Act (Review): Check the performance of the company to know if what
they set for the planning stage has been met or not. It is a comparison
between the actual output and desired output.

This whole cycle or TQM is a continual improvement