Chapter IV:

Business-Level and Corporate

Level Strategy

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Learning Objectives
4.1 Define two level strategy.
4.2 Understand the customer relationship to BLSs
4.3 Analyze the purpose of BLS
4.4 Understand the reason of diversifying.
4.5 Value creating diversification
4.6 Importance of CLS

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.1 Two Strategy Levels

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Two Strategy Levels
• Business-level Strategy (Competitive)
• Business level strategies refer to the combined set of moves
and actions taken with an aim of offering value to the
customers and developing a competitive advantage, by using
the firm’s core competencies, in the individual product or
service market. It determines the market position of the
enterprise, in relation to its rivals.
• Corporate-level Strategy (Companywide)
• Specifies actions taken by the firm to gain a competitive advantage by
selecting and managing a group of different businesses competing in
several industries and product markets.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.2 Understand the customer relationship to BLSs

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Understand the customer relationship to BLSs
• Who: Determining the Customers to Serve
• Market segmentation
• What: Determining Which Customer Needs to Satisfy
• Customer needs are related to a product’s benefits and features.
• How: Determining Core Competencies Necessary to Satisfy Customer Needs
• Firms use core competencies to implement value creating strategies that
satisfy customers’ needs.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.3 Analyze the purpose of BLS

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 The Purpose of a Business-Level Strategy

• Business-Level Strategies
• Are intended to create differences between the firm’s position relative to those of its
rivals.
• To position itself, the firm must decide whether it intends to:
• Perform activities differently or
• Perform different activities as compared to its rivals

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.4 Reasons for diversifying

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Reason for diversification

• Typically, a diversification strategy is used to increase the firm’s value

by improving its overall performance.
• Other reasons for using a diversification strategy may have nothing to
do with increasing the firm’s value; in fact, diversification can have
reduce a firm’s value.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.5 Value creating diversification

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Value creating diversification

• Sharing Activities
• Activity sharing requires sharing strategic control over business units.
• Activity sharing may create risk because business-unit ties create links between outcomes.
• Transferring Corporate Competencies
• Using complex sets of resources and capabilities to link different businesses through
managerial and technological knowledge, experience, and expertise.
• Market Power
• Sell its products above the existing competitive level and/or
• Reduce the costs of its primary and support activities below the competitive level.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 4.6 Importance of Corporate level strategy

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

 Importance of Corporate level strategy

• The purpose of a corporate-level strategy is to maximize its profitability

and maintain its financial success in the future.
• A corporate-level strategy is utilized to help increase competitive
advantage over its competitors and to continue to offer a unique
product or service to consumers.

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning

THANK YOU!

© Hitt, Ireland and Hoskisson, 2017, published by South-Western Cengage Learning