BUSINESS LEVEL
STRATEGY ANALYSIS
T P
he ositioning Approach.
P
orter’s 5 F
orces.
Value Chain Analysis.
T Generic Strategi...
The Positioning
Approach
The oldest approach to military
strategy.
The newest of the three prescriptive
approaches to stra...
Premises of The
Positioning Approach
Strategy follows structure.
Looks at the groups of competitors in
an industry.
Relies...
Porter’s Five
Forces Analysis
B
reaking Apart Industry-L
evel
Competition

87
Porter’s Five
Forces Analysis
Threat of
Entry
The 6 Barriers of
Entry
Economies of Scale.
Product Differentiation.
Capital Requirements.
Cost Disadvantages Independent ...
Porter’s Five
Forces Analysis
Power of
Buyers
Buyer Power
Determinants
Bargaining Leverage.








Buyer Concentration
Buyer Volume.
Buyer Switching Costs.
Buye...
Buyer Power
Determinants
Price Sensitivity.







Price/Total Purchases
Product Differences.
Brand Identity.
Impact...
Porter’s Five
Forces Analysis

Power
of
Suppliers
Supplier Power
Determinants
Differentiation of Inputs.
Switching Costs of Suppliers.
Presence of Substitute Products.
Supp...
Porter’s Five
Forces Analysis

Power
of
Substitutes
Power of
Substitutes
Relative Price Performance of

Substitute.
Switching Costs.
Buyer Propensity to Substitute.
92
Porter’s Five
Forces Analysis

Competitive
Rivalry
Determinants of
Rivalry
Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Id...
Determinants of
Rivalry
Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Id...
Value Chain Analysis

Figure 3

98
Value Chain Analysis

n
iin
rg
rg
Ma
Ma

Ma
Ma
r
rgii
gn
n

ce
ce
rvi
rvi
Se
Se
g
ng
tn
etii
rke s
rk s
Ma Sa e
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&...
Value Chain Analysis

n
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Human Resource Management
Technology Development
Procurement

Ma
Ma
r
rgii
gn
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...
Value Chain Analysis
Importance of value-chain
analysis is that

it provides a framework for
identifying or

82
Devising a Plan of Action
Position the Company.
Influence the Balance of the Forces.
Anticipate Shifts in the Forces.

93
Creating Families of Strategies
1
2
3
4
5

. Locating the core business.
. Distinguishing the core business.
. Elaborating...
Creating Families of Strategies
1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the ...
Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target

Differentiation

1. Cost Leadership

Competitive
Scope...
Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target

Competitive
Scope

Narrow
Target

Figure 4

1. Cost Le...
Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target

1. Cost Leadership

Competitive
Scope

Narrow
Target

...
Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target

1. Cost Leadership

2. Differentiation

3A. Cost Focus...
Strategies of Differentiation
Price Differentiation.
Image Differentiation.
Support Differentiation.
Quality Differentiati...
Strategies of Scope
Unsegmentation.
Segmentation.
Niche.
Customizing.

100
Elaborating the Core Business
Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Prod...
Elaborating the Core Business
Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Prod...
Ways to Elaborate a Given
Business
Existing Product

New Product

Existing
Market

P
enetration
Strategies

P
roduct
Devel...
Questions ?
End of Presentation
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Value chain & 5 f

