Business Level Strategy

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MGT 550: Strategic Management
Chapter 04: Business Level Strategy
Instructor
M. Moinul Haque

Notable Quotes




Alice said, “Would you please tell me which way to go
from here?” The cat said, “That depends on where you
want to get to.”
Lewis Carroll
Even if you are on the right track, you will get run
over if you just sit there.
Will Rogers

2

M. Moinul Haque, Premier University,
Chittagong

Business Level Strategy
Core Competency
The resources and capabilities that have been determined to be a source of competitive advantage for a firm over its rivals.
Business Level Strategy
Indicates how a firm intends to compete in individual product markets.
Corporate Level strategy
Identify the businesses in which the firm will compete.

Strategic Management
Chapter 04

M. Moinul Haque
Adjunct Faculty

3

Business Level Strategy
Business Level Strategy
Actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets.
It is an integrated and coordinated set of commitments and actions that firm uses to gain a competitive advantage by exploiting core competencies in specific product markets.
Example
Krispy Kreme’s choices about how to make and distribute its products as well as how to interact with its customers will affect the firm’s ability to earn above average returns across time.
Strategic Management
Chapter 04

4

M. Moinul Haque
Adjunct Faculty

M. Moinul Haque, Premier University,
Chittagong

Business Level Strategy
Key Issues when choosing a BLS
Customers are foundation of successful BLS and should never be taken for granted.
An effective BLS demonstrates the firm’s ability to build and maintain relationships to the best people for maximum value creation, both internally (to firm members) and externally (to customers).

Successful firms think of their employees as internal customers who produce value creating products for which customers are willing to pay. Such firms understand that the quality of their interactions which customers has a direct effect on firm performance.

Strategic Management
Chapter 04

M. Moinul Haque
Adjunct Faculty

5

Business Level Strategy
Importance of effectively managing relationships with customers If firm delivers superior value to customers than relationship with customers strengthen. Delivering superior value often results in increased loyalty and this loyalty has positive relationship with profitability. Managing all aspects of customer relationship is important here.

Examples
Ford estimates each percentage point increase in customer loyalty leads to at least $100 million in additional profit annually.
Amazon.com is widely recognized for the quality of information it maintains about its customers, services it renders and ability to anticipate customers’ needs.
Strategic Management
Chapter 04

6

M. Moinul Haque
Adjunct Faculty

M. Moinul Haque, Premier University,
Chittagong

Business Level Strategy
Importance of effectively managing relationships with customers Reach:
This dimension of relationship with customers is concerned with the firm’s access and connection to customers.
o Barnes & Noble – carries approximately 2,00,000 titles over 793 stores each averages 25,000 square feet.
o Amazon.com – 4.5 millions titles available tens of millions computer screens.
Richness:
This dimension is concerned with the depth and detail of the two-way flow of information between the firm and the customers.
o Broader and deeper information based exchanges allow firms to better understand their customers and their needs.
o Such exchanges also enable customers to become more
knowledgeable about how the firm can satisfy them.
Strategic Management
Chapter 04

M. Moinul Haque
Adjunct Faculty

7

Business Level Strategy
Importance of effectively managing relationships with customers Affiliation:
It is concerned with...
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