It is 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.

Three Issues:
Whom it will serve
What needs target customers have that it will satisfy
How those needs will be satisfied through implementation
of given strategy
Business-level strategies are intended to create
differences between the firms position relative to
those of its rivals

To position itself, the firm must decide whether it
intends to perform activities differently or to perform
different activities as compared to its rivals

Competitive Advantage
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Cost Uniqueness
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Cost
Leadership
Differentiation
Focused Cost
Leadership
Focused
Differentiation
Integrated Cost
Leadership/
Differentiation
It is an integrated set of actions designed to

produce or deliver goods or services with

features that are acceptable to customers at

the lowest cost relative to Competitors.

Eg;- Big Bazar,Mcdonalds

Cost Drivers Value Chain
Determine and
control
Reconfigure, if
needed
Alter production process
Change in automation
New distribution channel
Direct sales in place of
indirect sales
New advertising media
New raw material
Backward integration
Forward integration
Change location
relative to suppliers or
buyers
Dramatic technological change could take away your
cost advantage

Competitors may learn how to imitate value chain

Focus on efficiency could cause cost leader to
overlook changes in customer preferences

Unique attributes & characteristics of a firms product
provide value to customers
Premium prices due to unique need satisfaction
Unusual Features, Responsive Customer Service, Rapid
Product Innovations, Different Status , Engineering
Designs, Prestige & Status
Challenge to identify features that create value for
customers

Unique product features
Unique product performance
Exceptional services
New technologies
Quality of inputs
Exceptional skill or experience
Detailed information
The price differential between the
differentiators product and the cost leaders
product becomes too large
Differentiation ceases to provide value for
which customers are willing to pay
Experience narrows customers perceptions
of the value of differentiated features
Counterfeit goods replicate differentiated
features of the firms products
Integrated set of actions designed to produce goods or
services that serve the needs of a particular competitive
segment
A particular Buyer group, A different segment of a
product line, different geographic market
Firms have the core competencies required to provide
value to a narrow competitive segment that exceeds the
value available from firms serving customers on industry
wide basis
A focus strategy must exploit a narrow targets
differences from the balance of the industry by:

isolating a particular buyer group
isolating a unique segment of a product line
concentrating on a particular geographic market
finding their niche
Achieve LOWER COSTS than rivals in serving the
segment -- A low-cost strategy (Focused cost
leadership strategy). E.g.:- Aircel , Docomo

OFFER niche buyers SOMETHING DIFFERENT
from rivals -- A differentiation strategy(Focussed
differentiation strategy). E.g.:- Tanishq , Fastrack

Large firms may overlook small niches
Firm may lack resources to compete in the broader
market
May be able to serve a narrow market segment more
effectively than can larger industry-wide competitors
Focus may allow the firm to direct resources to certain
value chain activities to build competitive advantage
Firm may be out focused by competitors

Large competitor may set its sights on your niche
market

Preferences of niche market may change to match
those of broad market
A firm that successfully uses an integrated cost
leadership/differentiation strategy should be in a
better position to:
Adapt quickly to environmental changes
Learn new skills and technologies more quickly
Effectively leverage its core competencies while
competing against its rivals
Eg:-Cosmetic Company- AVON

It often involves compromises
Becoming neither the lowest cost nor the
most differentiated firm
Becoming stuck in the middle
Lacking the strong commitment and
expertise that accompanies firms following
either a cost leadership or a differentiated
strategy


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