Professional Documents
Culture Documents
Business Level Strategy
Business Level Strategy
Business Level Strategy
Business-level strategy: an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets
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Strategy
Business-level strategy
Actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets
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Strategy
Fundamental constraints
Scope
What good or service to offer, to which customers
Value chain
How and where to create the good or service How to distribute the good or service in the marketplace(s)
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creation model
Per.
Dem.
Consumption patterns
Perceptual factors
End
Competitive Scope
Broad target
Cost Leader
Narrow target
Focused Cost
Focused Differentiator
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Cost Drivers
Major Cost Drivers Economies of scale Learning/Spillovers Capacity utilization Integration Vertical Linkages Timing Location Political/regulatory Interrelationships (corporate)
Discretionary decisions Product features, performance Mix & variety of products Service levels Small vs. large buyers Process technology Wage levels Product features Hiring, training, motivation
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Implications?
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Implementation Pitfalls
Exclusive focus on Mfg Misunderstand drivers (ABC useful) Failure to recognize/exploit linkages (e.g., across the board cost
reductions)
Contradictions
(e.g., gain mkt share through ES but allow product clutter; cross subsidies)
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Differentiation Strategy
An integrated set of actions designed by a firm to produce or deliver goods or services that customers perceive as
adding value
price may exceed what the firms target customers are willing to pay Non-commodity products customers value differentiated features more than they value low cost
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Themes
Prestige Quality manufacturing, few defects
Rolex Honda, Toyota
Technological leadership
Top-of-the-line image
Ralph Lauren, Kiton 3M Corporation, Intel
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Differentiation Strategy
Add downstream value
lower buyer cost raise buyer performance
Cost
Add value to buyers value: reduce downstream processing time, search time, transaction costs, defect rates, direct costs, learning curves, labor, space, installation, etc. (e.g., CRM software)
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Differentiation Strategy
Some differentiation actions required by this strategy: develop new systems and processes signal and shape buyer perceptions quality focus capability in R&D Implication - maximize human capital contributions
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Competitive Advantage
Differentiation Advantage