Ppt Ch05

Chapter Five Building Competitive Advantage Through Business-Level Strategy

Business-Level Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],A successful business model results from business level strategies that create a competitive advantage over its rivals. These decisions determine which strategies are formulated & implemented to put a business model into action.

Customer Needs: Product Differentiation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Customer Needs: Market Segmentation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Identifying Customer Groups and Market Segments Figure 5.1

Three Approaches to Market Segmentation Figure 5.2

Implementing the Business Model ,[object Object],[object Object],[object Object],[object Object],[object Object],A profitable business model depends on providing the customer with the most value while keeping cost structures viable.

Wal-Mart’s Business Model Figure 5.3

Competitive Positioning at the Business Level Source: Copyright © C. W. L. Hill & G. R. Jones, “The Dynamics of Business-Level Strategy,” (unpublished manuscript, 2002). Maximizing the profitability of the company’s business model is about making the right choices with regard to value creation through differentiation, costs, and pricing. Figure 5.4

Generic Business-Level Strategies ,[object Object],[object Object],[object Object],[object Object],Specific business-level strategies that give a company a specific competitive position and advantage vis-à-vis its rivals

The Four Principal Generic Business-Level Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Cost Leadership Generic Business-Level Strategies Cost leaders establish a cost structure that allows them to provide goods and services at lower unit costs than competitors . ,[object Object],[object Object],[object Object],[object Object]

Advantages of Cost Leadership Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Cost leader is able to charge a lower price or is able to achieve superior profitability than its competitors at the same price.

Disadvantages Cost Leadership Strategies ,[object Object],[object Object],[object Object]

Why Focus Strategies Are Different     Figure 5.7

Focus Generic Business-Level Strategies The focuser strives to serve the need of a targeted niche market segment where it has either a low-cost or differentiated competitive advantage. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Advantages: Focus Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object]

Disadvantages: Focus Strategies ,[object Object],[object Object],[object Object],[object Object]

Companies with a differentiation strategy create a product that is different or distinct from its competitors in an important way. ,[object Object],[object Object],[object Object],[object Object],[object Object],Differentiation: Generic Business-Level Strategies

Advantages of Differentiation Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Differentiators can create demand for their distinct products and charge a premium price, resulting in greater revenue and higher profitability.

[object Object],[object Object],[object Object],[object Object],Disadvantages of Differentiation Strategies

Broad Differentiation: Cost Leadership and Differentiation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Competitive Positioning: Strategic Groups Strategic Groups are groups of companies that follow a business model similar to other companies within their strategic group, but are different from that of other companies in other strategic groups.

Failures in Competitive Positioning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],There is no more important task than ensuring that the company is optimally positioned against its rivals to compete for customers.

Ppt Ch05

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