1What is Strategy?Chapter 4: Business-Level StrategyBUSA 4980 (Strategic Management)Dr. Steven DionneSpring 2016
What is Business-LevelStrategy?•Business-level strategy is the core decision about strategy–It more narrowly defines how the company plans to engage its competitive environment–“It is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantageby exploiting core competencies in specific product markets”2The External The External EnvironmentEnvironmentThe Internal The Internal OrganizationDevelop Vision / Mission; Set Mission; Set ObjectivesObjectivesCraft Strategy to Craft Strategy to Achieve Vision and Achieve Vision and ObjectivesObjectivesStrategic InputsStrategy Formulation
Business-Level Strategyis not as comprehensive as defining strategy across the Five Main Elements31.Where will we be active?2.How will we get there?3.How will we win?4.What will be our timing?5.How will we obtain our returns?
Five Generic Business-Level (BL) StrategiesLower CostUnique Features1. Cost Leadership2. Differentiation3. Focused Cost Leadership4. Focused Differentiation5. Integrated Cost Leadership / DifferentiationType of Competitive Advantage Pursued(Basis for Customer Value)Competitive Scope4•“Unique Features” refers to creating value through non-price methods of differentiating from rivals, which allows the company to command premium prices
Achieving Competitive AdvantageRequires a BL Strategy that addresses three questions … •Are you delivering unique customer experience?–“The secret to a good experience is not the multiplicity of features, but the value to customersfrom each feature” (Meyer & Schwager, 2007)–Strategic competitiveness results only when a company satisfies a group of consumers•Are you different from rivals?–“Competitive strategy is about being different. It means deliberately choosing to perform activities differentlyor to perform different activitiesthan rivals to deliver a unique mix of value.” (Michael Porter, 1996)•Are your capabilities costly to imitate?