Today’s learning objectives
Understanding the relationships between customers and business level strategy
Explain why a business level strategy is important
Understand different types of business level strategies
Understand the risks and benefits of different business level strategies
Business level strategy
Business vs corporate level strategy
How to compete in a specific product market?
VS Which business to engage in?
Every firm has a business level strategy
ONE
BUSINESS
–
LEVEL
STRATEGY
SEVERAL BUSINESS
–
LEVEL
STRATEGIES
A single
–
product market/single geographic location firm employs
one business
–
level strategy and one corporate
–
level strategy to
identify what industry the firm will compete in.
A diversified firm employs a separate business
–
level strategy for
each product market area in which it competes and one or more
corporate
–
level strategies dealing with product and/or geographic
diversity.
ONE
BUSINESS
–
LEVEL
STRATEGY
SEVERAL BUSINESS
–
LEVEL
STRATEGIES
A single
–
product market/single geographic location firm employs
one business
–
level strategy and one corporate
–
level strategy to
identify what industry the firm will compete in.
A diversified firm employs a separate business
–
level strategy for
each product market area in which it competes and one or more
corporate
–
level strategies dealing with product and/or geographic
diversity.
What is business level strategy?
Integrated and coordinated set of commitments and actions
Build around core competencies in specific markets
Remember the example of Foodstuff NZ (North and South Island)
Retail
New World
PAK’nSAVE
Four Square
On the spot
Raeward Fresh
Wholesale
Gilmours • Trents
Retail (alcohol)
Liquorland
Henry’s
Brands
Pams
Value (formerly Budget)
Customers are key
Reach, richness, affiliation
Who is the target customer?
Segmentation and targeting
What customer needs will be addressed?
Product/Service features/benefits
Value to the customer
• How will customer needs be addressed?
Leverage/build core competencies
Business-level strategies
Lower cost (perform activities differently) vs different (perform different activities)
Broad vs narrow focus
Cost leadership
Differentiation
Focused cost leadership
Focused differentiation
Integrated
Cost leadership
Differentiation
Focused cost leadership
Focused differentiation
Integrated
Business models
The framework of how an organisation creates, delivers and captures value
Razor-blade
Direct (Disintermediation)
Advertising
Brick and mortar
Fermium
Subscription
Franchising
Brokerage
Customization
Pay as you go
Reverse razor blade
ETC…. Osterwalder, A. & Pigneur, Y. (2009) Business Model Generation. Hoboken, New Jersey: John Wiley & Sons.
Cost leadership vs differentiation
Focus
Emphasis on a narrowly defined market segment/customer group
The WHO is more narrowly defined (segmentation/targeting)
Market niches at the periphery
May become more central to the market over time
Focused cost leadership
Focused differentiation
Next week
Corporate level strategy
Required reading: Chapter 6
Required reading: To diversify or not to diversify
Don’t forget your preparation (poste one comment).
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