Documente Academic
Documente Profesional
Documente Cultură
Business-Level Strategy
Robert E. Hoskisson
Michael A. Hitt
R. Duane Ireland
Chapter 3 Chapter 4
Strategic Strategic Intent
The External The Internal
Analysis Environment Organization
Strategic Mission
Chapter 5 Chapter 6
Chapter 7
Business-Level Competitive Rivalry and
Creating Strategy Competitive Dynamics
Corporate-Level Strategy
Competitive
Advantage Chapter 8
Chapter 9 Chapter 10
Acquisition and
International Strategy Cooperative Strategy
Restructuring Strategies
Monitoring
And Creating Chapter 11 Chapter 12
Entrepreneurial Corporate Governance Strategic Entrepreneurship
2
Opportunities
Discussion Questions
Click
Here 1. What role does the organization’s
concern for customers play in shaping
its strategy?
Click
Here 2. What is business level strategy? What
are some types of business level
strategy?
Click
Here 3. What type of customers are necessary
to pursue a cost leadership strategy?
How is a cost leadership strategy
developed?
Click
Here More discussion questions 3
Discussion Questions (cont.)
Click
Here
4. How does establishing the cost leadership
position deal with the five competitive forces?
What are the risks of pursuing cost
leadership?
Click
5. What type of customers are necessary to
Here pursue a differentiation strategy? How is a
differentiation strategy developed?
6. How does establishing differentiation help a
firm fend off threats from the five forces?
Click
Here
What are the risks of pursuing differentiation?
4
Discussion Questions (cont.)
Click
Here 7. When should a focus strategy be
implemented? What are the risks
of a focus strategy?
Click
Here 8. What is the integrated low-cost
differentiation strategy? What are
the arguments as to why it is
increasing in importance? What
are the risks associated with the
integrated strategy?
5
Discussion Question 1
6
Managing Relationships With
Customers
Customer relationships are strengthened by
offering them superior value
– help customers to develop a new competitive
advantage
– enhance the value of existing competitive
advantages
Successful companies chart new
competitive space in order to serve new
customers as they simultaneously try to
find new ways to better server existing
customers 7
Managing Relationships With
Customers
Establish a competitive advantage along
these dimensions:
Reach
– the firm’s access and connection to customers
Richness
– the depth and detail of the two-way flow of
information between the firm and customers
Affiliation
– facilitating useful interactions with customers
8
The Central Role of Customers
In selecting a business-level
strategy, the firm determines
1. who it will serve
2. what needs those target customers
have that it will satisfy
3. how those needs will be satisfied
9
Basis for Customer Segmentation
Customers
Consumer Industrial
Markets Markets
10
Market Segmentation: Consumer Markets
Demographic factors
Per. Dem. Socioeconomic factors
Consumer Geographic
Con. Soc.
Markets factors
Psychological factors
Psy. Geo.
Consumption patterns
Perceptual factors
11
Market Segmentation: Industrial Markets
End-use segments
Product segments Size End
13
Core Competencies and Strategy
The resources and capabilities that have
Core been determined to be a source of
competencies competitive advantage for a firm over its
rivals
15
Key Issues of Business-Level
Strategy
What good or service to offer customers
How to manufacture or create the good or
service
How to distribute the good or service in
the marketplace
16
Types of Business-Level Strategies
Business-level strategies are intended to
create differences between the firm’s
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
17
Five Generic Strategies
Competitive Advantage
Cost Uniqueness
Cost Differentiation
Leadership
Competitive Scope
Broad
target
Integrated Cost
Leadership/
Differentiation
Narrow
target
Click
Here
Return to
Focused Cost Focused
Discussion
Leadership Differentiation
Questions 18
Discussion Question 3
19
Cost Leadership Strategy
An integrated set of actions designed to
produce or deliver goods or services at the
lowest cost, relative to competitors with
features that are acceptable to customers
– relatively standardized products
– features acceptable to many customers
– lowest competitive price
20
Cost Leadership Strategy
Cost saving actions required by this strategy:
– building efficient scale facilities
– tightly controlling production costs and
overhead
– minimizing costs of sales, R&D and service
– building efficient manufacturing facilities
– monitoring costs of activities provided by
outsiders
– simplifying production processes
21
How to Obtain a Cost Advantage
Determine and Reconfigure, if
control needed
Click
Here Return to Discussion Questions
24
Discussion Question 4
25
Cost Leadership Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Rivalry Among Competing
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Firms
Su
Can use cost leadership
Five Forces of of B u g Powe r
strategy to advantage since:
Thr trants
yer s
En
ea t o
Barg
Bargaining Power
of Suppliers creating higher profits for
the entire industry
26
Cost Leadership Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Bargaining Power of
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Buyers
Su
Can mitigate buyers’ power by:
Five Forces of of B u g Powe r
Thr trants
Competition
competitors, causing them
a inin
