FORMULATING BUSINESS LEVEL STRATEGY

Business Level Strategies

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.

Business Level Strategies

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.

Corporate strategy: It is the growth design of the firm; it spells out the growth objectives of the firm- the direction, extent, pace and timing of the firms growth; it also spells out the strategy for achieving the growth.

Business Level Strategies

Core Competencies and Strategy

Core competencies

The resources and capabilities that have been determined to be a source of competitive advantage for a firm over its rivals

Strategy

An integrated and coordinated set of actions taken to exploit core competencies and gain a competitive advantage

Business-level strategy

Actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets

Distinction between business level strategy and corporate strategy

Corporate level strategy covers the corporation as a whole and all its business, and is concerned with corporate growth and the best utilization of all resources of the corporation Business level strategy engages itself with shaping the future of the business unit concerned. Business level strategy is essentially competitive strategy.

Linkage between Business level strategy

and Corporate level strategy

BUSINESS LEVEL OBJECTIVES

Business level objectives-nature and scope Business level objectives take their cue from priorities assigned by corporate strategy. Objectives at the two levels are formulated in a composite manner, each impinging on the other. Business level objectives will specify the growth to be achieved by the unit; Quantum of growth Rate of growth Timing of growth

 Business level objectives will cover all key areas such as: Sales volume Sales revenue Market share Market standing and Profit They will also cover investment to be made: in plant and machinery, in process/technology, in human resources, in systems and other requirements.

Business Level Strategies

Competitive Advantage
Low-cost Differentiation

Broad Target

Price route

Differentiation

Competitive Scope

Narrow Target

Cost Focus

Differentiation Focus

PRICE ROUTE
Firms taking to the price route in business level strategy compete on the strength of pricing. They use price as their competitive lever. Firms opting for price route will have to have a substantial cost advantage. The cost advantage can emanate from different factors like a large market share built over a period of time, locational advantage, benefit of early entry. Right from the start, cost leadership must have been ensured.