Strategic Management

Fall 2020; Lecture 7; November 17

Associate Professor Nazlee Siddiqui
North South University
 Business level strategies: An overview
 What is it?
A business’s overall competitive theme in a given market. This theme should be
able to accommodate the different positioning strategies that it can use in different
industry setting.

 The overall strategies could be broadly about: Cost, Differentiation or Value

innovation
 The business level strategy must be aligned with functional strategies.
 Market segmentation is important in business level strategy
 The way a company decides to group customers, based on important differences in
their needs, in order to gain a competitive advantage. Example approaches:
standardisation, segmentation and focus strategies.
Nature of different level of
strategies: Broadest? Time-
orientation? Interrelation?
 Sample question
Multiple choice questions. You are to attempt all the multiple-choice questions by
choosing the correct answer with (X). You are also to justify your choice of answer with
explanation that is 35-50 words. Please note there is only one correct answer here.

1) Assume you are a Finance manager in the Navana Motors. So you will be actively
involved with :
 A) Corporate Level Strategies
 B) Business Level Strategies
 C) Functional Level Strategies
 D) All of the aboce
 Business Strategy examples: Chapter 6, p.173

 Fragmented industry:
Any industry composed of a large number of small, and medium
sized companies

 Lack of opportunities of scale of economies.

 Difficulties with brand loyalty.
 Low entry barriers. Example of local fragmented
industry?
Fragmented Industry strategies
 Consolidated through value innovation:
Offering value in a new way. The value innovator defines value
differently than do the established companies and finds a way to offer
value that lowers the cost. Sometimes, this is done through creation of
economies of scale.

 Chaining: A strategy designed to obtain the advantages of cost

leadership by establishing a network of linked merchandising outlets
interconnected by information technology that functions as one large
company.
 Franchising: A strategy in which franchisor grants to its franchisee
the right to use the franchise’s name, reputation, and business
model in return for a franchisee fee and often a % of profit.
 Fragmented industry strategies contd…
 Horizontal Integration: The process of acquiring or merging with
industry competitors to achieve the competitive advantages that arise
from a large size and scope of operations.
 Vertical Integration: Where a company expands its operations either
backward into an industry that produces inputs for the company’s
products or forward into an industry that uses, distributes, or sells the
company’s products.
Critical analysis:
 Similarities and differences?
 Advantage and disadvantages?
Business Strategy and Technology: Chapter 7, p.202

 Industry has combination of players with different cost

structure:

 Very high fixed cost but very minimal marginal cost

 Examples: Analog music recording, music in CD and music on
the internet

How did the cost structure change

with the above movement?
Strategy and Technology
 Technical standard: A set of technical specifications that that
producers adhere to when making a product or component.
 Who decides the technical standard?

 Format wars: Battles to control the source of differentiation, and

thus the value that such differentiation can create for the
customer.
 Role of complementary products?
 Killer applications?
 Aggressive pricing?
 Cooperate with competitors
Strategy and Technology: First mover organisation

 Develop and market the innovation.

 Develop and innovate the market jointly with other companies
through a strategic alliance or joint venture.
 License the innovation to others and allow them to develop the
market.

Which strategy to choose depends on the answer to following:

 Access to capital and complementary factors?
 Height of barriers to imitation? Specifically, threat of any capable
competitors who could rapidly imitate the innovation?
 Threat of new innovation?
Strategies: Technology Organisations in different stages of life cycle

How should the strategies change?

IS there any other industry that mirrors the high cost initial
investment structure?
Strategies in a declining industry, P. 196