BUSINESS LEVEL STRATEGY

ANALYSIS

The Positioning
Approach.
Porters 5 Forces.
Value Chain Analysis.
The Generic
Strategies.

The Positioning
Approach

The oldest approach to military

strategy.
The newest of the three prescriptive
approaches to strategy .

Design and Planning Approaches were

explained in Chapter 3.

Focuses on how firms in a given context

differ in product market positions compared
to the competition.
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Premises of The
Positioning
Strategy follows structure.
Approach
Looks at the groups of competitors in
an industry.
Relies more heavily on calculation than
the design or planning schools.
Places even more emphasis on the role
of strategic planners.
81

Porters Five
Breaking
Industry-Level
ForcesApart
Analysis
Competition

87

Porters Five
Forces
Analysis
Threat of
Entry

The 6 Barriers of
Entry

Economies of Scale.
Product Differentiation.
Capital Requirements.
Cost Disadvantages Independent of Size.
Access to Distribution Channels.
Government Policy.

89

Porters Five
Forces Analysis
Power of
Buyers

Buyer Power
Determinants
Bargaining Leverage.

Buyer Concentration
Buyer Volume.
Buyer Switching Costs.
Buyer Information.
Ability to Integrate Backward.
Substitute Products.
Pull-Through.
90

Buyer Power
Determinants
Price Sensitivity.

Price/Total Purchases
Product Differences.
Brand Identity.
Impact on Quality/Performance.
Buyer Profits.
Decision-Makers Incentives.
90

Porters Five
Forces Analysis

Power
of
Suppliers

Supplier Power
Determinants

Differentiation of Inputs.
Switching Costs of Suppliers.
Presence of Substitute Products.
Supplier Concentration.
Importance of Volume to Supplier.
Cost Relative to Total Purchases in

the
Industry.
Impact of Inputs on Cost or
Differentiation.
90

Porters Five
Forces Analysis

Power
of
Substitutes

Power of
Substitutes
Relative Price Performance of

Relative Price Performance of

Substitute.

Switching Costs.
Buyer Propensity to Substitute.
92

Porters Five
Forces Analysis

Competitive
Rivalry

Determinants of

Rivalry

Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers.

92

Determinants of

Rivalry

Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers.

Competition
is
Everything!!!

Value Chain
Analysis

Figure 3

98

Value Chain
Analysis

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Primary Activities
Figure 3

Value Chain
Analysis
Procurement
Human Resource Management
Technology Development
Procurement

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Value Chain
Analysis

Importance of value-chain analysis is that

it
provides a framework for identifying or
developing a distinctive competence.

82

Devising a Plan of Action

Position the Company.

Influence the Balance of the Forces.
Anticipate Shifts in the Forces.

93

Creating Families of Strategies

1
2
3
4
5

. Locating the core business.

. Distinguishing the core business.
. Elaborating the core business.
. Extending the core business.
. Reconceiving the core business.

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Creating Families of Strategies

1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.
The Core Business is reflected in the
Choice of Generic Strategies

Porters Generic
StrategiesCost Advantage
Lower Cost
Broad
Target

Differentiation

1. Cost Leadership

Competitive
Scope

Narrow
Target

Figure 4

99

Porters Generic
StrategiesCost Advantage
Lower Cost
Broad
Target

Competitive
Scope

Narrow
Target

Figure 4

1. Cost Leadership

Differentiation
2. Differentiation

Porters Generic
StrategiesCost Advantage
Lower Cost
Broad
Target

1. Cost Leadership

Competitive
Scope

Narrow
Target

Figure 4

3A. Cost Focus

Differentiation
2. Differentiation

Porters Generic
StrategiesCost Advantage
Lower Cost
Broad
Target

1. Cost Leadership

2. Differentiation

3A. Cost Focus

3B. Differentiation
Focus

Competitive
Scope

Narrow
Target

Figure 4

Differentiation

Strategies of Differentiation

Price Differentiation.
Image Differentiation.
Support Differentiation.
Quality Differentiation.
Design Differentiation.
Undifferentiation.
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Strategies of Scope

Unsegmentation.
Segmentation.
Niche.
Customizing.

100

Elaborating the Core Business

Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Product Development Strategies.

101

Elaborating the Core Business

Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Product Development Strategies.

Ways to Elaborate a Given

Business
Existing Product

New Product

Existing
Market

Penetration
Strategies

Product
Development
Strategies

New
Market

Market
Development
Strategies

Diversification
Strategies

Figure 5

101

Questions ?

End of Presentation