Business Level Strategy Analysis

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Business Level Strategy Analysis

  1. 1. 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.
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. Forc e sA n a ly s is Threat of Entry
  6. 6. B a r r ie r s o fE ntry Œ Economies of Scale.  Product Differentiation. Ž Capital Requirements.  Cost Disadvantages Independent of Size.  Access to Distribution Channels. ‘ Government Policy. 89
  7. 7. Forc e sA n a ly s is Power of Buyers
  8. 8. 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
  9. 9. 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
  10. 10. Forc e sA n a ly s is Power of Suppliers
  11. 11. 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
  12. 12. Forc e sA n a ly s is Power of Substitutes
  13. 13. Power ofS u b s t it u t e s Relative Price Performance of Substitute. Switching Costs. Buyer Propensity to Substitute. 92
  14. 14. Forc e sA n a ly s is Competitive Rivalry
  15. 15. 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
  16. 16. 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.
  17. 17. V a lu e C h a in A n a ly s isFigure 3 98
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. Devising a Plan of Action Ë Position the Company. Ë Influence the Balance of the Forces. Ë Anticipate Shifts in the Forces. 93
  22. 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. 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. 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
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. Strategies of Differentiation µ Price Differentiation. µ Image Differentiation. µ Support Differentiation. µ Quality Differentiation. µ Design Differentiation. µ Undifferentiation. 99
  29. 29. Strategies of Scope µ Unsegmentation. µ Segmentation. µ Niche. µ Customizing. 100
  30. 30. Elaborating the Core Business µ Penetration Strategies. µ Market Development Strategies. µ Geographic Expansion Strategies. µ Product Development Strategies. 101
  31. 31. Elaborating the Core Business µ Penetration Strategies. µ Market Development Strategies. µ Geographic Expansion Strategies. µ Product Development Strategies.
  32. 32. 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
  33. 33. Questions ?
  34. 34. End of Presentation

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