@AMRITA baa Gee ven (eM aCelatere aU AHEAD online Wing Commander KK Vimal Kumar Soe ec case) RA Net oe Summary - Week 4 Business Level Strategies * Corporate level strategies - Actions firms take to gain competitive advantages by operating in multiple markets or industries simultaneously. Business level strategies — Actions firms take to gain competitive advantages in a single market or industry. Functional level strategies - Department level strategies Business level strategies deal with:- + Satisfying customer needs * Achieving an edge over rivals + Avoiding competitive disadvantage Michael Porter's generic strategies:- * Cost leadership (e.g., Walmart, Tesco, Southwest, Ryanair etc.) * Differentiation (e.g., FedEx, Harley Davidson etc.) + Focus (e.g., Diet Coke etc.) Summary - Week 4 Cost Leadership Strategy * Ability to create more economic value than competitors. + Ifyour firm has a cost advantage in your market, develop a strategy to exploit the advantage. + If your competitor has a cost advantage in your market, develop a strategy to either capture the advantage or compete on some other basis Sources of cost advantage:- + Economies of scale * Diseconomies of scale (e.g., Nucor Steel etc.).+ Learning curve economies (e.g., Fuel Injectors manutactured by Robert Bosch etc.). + Differential low-cost access to productive inputs (2.g., oil company with fields in Saudi Arabia versus oil company with fields in north sea etc.). + Technology independent of scale (technological advantage independent of scale) * Policy choices (e.g., incentives for reduction of cost at Southwest airlines etc.) 3 ‘Summary - Week 4 Cost Leadership & Competitive Advantage * Asource of cost advantage will lead to competitive advantage if that source is:- + Valuable (assessed using external analysis — rivalry, entry, substitutes, buyers & suppliers). + Rare (assessed against industry life cycle - emerging & mature). + Costly to imitate (assessed against high cost conditions & low cost conditions). * Organized (implemented appropriately) + Implementing of cost leadership strategy — Implemented through organizational structure & control. + Structure ~ Division of management responsibilities & establishment of reporting relationships. * Control ~ Policies intended to influence behavior (aligning the interests of the individual with the interests of the organization). Rea Summary - Week 4 Organizational Structure + Organizational Structure:- * Simple + Functional * Multi-Divisional + Simple Organizational Structure — Owner/manager makes all major decisions directly & monitors all activities (e.g,, small family owned store/business) * Functional Organizational Structure:- + Divides management responsibilities by function (e.g., marketing, finance, production, R&D ete,), *+ CEO is responsible for strategy & coordination of functions, + Multi nal Organizational Structure:- + Functions are replicated in each division as appropriate. + CEO balances coordination & competition among divisions UC Summary - Week 4 Organizational Controls + Management Controls + Formal Management Controls + Budgeting Policies* Credit Policies * Spending Policies + Travel Policies + Purchasing Policies etc. + Informal Management Controls ~ Culture, Attitudes, Leadership Styles etc. + Compensation Policies ~ Stock Options, Bonuses, Vacations etc. + Compensation policies reinforce formal & informal management controls.