2. Business level strategies are intended to
create diffrence between the firms
position relative to those of its rivals.
to position itself the firms must decide
whether it intends to perform different
activities as compared to its rivals.
WHAT IS BUSINESS LEVEL STRATEGIES
3. Purpose of Business-Level (BL)
Strategies
• Two types of competitive advantage firms
must choose between
– Cost (Are we LOWER than others?)
– Uniqueness (Are we DIFFERENT? How?)
• Two types of ‘competitive scope’ firms must
choose between
– Broad target
– Narrow target
• These combine to yield 5 different BL strategies
5. Types of business level strategies
Cost leadership strategy
Differentiation strategy
Focused low cost strategy
Focused differentiation strategy
Using an integrated strategy
6. Firms must offer relatively standard product with
features or characteristic that are
acceptable to customers at the lowest
competitive price.
Firms must consider their value chain of primary
and secondary activities and link those activities
to implement a cost leadership strategy.
COST LEADERSHIP
7. MC. DONALDS
PROVIDES BASIC FAST FOODS MEALS AT THE LOWEST
PRICE
THROGH DIVISION OF LABOUR THEY ARE ABLE TO
PROVIDE LOW PRICE OF THE PRODUCT.
EXAMPLE
8. GOAL IS TO PROVIDE VALUE TO CUSTOMERS
THROUGH UNIQUE FEATURES AND
CHARACTERISTICS OF A FIRM’S PRODUCTS.
DIFFERENTIATION FOCUS ON PRODUCT
INNOVATION AND DEVELOPING PRODUCT
FEATURES THAT CUSTOMERS VALUE. PRODUCTS
GENERALLY COST MORE.
DIFFERENTIATION STRATEGY
10. NARROW TARGET MARKET:
Companies narrow their target markets to better
reach their core customers. These are the customers
who use their products most often and spend the
most money.
BROAD TARGET MARKET:
Much emphasis in marketing is given to segmentation
strategies that break down large audiences into
smaller target markets.
11. FOCUS STRATEGY
The focus strategy concentrates on a
narrow segment and within that segment
attempts to achieve either a cost
advantage or differentiation. The premise
is that the needs of the group can be
better serviced by focusing entirely on it.
12. Objective
Involves concentrated attention on a narrow piece of
the total market.
Serve niche buyers better than rivals.
Keys to Success
Choose a market niche where buyers have distinctive
preferences, special requirements, or unique needs.
Develop unique capabilities to serve needs of target
buyer segment
Characteristics
Achieve LOWER COSTS than rivals in serving the segment
-- A low-cost strategy.
Offer niche buyers SOMETHING DIFFERENT from rivals
-- A differentiation strategy
13. Two primary focused strategies
Focused differentiation Strategy:
Requirements for usage similar to
differentiation strategies.
Defense against the five forces similar to
differentiation strategies.
Examples: Rolls Royce, Fort Howard Paper.
- Rolls Royce (prestige, quality,
engineering design).
14.
15. Focused Cost Leadership strategies:
Requirements for usage similar to low-cost
strategies.
Defense against the five forces similar to
differentiation strategies.
Examples: Rally’s, Martin Brower
White Castle Rally’s (no frills service, limited menu, no
dine-in).
Martin Brower- 3rd largest food supplier, serves fast
food chains.
16.
17. FOCUS STRATEGY FAILS WHEN
Competitors find effective ways to match
a focuser’s capabilities in serving niche
Niche buyers’ preferences shift towards
product attributes desired by majority of
buyers--the niche becomes part of the
overall market
Segment becomes so attractive it
becomes crowded with rivals, causing
segment profits to be destroyed
18. Integrated Cost Leadership/
Differentiation 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.
19.
20. Risks of Integrated Strategies
Harder to implement than other strategies
Must simultaneously reduce costs while
increasing differentiation
Can get ‘stuck in the middle’ resulting in
no advantages and poor performance
