Business level strategies


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About business level strategies in strategic managment

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  • New designs introduced every quarter, differentiating strategy offering range of gold, pearl and diamond jwewlery for men and women treating jewlery as fashionable items rather than just investment. Titan Watches: Fast track watches were launched for youth segment, the cool, trendy, funky range for the young and young-at-heart were well differentiated itself as youth watches compare to TATA’s other watches.
  • DELL:- DELL India is a export hub for Asia market, DELL uses Indian talent and raw material (of best quality) for production at Chennai, they get the best mixture of raw material & skills to produce at low cost with best quality.DELL Chennai manufacturing unit cater 60% of their Asian mkt demand.
  • Business level strategies

    1. 1. Business level strategy Analysis<br /> Presented By…….<br /> Anil Dhankhar<br />
    2. 2. Core<br />competencies<br />Strategy<br />Business-level<br />strategy<br />Core Competencies and Strategy<br />The resources and capabilities that have been <br />determined to be a source of competitive advantage <br />for a firm over its rivals<br />An integrated and coordinated set of actions taken <br />to exploit core competencies and gain a competitive <br />advantage<br />Actions taken to provide value to customers and <br />gain a competitive advantage by exploiting core <br />competencies in specific, individual product markets<br />
    3. 3. Business Level Strategy<br />Three Issues:<br />Whom it will serve. <br />What needs target customers have <br />that it will satisfy.<br />How those needs will be satisfied <br />through implementation of given <br />strategy. <br />
    4. 4. Five Business-Level Strategies<br />
    5. 5. 1. Cost Leadership Strategy<br />An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors with features that are acceptable to customers<br />Relatively standardized products<br />Features acceptable to many customers<br />Lowest competitive price<br />
    6. 6.
    7. 7. 1. Cost Leadership strategy<br />Threats of new entrants.<br />Bargaining power of suppliers.<br />Bargaining power of buyers.<br />Threat of substituted products.<br />Rivalry among competing firms.<br />
    8. 8. 8<br /> 1. COST LEADERSHIP STRATEGY<br />FAILS WHEN?<br /><ul><li>Being overly aggressive in cutting price (revenue erosion of lower price is not offset by gains in sales volume--profits go down, not up).
    9. 9. Low cost methods are easily imitated by rivals
    10. 10. Becoming too fixated on reducing costs and ignoring</li></ul>Buyer interest in additional features<br />Declining buyer sensitivity to price<br />Changes in how the product is used<br /><ul><li>Technological breakthroughs open up cost reductions for rivals.</li></li></ul><li>9<br />2. DIFFERENTIATION STRATEGY<br /><ul><li>Objective</li></ul> Incorporate differentiating features that cause buyers to prefer <br /> firm’s product or service over the brands of rivals.<br /><ul><li>Keys to Success</li></ul> Find ways to differentiate that create value for buyers<br /> Not easily matched or cheaply copied by rivals.<br /><ul><li>Characteristics</li></ul>Uniquenessis achieved in ways that:<br /><ul><li>Buyers perceive as valuable
    11. 11. Rivals find hard to match or copy</li></li></ul><li>
    12. 12. 11<br />2. DIFFERENTIATION STRATEGY<br />FAILS WHEN?<br /><ul><li>Trying to differentiate on a feature buyers do not perceive as lowering their cost or enhancing their well-being
    13. 13. Over-differentiating such that product features exceed buyers’ needs
    14. 14. Charging a price premium that buyers perceive is too high
    15. 15. Failing to signal value
    16. 16. Not understanding what buyers want or prefer and differentiating on the “wrong” things</li></li></ul><li>Competitive Risks of Differentiation<br />The price differential between the differentiator’s product and the cost leader’s product becomes too large<br />Differentiation ceases to provide value for which customers are willing to pay<br />Experience narrows customers’ perceptions of the value of differentiated features<br />Counterfeit goods replicate differentiated features of the firm’s products<br />
    17. 17. 13<br />3. FOCUS STRATEGY<br /><ul><li>Objective</li></ul> Involves concentrated attention on a narrow piece of the total<br /> market<br />  Serve niche buyers better than rivals<br /><ul><li>Keys to Success</li></ul> Choose a market niche where buyers have distinctive<br /> preferences, special requirements, or unique needs<br /> Develop unique capabilities to serve needs of target buyer<br /> segment<br /><ul><li>Characteristics</li></ul> Achieve LOWER COSTSthan rivals in serving the segment<br /> -- A low-cost strategy<br /> Offer niche buyers SOMETHING DIFFERENTfrom rivals<br /> -- A differentiation strategy<br />
    18. 18. Focused cost leadership strategy<br />
    19. 19. Focused Differentiation Strategy <br />
    20. 20. 16<br />3. FOCUS STRATEGY<br />FAILS WHEN?<br /><ul><li>Competitors find effective ways to match a focuser’s capabilities in serving niche
    21. 21. Niche buyers’ preferences shift towards product attributes desired by majority of buyers--the niche becomes part of the overall market
    22. 22. Segment becomes so attractive it becomes crowded with rivals, causing segment profits to be splintered</li></li></ul><li>4. Integrated Cost Leadership/ Differentiation Strategy<br />A firm that successfully uses an integrated cost leadership/differentiation strategy should be in a better position to:<br />Adapt quickly to environmental changes<br />Learn new skills and technologies more quickly<br />Effectively leverage its core competencies while competing against its rivals<br />
    23. 23. Integrated Cost Leadership/ Differentiation Strategy <br />
    24. 24. Risks of the Integrated Cost Leadership/ Differentiation Strategy<br />Often involves compromises<br />Becoming neither the lowest cost nor the most differentiated firm<br />Becoming “stuck in the middle”<br />Lacking the strong commitment and expertise that accompanies firms following either a cost leadership or a differentiated strategy<br />
    25. 25. THANK YOU FOR LISTENING<br />