HITT Chapter 05 [Compatibility Mode]

8/12/2019 HITT Chapter 05 [Compatibility Mode]

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Business Level Strategy


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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

Indicates the choices the firm has made about how it intends to compete in individual product markets

COPYRIGHT 2009 by Nelson Education Ltd. All rights reserved 2


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the foundation of successful business level strategies and

should never

be

taken

for

granted



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Selecting a business level strategy



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Table 5.1

Basis for

Customer

Segmentation

5COPYRIGHT 2009 by Nelson Education Ltd. All rights reserved


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The Purpose of a Business Level Strategy

Create differences between:

firms position

its competitors



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Selecting a business level strategy



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Figure 5.2 Five Business Level Strategies



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Figure 5.1 WestJets Activity System



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Competitive Risks:Cost Leadership Strategy

Processes used to produce could become obsolete because of competitors innovations

Innovations may allow rivals to produce at costs lower than those of the original cost leader

Too much focus on cost reductions may occur at the expense of trying to understand customers perceptions of competitive levels of differentiation

Imitation: using their own core competencies, competitors sometimes learn how to successfully imitate the cost leaders strategy



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Competitive Risks:Differentiation Strategy

customers might

decide

the

price

differential

between

the

differentiators product and cost leaders is too large

firms means of differentiation may cease to provide value for

which customers are willing to pay

experience can narrow customers perceptions of the value of a products differentiated features

Counterfeiting: Fakes can damage the reputation of the company, not to mention harm the customers



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Competitive Risks:Focus Strategies

competitor may be able to focus on a more narrowly defined competitive segment and outfocus the focuser

a company competing on an industry wide basis may

decide that the market segment served by the focus strategy firm is attractive and worthy of competitive pursuit

the needs of customers within a narrow competitive segment may become more similar to those of industry wide customers as a whole



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Competitive Risks:Integrated Cost Leadership / Differentiation Strategy

Difficult for

firms

to

perform

primary

and

support

activities in ways that allow them to produce relatively inexpensive products with levels of differentiation that create value for the target customer

Result is becoming stuck in the middle


HITT Chapter 05 [Compatibility Mode]

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