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Business Level Strategy

Autor:   •  May 4, 2017  •  Course Note  •  292 Words (2 Pages)  •  792 Views

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Business level strategy

Source of Competitive Advantage

Efficiency

Uniqueness

Breadth of competitive scope

Broad target

Cost leadership

Differentiation

Narrow target

Focus

based on

* Low cost                  *distinctive product

Cost Leadership strategy

Operational excellence

Constant effort to reduce costs

  • Invest in “good” facilities with an efficient capacity
  • PROCESS INNOVATION - Streamline & automate
  • Benefit from experience (learning curve)
  • Control costs of overhead & contracted activities
  • Ensure value for $ in marketing, sales & service
  • Moving production to cheaper locations

[pic 1][pic 2]

Major risks

  • New technology may take away your cost advantage

(Toyota JIT vs Ford Mass Produce)

  • Competitors may be able to replicate your value chain

(Chinese manufacturers vs Sony)

  • Focus on efficiency could overlook changes in customer preferences

(Telephone voice messaging vs Operator)

Differentiation strategy

Product Leadership

Constant effort to distinguish products

  • Product innovation & marketing
  • Strong R&D and engineering capability
  • Quality in product and service
  • Experienced and motivated Staff
  • Use advertising and word of mouth to shape perceptions

[pic 3][pic 4]

Major risks

  • Customers may decide that the cost of “uniqueness” is too great
  • Competitors may learn how to imitate your product or process
  • Distinctive features that you offer may no longer be valued by customers

Focus strategy

Customer Intimacy

Constant effort to serve a niche market

• Target a narrow segment where needs and preferences differ significantly from the rest of the market.

• Serve that segment or niche at a lower cost or offer something customized to their needs and tastes.

• Remain dedicated to serving the niche better than anyone else.

Major risks

  • Target segment becomes unattractive due to eroding boundaries or declining demand.
  • Larger rivals may increase their focus on an attractive segment.
  • New entrants with focus strategies may sub-segment the niche.

Best on all three

IKEA, DELL, UNIQLO....

...

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