Business Level Strategy Analysis

B US I NE S S L E V E LS T R A T E GY A NA L Y S I S w The Positioning A pproach.½ Porter’ s 5 Forces.½ Value C hain A nalysis.½ The Generic Strategies.

T h e P o s it io n in gApproa c h s The oldest approach to military strategy. s The newest of the three prescriptive approaches to strategy . Design and Planning Approaches were explained in Chapter 3. s Focuses on how firms in a given context differ in product market positions compared to the competition. 80

T h e P o s it io n in gApproa c h s Strategy follows structure. s Looks at the groups of competitors in an industry. s Relies more heavily on calculation than the design or planning schools. s Places even more emphasis on the role of strategic planners. 81

Forc e sA n a ly s isB r e a k in g A p a r t In d u s t r y - L e v e l C o m p e t it io n 87

Forc e sA n a ly s is Threat of Entry

B a r r ie r s o fE ntry Economies of Scale. Product Differentiation. Capital Requirements. Cost Disadvantages Independent of Size. Access to Distribution Channels. Government Policy. 89

Forc e sA n a ly s is Power of Buyers

B u ye r P o w e rD e t e r m in a n t s Bargaining Leverage. a Buyer Concentration i Buyer Volume. i Buyer Switching Costs. C Buyer Information. n Ability to Integrate Backward. r Substitute Products. c Pull-Through. 90

B u ye r P o w e rD e t e r m in a n t s Price Sensitivity. y Price/Total Purchases h Product Differences. c Brand Identity. c Impact on Quality/Performance. y Buyer Profits. y Decision-Maker’s Incentives. 90

Forc e sA n a ly s is Power of Suppliers

PowerD e t e r m in a n t s 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

Forc e sA n a ly s is Power of Substitutes

Power ofS u b s t it u t e s Relative Price Performance of Substitute. Switching Costs. Buyer Propensity to Substitute. 92

Forc e sA n a ly s is Competitive Rivalry

D e t e r m in a n t so f R iv a lr y 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

D e t e r m in a n t so f R iv a lr y Competition is Industry Growth. Everything!!! Fixed Costs/Value Added. Intermittent Overcapacity. Product Differences. Brand Identity. Switching Costs. Concentration and Balance. Informational Complexity. Diversity of Competitors. Corporate Stakes. Exit Barriers.

V a lu e C h a in A n a ly s isFigure 3 98

Ma Ma n iin r rgii gn rg rg n Ma Ma ce ce rvi rvi Se Se Primary Activities g ng tn etiiV a lu e C h a in rke s rk s Ma Sa e Ma Salle & & d nd un ou tbo t cs tb tiics Ou g s Ou giisA n a ly s is 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

Ma Ma n iin r rgii gn rg rg n Ma Ma ce ce rvi rvi Se Se Human Resource Management Primary Activities g ng tn Technology Development etiiV a lu e C h a in rke s rk s Ma Sa e Ma Salle & & Procurement Procurement d nd un ou tbo t cs tb tiics Ou g s Ou giisA n a ly s is 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

V a lu e C h a inA n a ly s is Impora of v l cha a l is t t t nce aue- in naysis ha it pr ides a fr mew k ov a or for ident ifying or dev opingadistinctive competence. el 82

Devising a Plan of Action Ë Position the Company. Ë Influence the Balance of the Forces. Ë Anticipate Shifts in the Forces. 93

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. 94

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

G e n e r ic S t r a t e g ie s Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership TargetCompetitiveScope Narrow Target 99 Figure 4

G e n e r ic S t r a t e g ie s Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation TargetCompetitiveScope Narrow Target Figure 4

G e n e r ic S t r a t e g ie s Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation TargetCompetitiveScope Narrow 3A. Cost Focus Target Figure 4

G e n e r ic S t r a t e g ie s Cost Advantage Lower Cost Differentiation Broad 1. Cost Leadership 2. Differentiation TargetCompetitiveScope 3B. Differentiation Narrow 3A. Cost Focus Focus Target Figure 4

Strategies of Differentiation µ Price Differentiation. µ Image Differentiation. µ Support Differentiation. µ Quality Differentiation. µ Design Differentiation. µ Undifferentiation. 99

Strategies of Scope µ Unsegmentation. µ Segmentation. µ Niche. µ Customizing. 100

Elaborating the Core Business µ Penetration Strategies. µ Market Development Strategies. µ Geographic Expansion Strategies. µ Product Development Strategies. 101

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

Ways to Elaborate a Given Business Existing Product New Product ProductExisting Penetration Development Market Strategies Strategies Market New Diversification DevelopmentMarket Strategies Strategies Figure 5 101

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Business Level Strategy Analysis

by Savaş Şakar

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