Compatibility Model
Chapter 4:
BUSINESS-LEVEL STRATEGY (chapter 5 in the textbook)
1
“I surf to where hockey balls will be there….
not where it has to roll over.”
- Wayne Gretsky
2
Strategic model
Company
Environment
Strategy
4 levels of strategy • Function-level strategy • Business-level strategy • Corporate-level strategy • International strategy
3
Business Strategy - BUSN 162
1
Business-level strategy
Business-level strategy: an integrated and coordinated set of Businessstrategy: commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets Strategy makes following decisions: 1. Customer’s needs– WHAT needs will be satisfied? 2. Customer groups WHO will be served? 3. Distinctive competencies HOW will those needs be satisfied?
These decisions determine which strategies will be formulated and implemented to put a business model into operation.
4
Who: Determining the Customers to Serve Market segmentation
A process used to cluster people with similar needs into individual and identifiable groups.
All Customers
Consumer Markets Industrial Markets
5
Identify customer groups and market segments
6
Business Strategy - BUSN 162
2
Three approaches for segmentation
7
What: Determining Which Customer Needs to Satisfy
Customer needs are related to a product’s benefits and features. A firm’s ability to meet customer needs creates VALUE for the customer. Two forms of value:
Low cost Unique, or differentiated product
5-8
8
How: Determining Core Competencies Necessary to Satisfy Customer Needs
Firms use core competencies to implement value-creating strategies that satisfy customers’ needs. Only firms with capacity to continuously improve, innovate and upgrade their competencies can expect to meet and/or exceed customer expectations across time.
9
Business Strategy - BUSN 162
3
The Purpose of a Business-Level Strategy
BUSINESS-LEVEL STRATEGY (chapter 5 in the textbook)
1
“I surf to where hockey balls will be there….
not where it has to roll over.”
- Wayne Gretsky
2
Strategic model
Company
Environment
Strategy
4 levels of strategy • Function-level strategy • Business-level strategy • Corporate-level strategy • International strategy
3
Business Strategy - BUSN 162
1
Business-level strategy
Business-level strategy: an integrated and coordinated set of Businessstrategy: commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets Strategy makes following decisions: 1. Customer’s needs– WHAT needs will be satisfied? 2. Customer groups WHO will be served? 3. Distinctive competencies HOW will those needs be satisfied?
These decisions determine which strategies will be formulated and implemented to put a business model into operation.
4
Who: Determining the Customers to Serve Market segmentation
A process used to cluster people with similar needs into individual and identifiable groups.
All Customers
Consumer Markets Industrial Markets
5
Identify customer groups and market segments
6
Business Strategy - BUSN 162
2
Three approaches for segmentation
7
What: Determining Which Customer Needs to Satisfy
Customer needs are related to a product’s benefits and features. A firm’s ability to meet customer needs creates VALUE for the customer. Two forms of value:
Low cost Unique, or differentiated product
5-8
8
How: Determining Core Competencies Necessary to Satisfy Customer Needs
Firms use core competencies to implement value-creating strategies that satisfy customers’ needs. Only firms with capacity to continuously improve, innovate and upgrade their competencies can expect to meet and/or exceed customer expectations across time.
9
Business Strategy - BUSN 162
3
The Purpose of a Business-Level Strategy