Strategy at Business Level

Decent Essays
Chapter 5 Business Level Strategy Successful business model is the product of successful business level strategies. A successful business model can give a company competitive advantage over rivals. To craft a successful business model, strategic managers must determine three issues stated below: 1. What to be satisfied-customer’s needs: Customer needs are the wants that can be satisfied by the means of attributes of the products. Customers choose a product based on: A. Product differentiation B. Price of the product Product differentiation is the process of designing the products to satisfy the customer needs. If managers take the strategies to differentiate the products in terms of innovation, quality on excellence, customer…show more content…
4. Focused differentiation: Focused differentiation is providing a differentiated product for just one or two market segments. Why are some companies in an industry able to reach value creation frontier while others fail even when they appear to be using the same business model? The answer lies on the understanding of dynamics involved in positioning a company’s business model. We can understand the dynamics of the business model in the following three perspectives: 1. Broad differentiation: The middle of the value creation frontier is the broad differentiation. Companies can reach to broad differentiation by developing business-level strategies to improve their differentiation and cost structure simultaneously. Companies that can formulate and implement their business model based on broad differentiation can impose threat to both differentiators and cost-leaders over time. If strategic managers can pursue this broad differentiation business model, then they can steadily increase their market share and profitability over time. 2. Strategic group analysis: Strategic group analysis helps companies in an industry better understand the dynamics of competitive positioning. In strategic group analysis, managers identify and chart the business models and business level strategies their industry rivals are pursuing. Then they determine which strategies are successful and unsuccessful and why a certain business
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