Business level strategy analysis

Slide 1: BUSINESS LEVEL STRATEGY ANALYSIS w The Positioning Approach. ½ Porter’s 5 Forces. ½ Value Chain Analysis. ½ The Generic Strategies.

Slide 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.

Slide 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.

Slide 4: Porter’s Five Forces Analysis Breaking Apart Industry-Level Competition

Slide 5: Porter’s Five Forces Analysis Threat of Entry

Slide 6: The 6 Barriers of Entry Economies of Scale. Product Differentiation. Capital Requirements. Cost Disadvantages Independent of Size. Access to Distribution Channels. Government Policy.

Slide 7: Porter’s Five Forces Analysis Power of Buyers

Slide 8: Buyer Power Determinants Bargaining Leverage. Buyer Concentration Buyer Volume. Buyer Switching Costs. Buyer Information. Ability to Integrate Backward. Substitute Products. Pull-Through.

Slide 9: Buyer Power Determinants Price Sensitivity. Price/Total Purchases Product Differences. Brand Identity. Impact on Quality/Performance. Buyer Profits. Decision-Maker’s Incentives.

Slide 10: Porter’s Five Forces Analysis Power of Suppliers

Slide 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 the Industry. • Impact of Inputs on Cost or Differentiation.

Slide 12: Porter’s Five Forces Analysis Power of Substitutes

Slide 13: Power of Substitutes Relative Price Performance of Substitute. Switching Costs. Buyer Propensity to Substitute.

Slide 14: Porter’s Five Forces Analysis Competitive Rivalry

Slide 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.

Slide 16: Determinants of Rivalry Competition is Everything!!! • 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.

Slide 17: Value Chain Analysis Figure 3

Slide 18: Ma Ma r rgii n iin gn rg n rg Ma Ma ce ce rvi rvi Se Se Value Chain Analysis Primary Activities g ng tn etii rke s rk s Ma a e Ma Salle &S & d nd un ou tbo cs tb tiics Ou g st 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 Figure 3

Slide 19: Ma Ma r rgii n iin gn rg n rg Ma Ma ce ce rvi rvi Se Se Value Chain Analysis Human Resource Management Primary Activities g ng tn Technology Development etii rke s rk s Ma a e Ma Salle &S & Procurement Procurement d nd un ou tbo cs tb tiics Ou g st 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 A C V E S T T I I I O U R S P P T Figure 3

Slide 20: Value Chain Analysis Importance of value-chain analysis is that it provides a framework for identifying or developing a distinctive competence.

Slide 21: Devising a Plan of Action ËPosition the Company. ËInfluence the Balance of the Forces. ËAnticipate Shifts in the Forces.

Slide 22: 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.

Slide 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

Slide 24: Porter’s Generic Strategies Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership Target Competitive Scope Narrow Target Figure 4

Slide 25: Porter’s Generic Strategies Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation Target Competitive Scope Narrow Target Figure 4

Slide 26: Porter’s Generic Strategies Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation Target Competitive Scope Narrow 3A. Cost Focus Target Figure 4

Slide 27: Porter’s Generic Strategies Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation Target Competitive Scope 3B. Differentiation Narrow 3A. Cost Focus Focus Target Figure 4

Slide 28: Strategies of Differentiation Price Differentiation. µ Image Differentiation. µ Support Differentiation. µ Quality Differentiation. µ Design Differentiation. µ Undifferentiation. µ

Slide 29: Strategies of Scope Unsegmentation. µ Segmentation. µ Niche. µ Customizing. µ

Slide 30: Elaborating the Core Business Penetration Strategies. µ Market Development Strategies. µ Geographic Expansion Strategies. µ Product Development Strategies. µ

Slide 31: Elaborating the Core Business Penetration Strategies. µ Market Development Strategies. µ Geographic Expansion Strategies. µ Product Development Strategies. µ

Slide 32: Ways to Elaborate a Given Business Existing Product New Product Product Penetration Existing Development Strategies Market Strategies Market Diversification Development New Strategies Market Strategies Figure 5

Slide 33: Questions ?

Slide 34: End of Presentation