49056176-Strategic-Mgmt-ch08 - Chapter 8 Business Strategy...

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Chapter 8 Business Strategy 0Chapter Summary This chapter examines how managers in businesses that have a single or dominant product or service evaluate and choose their company’s strategy. The two critical areas deserve their attention: (1) their business’s value chain, and (2) the appropriateness of 12 different grand strategies based on matching environmental factors with internal capabilities. Managers in single-product-line business units examine their business’s value chain to identify existing or potential activities around which they can create sustainable competitive advantages . As managers scrutinize their value chain activities, they are looking for three sources of competitive advantage: low cost, differentiation, and rapid response capabilities. They also examine whether focusing on a narrow market niche provides a more effective, sustainable way to build or leverage these three sources of competitive advantage. Managers in single- or dominant-product/service businesses face two interrelated issues: (1) They must choose which grand strategies make best use of their competitive advantages. (2) They must ultimately decide whether to diversify their business activity. Twelve grand strategies are identified in this chapter along with three frameworks that aid managers in choosing which grand strategies should work best and when diversification or integration should be the best strategy for the business. The next chapter expands the coverage of diversification to look at how multibusiness companies evaluate continued diversification and how they construct corporate strategy. 0Learning Objectives 1. Determine why a business would choose a low-cost, differentiation, or a speed-based strategy. 2. Explain the nature and value of a market focus strategy. 3. Illustrate how a firm can pursue both low-cost and differentiation strategies. 4. Identify requirements for business success at different stages of industry evolution. 5. Determine good business strategies in fragmented and global industries. 6. Decide when a business should diversify. 0Lecture Outline I0. Introduction A0. Strategic analysis and choice continue to form the phase of the strategic management process in which business managers examine and choose a business strategy that allows their business to maintain or create a sustainable competitive advantage. 164
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10. Their starting point is to evaluate and determine which competitive advantages provide the basis for distinguishing the firm in the customer’s mind from other reasonable alternatives. 2. Businesses with a dominant product or service line must also choose among alternate grand strategies to guide the firm’s activities, particularly when they are trying to decide about broadening the scope of the firm’s activities beyond its core business. B. Strategic analysis and choice in single- or dominant-product/service businesses can
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This note was uploaded on 06/02/2011 for the course BA 13213 taught by Professor Deez during the Spring '10 term at Aarhus Universitet, Aarhus.

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49056176-Strategic-Mgmt-ch08 - Chapter 8 Business Strategy...

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