business level strategies

BUSINESS LEVEL STRATEGIES: 

BUSINESS LEVEL STRATEGIES -ASHIKA SHOME

STRATEGIES: 

STRATEGIES CORPORATE LEVEL Deals with organization as a whole. It examines what the business does and makes command decisions, including whether the business should diversify into different areas, leave product lines behind or develop specific partnerships with other companies. Many corporate-level decisions take into account the shareholders who own the company. Shareholder demands and expectations have a much stronger influence on the corporate level than other levels. strategy on revenue streams and funding is created at this level. BUSINESS LEVEL Deals with organization as a business and its relationship to its consumers & other businesses the organization works on creating a value offering that appeals to consumers while also being cost-effective Many decisions made at this level help a business position itself in the market and challenge competitors. Industry standards, pricing models and competitor advantages all play important roles within this level of strategy.

BUSINESS STRATEGIES: 

BUSINESS STRATEGIES Courses of action adopted by a few firms for each of its businesses separately to serve identified customer groups and provide value to the customer by a satisfaction of their needs. Acc to Michael Porter, factors that help choose a competitive strategy are Industry structure Positioning of the firm in that industry.

Cost leadership: 

Cost leadership When the competitive advantage of a firm lies in a lower cost of products or services relative to what the competitors have to offer. How to Achieve? Cumulative cost across the value chain is lowest. Accurate demand forecasting &high capacity utilization Attaining economies of scale leads to lower/unit cost Withholding differentiation for the time being unless it is absolutely necessary. Investments in cost saving technologies

Conditions where to use ?: 

Conditions where to use ? Price based competition is vigorous Buyers are numerous & possess bargaining power to negotiate Less customer loyalty towards product

Slide 7: 

BENEFITS Protects from the ill-effects of competition. Best insurance Firm’s cost advantage is less affected if powerful buyers have a high bargaining power. Threat of cheaper substitutes is lowered. Effective barrier for potential entrants who cannot offer the same price RISKS Imitation of strategy by competitors causing change in market scenario Not a market-friendly approach Technological shifts

Differentiation : 

Differentiation When the competitive strategy of a firm lies in special features incorporated into the product/service, which are demanded by the customers who are willing to pay for those. How to achieve? Incorporate the following features Offer utility for the customers & match their taste and preferences Lower the overall cost for the buyer in using the product/service Raise the performance of the product Increase the buyer satisfaction in tangible & non tangible ways Offer promise of high quality of product/service Enable the customers to claim distinctiveness from other customers and enhance their status and prestige among the buyer community

Conditions where to use ?: 

Conditions where to use ? Market large and not sufficient firms providing standardized product/service Needs and preferences are too diversified Possible for the firm to charge a premium price Brand loyalty is possible to generate and sustain Ample scope for sales volume increase

Slide 10: 

Benefits Less competitive rivalry Less negotiation of price As its expensive, new entrants stay away Negligible threat from the substitutes Risks Technological changes in the industry Basis of distinctiveness loses its stand in the later stage Differentiation fails if not valued by the customers Price premiums have a limit Failure to communicate to the customers the benefit of the differentiation used

Focus : 

Focus Cater to a narrow segment on the total market Niche strategies How to achieve? Choosing specific niches by identifying gaps not covered by cost leaders & differentiators Creating superior skills Creating superior efficiency Achieving lower cost/differentiations as compared to competitors Innovative ways to manage value chain

Conditions where to be used ? : 

Conditions where to be used ? Uniqueness in the segment Specialized requirements for using the products Niche market should be profitable Promising potential growth in the market Major players not interested in the niche

Slide 13: 

Benefits Focused firm free from competition Powerful suppliers not interested in cost increase as quantities are less Powerful buyers don’t shift loyalties Risks Development of distinctive competencies is a long, difficult process Difficult to move to other segments Niches are transient, tend to disappear with changes in environment Bigger players shift attention seeing the attractiveness of market

Slide 14: 

Thank you