Chapter 4 Business-Level Strategy

Kevin Chen Kristen Wallis Inman Breaux Jordann Zachary Ryan Hollaender Roberto Torres

Overview

Definition of Business-Level Strategy Who, What, and How? (Customer Relation) Cost Leadership Strategy & Risks Differentiation Strategy & Risks Focus Strategy & Risks Integrated Strategy & Risks Q&A

Business-Level Strategy

What is it? Ans: action firms use to gain a competitive advantage by exploiting core competencies in specific product markets. Types Of Business-Level Strategy

Cost Leadership Differentiation Focused Cost Leadership/Differentiation Integrated Cost Leadership/Differentiation

Who, What & How?

Customers are the foundation of successful business-level strategy Who?

Customer groups to be served Needs that the firm seeks to satisfy Core competencies the firm will use to satisfy customer needs

What?

How?

Cost Leadership

Low-Cost Product Competitive Levels of differentiation Risks

Newer technologies Lower Cost & New Feature without increasing cost Imitation Competitor learns to imitate cost leaders strategy

Differentiation

Provides product that are different Premium earned on uniqueness that meets customers demands

Risks

Inability to create value that customer is willing to pay premium for Competitor offers product in similar features but at lower cost

Focused Strategy

Narrow competitive segments

Buyer Group Product Segment Geographic Area (eg. Wal-Mart)

Risks

Competitors ability to out-focus (eg. Big Dog Motorcycle-high end premium cruiser)

Integrated Strategy

Integration of Cost Leadership & Differentiation Relatively Low-Cost with Valued Differentiation (eg. Target) Risks:

Do not offer sufficient value in either low cost or differentiation (Stuck In The Middle)

Brief Review

Analyze Customer

Who What and How

Cost Leadership Differentiation Focused Integrated

Choose A Strategy

Question & Answer