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Business-Level Strategy: Creating and Sustaining Competitive Advantages
Business-Level Strategy: Creating and Sustaining Competitive Advantages
Business-Level
Strategy: Creating and
Sustaining Competitive
Advantages
©McGraw-Hill Education.
Three Generic Strategies
(1 of 3)
©McGraw-Hill Education.
Overall Low-Cost Leadership
(1 of 2)
©McGraw-Hill Education.
Overall Low-Cost Leadership
(2 of 2)
©McGraw-Hill Education.
Improving Competitive Position vis-à-
vis the Five Forces: Cost Leadership
©McGraw-Hill Education.
Pitfalls of Cost Leadership
Reduced flexibility
©McGraw-Hill Education.
Differentiation
(1 of 2)
©McGraw-Hill Education.
Differentiation
(2 of 2)
Differentiation requires:
• A level of cost parity relative to competitors
• Integration of multiple points along the value chain
• Superior material handling operations to minimize
damage
• Low defect rates to improve quality
• Accurate and responsive order processing
• Personal relationships with key customers
• Rapid response to customer service requests
• Differentiation along several different dimensions at
once
©McGraw-Hill Education.
Improving Competitive Position vis-à-
vis the Five Forces: Differentiation
©McGraw-Hill Education.
Pitfalls of Differentiation
©McGraw-Hill Education.
Focus
(1 of 2)
©McGraw-Hill Education.
Focus
(2 of 2)
2. Differentiation focus
• Differentiates itself in its target market
©McGraw-Hill Education.
Improving Competitive Position vis-à-
vis the Five Forces: Focus
An overall focus strategy
Creates higher entry barriers due to cost leadership
or differentiation or both
Can provide higher margins that enable the firm to
deal with supplier power
Reduces buyer power because the firm provides
specialized products or services
Focused niches less vulnerable to substitutes
©McGraw-Hill Education.
Pitfalls of Focus
©McGraw-Hill Education.
Industry Life Cycle Stages
(1 of 2)
©McGraw-Hill Education.
Industry Life Cycle Stages
(2 of 2)
©McGraw-Hill Education.
Strategies in the Introduction Stage
©McGraw-Hill Education.
Strategies in the Growth Stage
©McGraw-Hill Education.
Strategies in the Maturity Stage
©McGraw-Hill Education.
Strategies in the Decline Stage
©McGraw-Hill Education.