Business-Level Strategy and Competitive Rivalry

Business-Level Strategy and Competitive Rivalry - 1...

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Unformatted text preview: 1 Business-Level Strategy 2 Business-Level Strategy 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 markets 3 Types of Business-Level Strategies Business-level strategies are intended to create differences between the firms position relative to those of its rivals To position itself, the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals 4 Five Generic Strategies Competitive Advantage Competitive Scope Cost Cost Uniqueness Uniqueness Broad Broad target target Narrow Narrow target target Cost Cost Leadership Leadership Differentiation Differentiation Focused Cost Focused Cost Leadership Leadership Focused Focused Differentiation Differentiation Integrated Cost Integrated Cost Leadership/ Leadership/ Differentiation Differentiation 5 Cost Leadership Strategy An integrated set of actions designed to produce or deliver goods or services at the lowest cost, relative to competitors with features that are acceptable to customers relatively standardized products features acceptable to many customers lowest competitive price 6 Cost Leadership Strategy Cost saving actions required by this strategy: building efficient scale facilities tightly controlling production costs and overhead minimizing costs of sales, R&D and service building efficient manufacturing facilities monitoring costs of activities provided by outsiders simplifying production processes 7 Questions Leading to Lower Costs 1. How can an activity be performed differently or even eliminated? 2. How can a group of linked value activities be regrouped or reordered? 3. How might coalitions with other firms lower or eliminate costs? 8 Cost Leadership Strategy and the Five Forces of Competition Rivalry Among Competing Firms Can use cost leadership strategy to advantage since: competitors avoid price wars with cost leaders, creating higher profits for the entire industry R i v a l r y A m o n g R i v a l r y A m o n g C o m p e t i n g F i r m s C o m p e t i n g F i r m s B a r g a i n i n g P o w e r B a r g a i n i n g P o w e r o f B u y e r s o f B u y e r s Bargaining Power Bargaining Power of Suppliers of Suppliers T h r e a t o f N e w T h r e a t o f N e w E n t r a n t s E n t r a n t s T h r e a t o f T h r e a t o f S u b s t i t u t e P r o d u c t s S u b s t i t u t e P r o d u c t s Five Forces of Five Forces of Competition Competition 9 Cost Leadership Strategy and the Five Forces of Competition Bargaining Power of Bargaining Power of Buyers Buyers Can mitigate buyers power Can mitigate buyers power by: by: driving prices far below...
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Business-Level Strategy and Competitive Rivalry - 1...

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