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BMGT 495 businesslevel.strategy spring2011

BMGT 495 businesslevel.strategy spring2011 - BUSINESS LEVEL...

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© Copyright 2009 BUSINESS LEVEL STRATEGIES Dr. Knight BMGT 495: Business Policies Spring 2011
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© Copyright 2009 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
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© Copyright 2009 Types of Business-Level Strategy Business-Level Strategies Are intended to create differences between the firm’s position relative to those of its rivals To position itself, the firm must decide whether it intends to: Perform activities differently or Perform different activities as compared to its rivals
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© Copyright 2009 Types of Potential Competitive Advantage Achieving lower overall costs than rivals Performing activities differently (cheaper process) Possessing the capability to differentiate the firm’s product or service and command a premium price Performing different (valuable) activities
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© Copyright 2009 Two Targets of Competitive Scope Broad Scope The firm competes in all or most customer segments Narrow Scope The firm selects a segment or a few segments in the industry and tailors its strategy to serving them at the exclusion of others
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© Copyright 2009 Competitive Advantage Competitive Scope Cost Uniqueness Broad Target Narrow Target Five Business- Level Strategies
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© Copyright 2009 Cost Leadership Strategy 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 with features that are acceptable to customers Relatively standardized products Features acceptable to many customers Lowest competitive price
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© Copyright 2009 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
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© Copyright 2009 Differentiation Strategy 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 Nonstandardized products Customers value differentiated features more than they value low cost
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© Copyright 2009 Value-Creating Activities and Differentiation Highly developed MIS Emphasis on quality Worker compensation for creativity/productivity Use of subjective performance measures Basic research capability Technology High quality raw materials Delivery of products High quality replacement parts Superior handling of incoming raw materials Attractive products Rapid response to customer specifications Order-processing procedures Customer credit Personal relationships
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