Business-Level Strategy

CHAPTER4Business-LevelStrategyCHAPTER4Business-LevelStrategySTRATEGICACTIONS:STRATEGYFORMULATIONStrategicManagementCompetitivenessandGlobalization:ConceptsandCasesMichaelA.Hitt•R.DuaneIreland•RobertE.HoskissonSeventheditionAfterreadingthischapter,youshouldbeableto:•1.Definestrategyandexplainbusiness-levelstrategies.•2.Describetherelationshipbetweencustomersandbusiness-levelstrategies.•√3.Discusstheissuesfirmsconsiderwhenevaluatingcustomersintermsofwho,what,andhow.•4.Definetheintegratedcostleadership/differentiationstrategyanddiscussitsincreasingimportanceinthe21st-centurycompetitiveLandscape.•√5.Describethecapabilitiesnecessarytodevelopcompetitiveadvantagethroughthecostleadership,differentiation,focusedcostleadership,focuseddifferentiation,andintegratedcostleadership/differentiationbusiness-levelstrategies.•6.Explaintherisksassociatedwitheachofthefivebusiness-levelstrategies.Chapter3InternalEnvironmentChapter2ExternalEnvironmentTheStrategicManagementProcessStrategicIntentStrategicMissionStrategicCompetitivenessAboveAverageReturnsFeedbackStrategyFormulationChapter4Business-LevelStrategyChapter5CompetitiveDynamicsChapter6Corporate-LevelStrategyChapter8InternationalStrategyChapter9CooperativeStrategiesChapter7Acquisitions&RestructuringStrategyImplementationChapter10CorporateGovernanceChapter11Structure&ControlChapter12StrategicLeadershipChapter13Entrepreneurship&InnovationStrategicInputsStrategicActionsStrategicOutcomes1Chapter2ExternalEnvironmentFiveForcesAnalysisChapter3InternalEnvironmentResources,CapabilitiesandCoreCompetenciesSustainableCompetitiveAdvantage2Chapter4BusinessLevelStrategyChapter2ExternalEnvironmentFiveForcesAnalysisChapter3InternalEnvironmentResources,CapabilitiesandCoreCompetenciesSustainableCompetitiveAdvantage3CoreCompetencyTheresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals.4StrategyAnintegratedandcoordinatedsetofactionstakentoexploitcorecompetenciesandgainacompetitiveadvantage.CoreCompetencyTheresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals.5StrategyAnintegratedandcoordinatedsetofactionstakentoexploitcorecompetenciesandgainacompetitiveadvantage.BusinessLevelStrategyActionstakentoprovidevaluetocustomersandgainacompetitiveadvantagebyexploitingcorecompetenciesinspecific,individualproductmarkets.CoreCompetencyTheresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals.64.1customers:who,what,andhowMarketsegmentationisaprocessthroughwhichpeopleWithsimilarneedsareclusteredintoindividualandidentifiablegroups.4.1.1Who:Determiningthecustomerstoserve7•4.1.2What:Determiningthecustomerneedstosatisfy•First-moveradvantageisanearlycompetitiveadvantagethatallowsfirmstoanticipatecustomers’needsandshapetheirindustry’sfuture.4.1customers:who,what,andhow8•4.1.3How:Determiningcorecompetenciesnecessarytosatisfycustomer’sneeds•First-moveradvantageisanearlycompetitiveadvantagethatallowsfirmstoanticipatecustomers’needsandshapetheirindustry’sfuture.4.1customers:who,what,andhow9TypesofBusiness-LevelStrategiesCostUniquenessDifferentiationCostLeadershipFocusedDifferentiationFocusedCostLeadershipIntegratedCostLeadership/DifferentiationBroadTargetNarrowTargetCompetitiveAdvantageCompetitiveScope10•Acostleadershipstrategyisanintegratedsetofactionsdesignedtoproduceordelivergoodsorservicesatthelowestcost,relativetocompetitors,withfeaturesthatareacceptabletocustomers.GenericBusinessLevelStrategies11•Acostleadershipstrategyisanintegratedsetofactionsdesignedtoproduceordelivergoodsorservicesatthelowestcost,relativetocompetitors,withfeaturesthatareacceptabletocustomers.•Adifferentiationstrategyisanintegratedsetofactionsdesignedtoproducegoodsorservicesthatcustomersperceiveasbeingdifferentinwaysthatareimportanttothem.12•Acostleadershipstrategyisanintegratedsetofactionsdesignedtoproduceordelivergoodsorservicesatthelowestcost,relativetocompetitors,withfeaturesthatareacceptabletocustomers.•Adifferentiationstrategyisanintegratedsetofactionsdesignedtoproducegoodsorservicesthatcustomersperceiveasbeingdifferentinwaysthatareimportanttothem.•Afocusstrategyisanintegratedsetofactionsdesignedtoproduceordelivergoodsandservicesthatservetheneedsofaparticularcompetitivesegment.13BreadthofCompetitiveScopeSourceofCompetitiveAdvantageBroadTargetMarketNarrowTargetMarketCostCostLeadershipGenericBusinessLevelStrategiesUniqueness14RelativelystandardizedproductsKeyCriteriaCostLeadershipBusinessLevelStrategy15RelativelystandardizedproductsFeaturesacceptabletomanycustomersKeyCriteriaCostLeadershipBusinessLevelStrategy16RelativelystandardizedproductsFeaturesacceptabletomanycustomersLowestcompetitivepriceKeyCriteriaCostLeadershipBusinessLevelStrategy17RelativelystandardizedproductsFeaturesacceptabletomanycustomersLowestcompetitivepriceRequirementsConstantefforttoreducecoststhrough:*BuildingefficientscalefacilitiesCostLeadershipBusinessLevelStrategy18RelativelystandardizedproductsFeaturesacceptabletomanycustom