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Unformatted text preview: Chapter 4 Business-Level Strategy As stated in Chapter 1, s trategies represent integrated and coordinated sets of actions that are taken to exploit core competencies and gain a competitive advantage. To be more specific, strategies are purposeful, precede the taking of actions to which they apply, and demonstrate a shared understanding of the firms vision and mission. An effectively formulated strategy marshals, integrates, and allocates the firms resources, capabilities, and competencies so that it will be properly aligned with its external environment. A properly developed strategy also rationalizes the firms vision and mission along with the actions taken to achieve them. Determining the businesses in which the firm will compete is a question of corporate-level strategy and is discussed in Chapter 6. Competition in individual product markets is a question of business-level strategy. The firms core competencies should be focused on satisfying customer needs or preferences through business-level strategies, which detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets. In other words, business-level strategies are developed based on a firms core competencies and indicate how an organization chooses to compete in a particular market to gain a competitive advantage over competitors. Cost leadership , a strategy that provides productsgoods or serviceswith features acceptable to customers at the lowest competitive price. For example, many of Taiwans PC manufacturers target the low-priced segment of the PC market through extreme forms of the cost leadership strategy. To drive their costs lower and to exploit the competitive advantage their low-cost structures provide, these companies rely on suppliers from China to supply low- priced components that will allow the PC manufacturers to drive production costs still lower. Differentiation , a strategy that provides products that customers perceive as being unique in ways that are important to them and, because this uniqueness offers value, customers are willing to pay a premium price for them. Jaguar is a manufacturer of high-prestige cars for which customers are willing pay high prices. A customer focus requires that firms simultaneously evaluate or consider who to serve, what customer needs will be satisfied, and how those needs will be satisfied through the strategy selected. CUSTOMERS: THEIR RELATIONSHIP WITH BUSINESS-LEVEL STRATEGIES To survive and achieve strategic competitiveness in the contemporary competitive landscape, firms must: identify who their customers are determine customer needs or preferences focus on satisfying the needs of some group of customers determine how to compete (select a strategy) that enables them to satisfy customer needs Key connections in managing customer relationships are as follows: The firms relationships with its customers are strengthened when it delivers superior value to...
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This note was uploaded on 04/01/2012 for the course MGT 4476 taught by Professor Marthabrowski during the Spring '10 term at Troy.
- Spring '10