Business-Level Strategy BUSI 7130/7136
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Business-Level Strategy BUSI 7130/7136

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    Business-Level Strategy BUSI 7130/7136 Business-Level Strategy BUSI 7130/7136 Presentation Transcript

    • Business-Level Strategy BUSI 7130/7136 Chris Shook
    • Agenda
      • Overview of Business Level Strategy
      • What is Strategy
      • Geometry of Competition
    • Business-Level Strategy
      • How to create competitive advantage in each business in which the company competes.
    • Generic Business Level Strategies Cost Uniqueness Source of Competitive Advantage
    • Breadth of Competitive Scope Broad Target Market Narrow Target Market Cost Generic Business Level Strategies Source of Competitive Advantage Uniqueness
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Focused Differen- tiation Cost Leadership Differen- tiation Focused Low Cost Generic Business Level Strategies Uniqueness
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Cost Leadership Generic Business Level Strategies Uniqueness
    • Relatively standardized products Key Criteria Cost Leadership Business Level Strategy
    • Relatively standardized products Features acceptable to many customers Key Criteria Cost Leadership Business Level Strategy
    • Relatively standardized products Features acceptable to many customers Lowest competitive price Key Criteria Cost Leadership Business Level Strategy
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Cost Leadership Differen- tiation Generic Business Level Strategies Uniqueness
    • Value provided by unique features and value characteristics Key Criteria Differentiation Business Level Strategy
    • Value provided by unique features and value characteristics Command premium price Key Criteria Differentiation Business Level Strategy
    • Value provided by unique features and value characteristics Command premium price Key Criteria Differentiation Business Level Strategy High customer service
    • Value provided by unique features and value characteristics Command premium price Superior quality Key Criteria Differentiation Business Level Strategy High customer service
    • Value provided by unique features and value characteristics Command premium price Superior quality Key Criteria Differentiation Business Level Strategy Prestige or exclusivity High customer service
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Cost Leadership Differen- tiation Generic Business Level Strategies Focused Differen- tiation Focused Low Cost Uniqueness
    • Focused Business Level Strategies Focused Business Level Strategies involve the same basic approach as Broad Market Strategies
    • Focused Business Level Strategies involve the same basic approach as Broad Market Strategies Large firms may overlook small niches However..... Opportunities may exist because: * Focused Business Level Strategies
    • Firm may lack resources to compete industrywide Large firms may overlook small niches However..... Opportunities may exist because: * * Focused Business Level Strategies Focused Business Level Strategies involve the same basic approach as Broad Market Strategies
    • Firm may lack resources to compete industrywide Large firms may overlook small niches However..... Opportunities may exist because: * * * Focused Business Level Strategies Focused Business Level Strategies involve the same basic approach as Broad Market Strategies May be able to serve a narrow market segment more effectively than industrywide competitors
    • Focused Differentiators may thrive by selecting a small market that is underserved by large players * Focused Business Level Strategies Focused Business Level Strategies involve the same basic approach as Broad Market Strategies
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Cost Leadership Differen- tiation Generic Business Level Strategies Focused Differen- tiation Focused Low Cost Uniqueness
    • Breadth of Competitive Scope Source of Competitive Advantage Broad Target Market Narrow Target Market Cost Cost Leadership Differen- tiation Generic Business Level Strategies Focused Differen- tiation Focused Low Cost Integrated Low Cost/ Differentiation Uniqueness
    • What is Strategy? Porter, 1996
    • What does the article say about OE ?
    • What does it say about unique activities?
    • What about trade-offs?
    • Is Growth Always Good?
    • Fit Elimination of Activities Optimization Optimization of Effort Synergy Reinforcing Activities Second-Order Single Mindedness Simple Consistency First-Order Goal Definition Type of Fit
    • Geometry of Competition
    • Summary
      • Competitive advantage is very rare.
        • Most competitors don’t have a competitive advantage
          • Despite
            • Good products
            • Good customer relations
            • Excellent capabilities
      • Competitive position is very real.
    • Ind Avg Price Ind Ave Cost Alternate Paths to Outperforming Industry Average
      • Low cost producers have a cost savings greater than its price reduction
      • Differentiated producer commands a price premium in excess of its added costs
    • Geometry of Competition
      • Where are you in relation to your competitors?
      • Two types of multidimensional positioning
        • Positioning related to capabilities
        • Positions related to offerings
    • Positioning Related to Capabilities
      • Capabilities drive offerings
      • Assets & Activities
      • ->Capabilities
      • ->Offerings A firm must have
        • Competitive offerings
        • Frontier capabilities
        • A fit between the two
    • Advantage Curve for Steinway and Yamaha Yamaha Steinway
    • Stuck in the Middle A B C
    • Win in the Middle A B C
    • A Guide to Action
      • Change the offerings (i.e. move the dot)
      • Create new capabilities (i.e. shift the curve)
      • Influence customer preferences
      • Change dimensions of competition (change the axis)