Hill 10e IM Ch05
CHAPTER 5
Building Competitive Advantage Through Business-Level Strategy
SYNOPSIS OF CHAPTER
The purpose of this chapter is to discuss the various business‑level strategies that a company can use to compete effectively in a business and in an industry. This chapter argues that the basis of all successful business models is the choice of business-level strategies that work together to provide competitive advantage through optimal competitive positioning. The decisions made about customer needs, customer groups, and distinctive competencies determines which set of strategies to formulate and implement to put a business model into action and create value for customers.
Next, the generic competitive strategies of cost leadership, differentiation, and focus are discussed, and it is argued that each represents a different set of choices concerning products, markets, and distinctive competencies. Pursuing a particular business‑level strategy involves combining these choices successfully. These sections are very detailed and include implications and conclusions of each strategy. There are also discussions of pursuing a simultaneous low‑cost and differentiation strategy and of being “stuck in the middle.”
This chapter then discusses strategic groups analysis that helps managers understand the behavior of their closest competitors. In addition, companies can alter the competitive dynamics of their industry by raising mobility barriers to movement across strategic groups.
The last section of the chapter provides reasons why companies fail at competitive positioning. Constant changes occurring in the external environment and actions of competitors who work to develop superior business-level strategies, make competitive positioning a complex, demanding task that requires the highest degree of strategic thinking.
TEACHING OBJECTIVES
1. Explain why a company must define its business, and how managers do this through choices about which customer groups, customer needs, and
Building Competitive Advantage Through Business-Level Strategy
SYNOPSIS OF CHAPTER
The purpose of this chapter is to discuss the various business‑level strategies that a company can use to compete effectively in a business and in an industry. This chapter argues that the basis of all successful business models is the choice of business-level strategies that work together to provide competitive advantage through optimal competitive positioning. The decisions made about customer needs, customer groups, and distinctive competencies determines which set of strategies to formulate and implement to put a business model into action and create value for customers.
Next, the generic competitive strategies of cost leadership, differentiation, and focus are discussed, and it is argued that each represents a different set of choices concerning products, markets, and distinctive competencies. Pursuing a particular business‑level strategy involves combining these choices successfully. These sections are very detailed and include implications and conclusions of each strategy. There are also discussions of pursuing a simultaneous low‑cost and differentiation strategy and of being “stuck in the middle.”
This chapter then discusses strategic groups analysis that helps managers understand the behavior of their closest competitors. In addition, companies can alter the competitive dynamics of their industry by raising mobility barriers to movement across strategic groups.
The last section of the chapter provides reasons why companies fail at competitive positioning. Constant changes occurring in the external environment and actions of competitors who work to develop superior business-level strategies, make competitive positioning a complex, demanding task that requires the highest degree of strategic thinking.
TEACHING OBJECTIVES
1. Explain why a company must define its business, and how managers do this through choices about which customer groups, customer needs, and