These notes provide a detailed look at learning unit 1 of Business Management 3B (2nd semester). They include customized diagrams, images, and explain business level strategies such as low-cost leadership, differentiation, focused strategies and more. A table of definitions is included at the end o...
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, LEARNING UNIT 1: BUSINESS LEVEL STRATEGY
Business level strategy refers to the
actions and approaches a company
takes to compete successfully (and
how it competes) in a particular
market or industry.
§ It focuses on HOW to: NECESSITY
® Achieve or sustain
competitive advantage
§ Market positioning:
® Meet customer needs
® Helps an organization define
® Counteract rival’s
its position within the market
competitive efforts
which is critical for
® Cope with the current market
attracting and retaining
conditions customers in a competitive
environment.
§ Competitive Scope:
® Cost leadership strategy – § Customer Focus:
Aiming to be the lowest cost
® Strategies centered around
producer in the industry. cost leadership,
® Differentiation strategy – differentiation, or focus
Offering unique strategies are fundamentally
products/services that stand about understanding and
out from competitors. meeting customers’ needs
® Focus strategy – better than competitors.
Concentrating on narrow
market segment either § Alignment with Corporate Strategy:
through cost focus or
® Business level strategies
differentiation focus.
must align with the broader
corporate strategy – allowing
§ Value Creation: coherence in how different
® Business level strategies are business units contribute to
designed to create value for overall corporate goals.
customers which in turn
generates revenue and profit.
® This involves delivering
products/services that meet
customer needs more
effectively than competitors. What is Strategy?
A course of deliberate action that strategic
decision-makers take to match the
organizations’ unique strengths and
capabilities with the opportunities in the
external environment.
, LEVELS OF STRATEGY OVERVIEW
(Three levels that decisions are made at).
1. Corporate Level Strategies
® Refers to strategies that determine the overall direction, scope, and scale of the
organization (purpose of the organization).
2. Business Level Strategies (Competitive strategies)
® How to compete successfully in particular markets
® Products and services an organization needs to develop and position in the market to
achieve competitive advantage and long-term survival.
3. Functional Strategies (Operational strategies)
§ How the business units of an organization deliver corporate level strategies (these are shorter to
medium term strategies).
Corporate What the overall scale and scope of the
organization is
level
How to remain competitive
in specific markets
Business (Competitive) level
How to deliver
on the
corporate and
Functional (Operational) level business level
strategies
FACTORS INFLUENCING STRATEGIC CHOICE:
§ Available resources
§ Staff skills
§ Unique capabilities within organization
§ Organization's competitive advantage
§ Market conditions and competitor strength
§ Customer needs and changing demands
§ Industry opportunities and threats
§ Strategic intent
§ Impact of chosen strategy on stakeholders
We consider these factors due to the volatility and unpredictable nature of an industry and the
organization’s competitors.
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