  1. 1. BUSINESS LEVEL STRATEGY ANALYSIS T P he ositioning Approach. P orter’s 5 F orces. Value Chain Analysis. T Generic Strategies. he
  2. 2. The Positioning Approach The oldest approach to military strategy. The newest of the three prescriptive approaches to strategy . Design and Planning Approaches were explained in Chapter 3. Focuses on how firms in a given context differ in product market positions compared to the competition. 80
  3. 3. Premises of The Positioning Approach Strategy follows structure. Looks at the groups of competitors in an industry. Relies more heavily on calculation than the design or planning schools. Places even more emphasis on the role of strategic planners. 81
  4. 4. Porter’s Five Forces Analysis B reaking Apart Industry-L evel Competition 87
  5. 5. Porter’s Five Forces Analysis Threat of Entry
  6. 6. The 6 Barriers of Entry Economies of Scale. Product Differentiation. Capital Requirements. Cost Disadvantages Independent of Size. Access to Distribution Channels. Government Policy. 89
  7. 7. Porter’s Five Forces Analysis Power of Buyers
  8. 8. Buyer Power Determinants Bargaining Leverage.        Buyer Concentration Buyer Volume. Buyer Switching Costs. Buyer Information. Ability to Integrate Backward. Substitute Products. Pull-Through. 90
  9. 9. Buyer Power Determinants Price Sensitivity.       Price/Total Purchases Product Differences. Brand Identity. Impact on Quality/Performance. Buyer Profits. Decision-Maker’s Incentives. 90
  10. 10. Porter’s Five Forces Analysis Power of Suppliers
  11. 11. Supplier Power Determinants Differentiation of Inputs. Switching Costs of Suppliers. Presence of Substitute Products. Supplier Concentration. Importance of Volume to Supplier. Cost Relative to Total Purchases in 90
  12. 12. Porter’s Five Forces Analysis Power of Substitutes
  13. 13. Power of Substitutes Relative Price Performance of Substitute. Switching Costs. Buyer Propensity to Substitute. 92
  14. 14. Porter’s Five Forces Analysis Competitive Rivalry
  15. 15. Determinants of Rivalry Industry Growth. Fixed Costs/Value Added. Intermittent Overcapacity. Product Differences. Brand Identity. Switching Costs. Concentration and Balance. Informational Complexity. Diversity of Competitors. Corporate Stakes. Exit Barriers. 92
  16. 16. Determinants of Rivalry Industry Growth. Fixed Costs/Value Added. Intermittent Overcapacity. Product Differences. Brand Identity. Switching Costs. Concentration and Balance. Informational Complexity. Diversity of Competitors. Corporate Stakes. Exit Barriers. Competition is Everything!!!
  17. 17. Value Chain Analysis Figure 3 98
  18. 18. Value Chain Analysis n iin rg rg Ma Ma Ma Ma r rgii gn n ce ce rvi rvi Se Se g ng tn etii rke s rk s Ma Sa e Ma Salle & & nd nd ou ou tb t cs tb tiics Ou g s Ou giis Lo Lo s s on ion ati at er er Op Op d nd un s ou cs bo tiic nb g st IIn giis Lo Lo Primary Activities Figure 3
  19. 19. Value Chain Analysis n iin rg rg Ma Ma Human Resource Management Technology Development Procurement Ma Ma r rgii gn n ce ce rvi rvi Se Se g ng tn etii rke s rk s Ma Sa e Ma Salle & & nd nd ou ou tb t cs tb tiics Ou g s Ou giis Lo Lo s s on ion ati at er er Op Op d nd un s ou cs bo tiic nb g st IIn giis Lo Lo Primary Activities Figure 3 Procurement S U P P O R T A C T I V I T I E S
  20. 20. Value Chain Analysis Importance of value-chain analysis is that it provides a framework for identifying or 82
  21. 21. Devising a Plan of Action Position the Company. Influence the Balance of the Forces. Anticipate Shifts in the Forces. 93
  22. 22. Creating Families of Strategies 1 2 3 4 5 . Locating the core business. . Distinguishing the core business. . Elaborating the core business. . Extending the core business. . Reconceiving the core business. 94
  23. 23. Creating Families of Strategies 1 . Locating the core business. 2 . Distinguishing the core business. 3 . Elaborating the core business. 4 . Extending the core business. 5 . Reconceiving the core business. The Core Business is reflected in the Choice of Generic Strategies
  24. 24. Porter’s Generic Strategies Cost Advantage Lower Cost Broad Target Differentiation 1. Cost Leadership Competitive Scope Narrow Target Figure 4 99
  25. 25. Porter’s Generic Strategies Cost Advantage Lower Cost Broad Target Competitive Scope Narrow Target Figure 4 1. Cost Leadership Differentiation 2. Differentiation
  26. 26. Porter’s Generic Strategies Cost Advantage Lower Cost Broad Target 1. Cost Leadership Competitive Scope Narrow Target Figure 4 3A. Cost Focus Differentiation 2. Differentiation
  27. 27. Porter’s Generic Strategies Cost Advantage Lower Cost Broad Target 1. Cost Leadership 2. Differentiation 3A. Cost Focus 3B. Differentiation Focus Competitive Scope Narrow Target Figure 4 Differentiation
  28. 28. Strategies of Differentiation Price Differentiation. Image Differentiation. Support Differentiation. Quality Differentiation. Design Differentiation. Undifferentiation. 99
  29. 29. Strategies of Scope Unsegmentation. Segmentation. Niche. Customizing. 100
  30. 30. Elaborating the Core Business Penetration Strategies. Market Development Strategies. Geographic Expansion Strategies. Product Development Strategies. 101
  31. 31. Elaborating the Core Business Penetration Strategies. Market Development Strategies. Geographic Expansion Strategies. Product Development Strategies.
  32. 32. Ways to Elaborate a Given Business Existing Product New Product Existing Market P enetration Strategies P roduct Development Strategies New Market M arket Development Strategies Diversification Strategies Figure 5 101
  33. 33. Questions ?
  34. 34. End of Presentation
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