STRATEGIC MANAGEMENT LECTURE NOTES CH4.docx - STRATEGIC...

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STRATEGIC MANAGEMENT LECTURE NOTES CH4 (Business Level Strategy) “The answer to #12 is A” Business Level Strategy: an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product market (How should we compete in this business?) TYPES OF BUSINESS LEVEL STRATEGIES (5 GENERIC) Basis for customer value - Value comes through either LOW COST or DISTINCTIVENESS 1. Cost leadership: 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; commonly sell standardized goods or services, but with competitive levels of differentiation, to the industry’s most typical customers; Process innovations, which are newly designed production and distribution methods and techniques that allow the firm to operate more efficiently ( BROAD MARKET = Many target markets & many geographic areas) (Walmart, Dollars stores, Costco etc.) 2. Differentiation: an integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them; target customers for whom value is created by the manner in which the firm’s products differ from those produced and marketed by competitors; Product innovation, which is “the result of bringing to life a new way to solve the customer’s problem—through a new product or service development—that benefits both the customer and the sponsoring company; the firm produces distinctive products for customers who value differentiated features more than they value low cost; must consistently upgrade differentiated features that customers value and/or create new valuable features (i.e., innovate) without significant cost increases; constantly change product lines; ( BROAD MARKET = Many target markets & many geographic areas) (Apple, Focused Strategy : an integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment; 1. a particular buyer group (e.g., youths or senior citizens), 2.

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