1. B US I NE S S L E V E L
S T R A T E GY A NA L Y S I S
w
The Positioning A pproach.
½ Porter’ s 5 Forces.
½ Value C hain A nalysis.
½ The Generic Strategies.

2. T h e P o s it io n in g
Approa c h
s The oldest approach to military
strategy.
s The newest of the three prescriptive
approaches to strategy .
Design and Planning Approaches were
explained in Chapter 3.
s Focuses on how firms in a given
context differ in product market
positions compared to the competition.
80

3. T h e P o s it io n in g
Approa c h
s Strategy follows structure.
s Looks at the groups of competitors in
an industry.
s Relies more heavily on calculation than
the design or planning schools.
s Places even more emphasis on the role
of strategic planners.
81

4. Forc e s
A n a ly s is
B r e a k in g A p a r t In d u s t r y -
L e v e l C o m p e t it io n
87

5. Forc e s
A n a ly s is
Threat of
Entry

6. B a r r ie r s o f
E ntry
ΠEconomies of Scale.
 Product Differentiation.
Ž Capital Requirements.
 Cost Disadvantages Independent of Size.
 Access to Distribution Channels.
‘ Government Policy.
89

7. Forc e s
A n a ly s is
Power of
Buyers

8. B u ye r P o w e r
D e t e r m in a n t s
Bargaining Leverage.
a Buyer Concentration
i Buyer Volume.
i Buyer Switching Costs.
C Buyer Information.
n Ability to Integrate Backward.
r Substitute Products.
c Pull-Through.
90

9. B u ye r P o w e r
D e t e r m in a n t s
Price Sensitivity.
y Price/Total Purchases
h Product Differences.
c Brand Identity.
c Impact on Quality/Performance.
y Buyer Profits.
y Decision-Maker’s Incentives.
90

10. Forc e s
A n a ly s is
Power
of
Suppliers

11. Power
D e t e r m in a n t s
Differentiation of Inputs.
Switching Costs of Suppliers.
Presence of Substitute Products.
Supplier Concentration.
Importance of Volume to Supplier.
Cost Relative to Total Purchases in
90

12. Forc e s
A n a ly s is
Power
of
Substitutes

13. Power of
S u b s t it u t e s
Relative Price Performance of
Substitute.
Switching Costs.
Buyer Propensity to Substitute.
92

14. Forc e s
A n a ly s is
Competitive
Rivalry

15. D e t e r m in a n t s
o f R iv a lr y
Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers. 92

16. D e t e r m in a n t s
o f R iv a lr y
Competition is
Industry Growth.
Everything!!!
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers.

17. V a lu e C h a in
A n a ly s is
Figure 3 98

18. Ma
Ma
n
iin r
rgii
gn
rg
rg n
Ma
Ma
ce
ce
rvi
rvi
Se
Se
Primary Activities
g
ng
tn
etii
V a lu e C h a in
rke s
rk s
Ma Sa e
Ma Salle
d
nd
un
ou
tbo t cs
tb tiics
Ou g s
Ou giis
A n a ly s is
Lo
Lo
s
s
on
ion
ati
at
er
er
Op
Op
d
nd
un s
ou cs
bo tiic
nb g st
IIn giis
Lo
Lo
Figure 3

19. Ma
Ma
n
iin r
rgii
gn
rg
rg n
Ma
Ma
ce
ce
rvi
rvi
Se
Se
Human Resource Management
Primary Activities
g
ng
tn
Technology Development
etii
V a lu e C h a in
rke s
rk s
Ma Sa e
Ma Salle
Procurement
Procurement
d
nd
un
ou
tbo t cs
tb tiics
Ou g s
Ou giis
A n a ly s is
Lo
Lo
s
s
on
ion
ati
at
er
er
Op
Op
d
nd
un s
ou cs
bo tiic
nb g st
IIn giis
Lo
Lo
A
C
V
E
S
T
T
I
I
I
O
U
R
S
P
P
T
Figure 3

20. V a lu e C h a in
A n a ly s is
Impora of v l cha a l is t t
t nce aue- in naysis ha
it pr ides a fr mew k
ov a or
for ident
ifying or
dev opingadistinctive competence.
el
82

21. Devising a Plan of Action
Ë Position the Company.
Ë Influence the Balance of the Forces.
Ë Anticipate Shifts in the Forces.
93

22. Creating Families of Strategies
1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.
94

23. Creating Families of Strategies
1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.
The Core Business is reflected in the
Choice of Generic Strategies

24. G e n e r ic
S t r a t e g ie s
Cost Advantage
Lower Cost Differentiation
Broad
1. Cost Leadership
Target
Competitive
Scope
Narrow
Target
99
Figure 4

25. G e n e r ic
S t r a t e g ie s
Cost Advantage
Lower Cost Differentiation
Broad
1. Cost Leadership 2. Differentiation
Target
Competitive
Scope
Narrow
Target
Figure 4

26. G e n e r ic
S t r a t e g ie s
Cost Advantage
Lower Cost Differentiation
Broad
1. Cost Leadership 2. Differentiation
Target
Competitive
Scope
Narrow 3A. Cost Focus
Target
Figure 4

27. G e n e r ic
S t r a t e g ie s
Cost Advantage
Lower Cost Differentiation
Broad
1. Cost Leadership 2. Differentiation
Target
Competitive
Scope
3B. Differentiation
Narrow 3A. Cost Focus
Focus
Target
Figure 4

28. Strategies of Differentiation
µ Price Differentiation.
µ Image Differentiation.
µ Support Differentiation.
µ Quality Differentiation.
µ Design Differentiation.
µ Undifferentiation.
99

29. Strategies of Scope
µ Unsegmentation.
µ Segmentation.
µ Niche.
µ Customizing.
100

30. Elaborating the Core Business
µ Penetration Strategies.
µ Market Development Strategies.
µ Geographic Expansion Strategies.
µ Product Development Strategies.
101

31. Elaborating the Core Business
µ Penetration Strategies.
µ Market Development Strategies.
µ Geographic Expansion Strategies.
µ Product Development Strategies.

32. Ways to Elaborate a Given
Business
Existing Product New Product
Product
Existing Penetration
Development
Market Strategies
Strategies
Market
New
Diversification
Development
Market Strategies
Strategies
Figure 5 101

33. Questions ?

34. End of Presentation