f Ne
Barg
Bargaining Power
of Suppliers with buyers back to the
firm
27
Cost Leadership Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Bargaining Power of
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Suppliers
Su
Can mitigate suppliers’ power
Five Forces of of B u g Powe r
by:
Thr trants
yer s
En
ea t o
Barg
Bargaining Power
of Suppliers position
● being able to make very large
yer s
En
ea t o
competitive
Barg
w
29
Cost Leadership Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Threat of Substitute
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Products
Su
Cost leader is well positioned
Five Forces of of B u g Powe r
to:
Thr trants
yer s
En
ea t o
Barg
Bargaining Power
of Suppliers ● buy patents developed by
potential substitutes
● lower prices in order to
Marketing Personnel
31
Click
Here Return to Discussion Questions
32
Discussion Question 5
33
Differentiation Strategy
An integrated set of actions designed by a
firm to produce or deliver goods or services
(at an acceptable cost) that customers
perceive as being different in ways that are
important to them
– price for product can exceed what the firm’s
target customers are willing to pay
– nonstandardized products
– customers value differentiated features more
than they value low cost
34
Differentiation Strategy
Value provided by unique features and
value characteristics
Command premium price
High customer service
Superior quality
Prestige or exclusivity
Rapid innovation
35
Differentiation Strategy
Differentiation actions required by this strategy:
– developing new systems and processes
– shaping perceptions through advertising
– quality focus
– capability in R&D
– maximize human resource contributions
through low turnover and high motivation
36
How to Obtain a Differentiation
Advantage
Control if Reconfigure to
needed maximize
yer s
En
ea t o
Barg
differentiated product
w
Bargaining Power
of Suppliers offsets price competition
Click
Here Return to Discussion Questions
39
Discussion Question 6
40
Differentiation Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Bargaining Power of Buyers
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Can mitigate buyer power
Su
because:
Five Forces of of B u g Powe r ● well differentiated products
Thr trants
yer s
En
ea t o
to price increases
Barg
w
Bargaining Power
of Suppliers
41
Differentiation Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Bargaining Power of
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Suppliers
Su
Can mitigate suppliers’ power
Five Forces of of B u g Powe r
by:
Thr trants
yer s
En
ea t o
Barg
Bargaining Power
of Suppliers ● passing along higher
yer s
En
ea t o
Bargaining Power
of Suppliers least equal to performance
of proven products, but
offered at lower prices
43
Differentiation Strategy and the
Five Forces of Competition
R
at
o f
d uc ts Co ival
mp ry
eti Am
Threat of Substitute
h re Pro ng on
T te
bs ti
tu Fi g
rm
s
Products
Su
Well positioned relative to
Five Forces of of B u g Powe r
substitutes because:
Thr trants
yer s
En
ea t o
Barg
Bargaining Power
of Suppliers to reduce customers’ testing
of new products or
switching brands
44
Structure for Differentiation
Strategy
President and
Limited Staff
R&D Marketing
46
Major Risks of Differentiation
Strategy
Experience may narrow customer’s
perceptions of the value of differentiated
features of the firm’s products
Makers of counterfeit goods may attempt
to replicate differentiated features of the
firm’s products
Click
Here Return to Discussion Questions
47
Discussion Question 7
48
Focused Business-Level
Strategies
A focus strategy must exploit a narrow
target’s 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”
49
Factors That May Drive Focused
Strategies
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
50
Major Risks of Focused Strategies
Firm may be “outfocused” by competitors
Large competitor may set its sights on
your niche market
Preferences of niche market may change
to match those of broad market
Click
Here Return to Discussion Questions
51
Discussion Question 8
What is the integrated low-cost
differentiation strategy? What are
the arguments as to why it is
increasing in importance? What
are the risks associated with the
integrated strategy?
52
Advantages of Integrated Strategy
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
53
Benefits of Integrated Strategy
Successful firms using this strategy have
above-average returns
Firm offers two types of values to
customers
– some differentiated features (but less
than a true differentiated firm)
– relatively low cost (but now as low as
the cost leader’s price)
54
Using the Functional Structure
The integrated form of the functional
structure
– must have decision-making patterns that are
partially centralized and partially decentralized
– will have semi-specialized jobs and rules and
procedures that call for some formal and some
informal job behavior
Strategic flexibility is obtained via
– flexible manufacturing systems
– information networks
– total quality management systems 55
Major Risks of Integrated Strategy
An integrated cost/differentiation business
level strategy often involves compromises
(neither the lowest cost nor the most
differentiated firm)
The firm may become “stuck in the
middle” lacking the strong commitment
and expertise that accompanies firms
following either a cost leadership or a
differentiated strategy
56