A business level strategy is 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.
2. What is the relationship between a firm’s customers and its business-level strategy in terms of who, what, and how? Why is this relationship important?
The five business-level Strategies
Cost leadership: is 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. Firms using the cost leadership strategy commonly sell standardized goods or services (but with competitive levels of differentiation) to the industry’s most typical customers.
Differentiation: is 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. While cost leaders serve a typical customer in an industry, differentiators target customers for whom value is created by the manner in which the firm’s products differ from those produced and marketed by competitors.
Focused Cost Leadership: is an integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment. Thus, firms use a focus strategy when they utilize their core competencies to serve the needs of a particular industry segment or niche to the exclusion of others.
Focused Differentiation: a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeti...
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...firms may be able to lower their costs as well. As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage. Additionally, several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain significant market share.
Focused Differentiation: risks resulting from consumer disappointment, distributor resistance and resource misallocation.
Integrated cost leadership/differentiation: focusing on consistently reducing costs, adding differentiated features that customers value and for which they are willing to pay a higher price and avoiding becoming "stuck-in-the-middle" by failing to consistently pay attention to the competitive requirements of either or both generic strategies.
Differentiation through distribution, including distribution via mail order or through internet shopping. For example u can buy Monster from Amazon.com.
Porter (1997) suggests in order to gain competitive advantages in the changing business environment, it is essential to design a generic strategy for the business: product differentiation or cost leadership. The competitive strategy is determined at round 2, when recognised our rivals held whole product profile which was the product differentiation strategy. To differentiate our strategy from rivals for competitive advantages, Digby designed to imply the cost
Narrow focus on limited value chain activities, competitor’s pricing war and lack of differentiation parity can erode the competitive advantage associated with cost leadership strategy. Similarly, imitation of differentiating features by competition and lack of perceived value of the differentiating features can erode the competitive advantage associated with differentiation strategy.
Differentiation through marketing strategies, this is a form of innovation driven by the need to create a superior brand (Sadler, 2003).
Leadership principles are the strategic creation of visions. It’s about not only having an idea, but an idea becoming the mission to push Lidl UK forward and in the right direction to improve and lead, considering outside influences, such as the economy, and future trends, such as the customers’
According to the Harley Davidson case study, the author has mentioned Harley Davidson uses the differentiation strategy: focus strategy for their business level strategy. This is, the focus strategy is an integrated set of actions taken to produce goods or services that serve the needs of a particular competition segment. Thus, by using the focus strategy for their business level strategy, it can help Harley Davidson to build strong brand recognition for their products. Harley Davidson believes that they understand the dynamics of their market and the unique needs of customers within it very well. Since they serve their customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. As a result, they
In the modern world of conducting business, any company that wishes to succeed must differentiate its products or services from others in the industry. Differentiation makes it possible for consumers to point out notable differences between one company’s products as compared to those of competitors. Differentiation helps companies build brand loyalty as the uniqueness keeps customers fixed on a particular product. BMW is one of the most popular automakers in the world today. It definitely uses differentiation as a strategy to beat off competition by building products that are innovative, detailed and incomparable to those of competitors.
According to Johnson et al (2013) and John (1997), strategy can be defined as a general scope or long-term direction of a firm. Johnson et al (2013) state that strategy has three levels which refer to corporate, business and operational levels. In Lynch’s view (2006), there are two elements in corporate strategy that are corporate-level and business-level. This essay will focus on both corporate and business-level strategy. To conclude Lynch (2006) and Johnson et al (2013)’s points, corporate-level strategy can be identified as a purpose or overall scope of an organization. Business-level strategy is related provide the best value for products or services to compete in the specific markets. For example, innovation or response to competitors are usually the tactics of business-level strategy (Johnson et al.,
The second way is to achieve low direct and indirect operating costs is gained by offering high volumes of standard products and offering basic no-frills products. Production costs are kept low by using less parts and using standard components. Limiting the number of models produced to ensure larger producti...
Leadership refers to the ability to make full use of manpower and objective conditions within the jurisdictional limits and to do what is needed at the least cost to enhance the efficiency
emerging or new market. It can originate from new technology or new market opportunities (Eliashberg, J., Lilien, G. L., & Rao, V. R. 1997). Literature defines product development as exploiting an untapped market opportunity and turning it into a value product for customer satisfaction. Development and introduction of a new product requires extensive research on understanding customer needs, market structure, emerging trends and analysing the internal & external competitive market environments. To evaluate customer satisfaction previous researches provide strong relationship between customer satisfaction and product quality, product features and value for money. ***
Corporate level strategy is the overall strategy for a diversified organization or company. It is usually concerned with a mix of businesses that the company should compete in and also the ways on which individual strategy units are integrated and co-ordinated.
A differentiation strategy and generic business strategy seeks to create higher value for customers than the value that competitors create, by delivering products or services with unique features while keeping the cost at the same or similar levels. Tesla cars have a brand image in the market they are the best in the industry. This differentiation is increasing Tesla market share. Although, BMW series cars had 2-3% US market share, they are not giving as mileage as Tesla cars are giving. A generic cost-leadership strategy, in contrast, seeks to create the same or similar value for customers by delivering products or services at a lower cost than competitors, enabling the firm to offer lower prices to its customers. Tesla cars are very expensive. As an introducer, its products are expensive initially but, when the production and demand increased EV’s value will reduce. Also, the company focused on the scope of competition—whether to pursue a specific, narrow part of the market or go after the broader market. Tesla focused primarily on the narrow market globally that is, since, its cars are expensive for more sales and to get more revenue it started selling in around 30 countries via the internet and local Tesla stores. Now, the company is also concentrating on the mass market, which makes it turn into a profitable company.
Tata motors since its inception has been keen to have a broad product line – passenger cars, utility vehicles and also commercial vehicles. The automobile market is India is one where there are many buyers and many sellers and hence in such a market place no single player dominates. So Tata Motors had the option to choose from two different strategies – Cost leadership or Product leadership. Tata motors adopted a cost leadership strategy with focus on the right product at the right time. And where it lacked the technology to differentiate
Leadership builds the business, creates operational strategies to withstand and position themselves to be successful in today’s competitive market. Those strategic planning’s including the vision and goals combining with knowledge management and with business analytics to push the value of knowledge throughout the company. The main focus is on building executive support and an outstanding leader at the top who can provide strong leadership and successful implementation of the knowledge management system.