Business Level Strategy Analysis

BUSINESS LEVEL STRATEGY ANALYSISThe Positioning Approach.Porter’s 5 Forces.Value Chain Analysis.The Generic Strategies.The Positioning ApproachThe oldest approach to military strategy.The newest of the three prescriptive approaches to strategy .Design and Planning Approaches were explained in Chapter 3.Focuses on how firms in a given context differ in product market positions compared to the competition.80Premises of The Positioning ApproachStrategy follows structure.Looks at the groups of competitors in an industry.Relies more heavily on calculation than the design or planning schools.Places even more emphasis on the role of strategic planners.81Porter’s Five Forces AnalysisBreaking Apart Industry-Level Competition87Porter’s Five Forces AnalysisThreat ofEntryThe 6 Barriers of EntryEconomies of Scale.Product Differentiation.Capital Requirements.Cost Disadvantages Independent of Size.Access to Distribution Channels.Government Policy.89Porter’s Five Forces AnalysisPower of BuyersBuyer Power DeterminantsBargaining Leverage.Buyer ConcentrationBuyer Volume.Buyer Switching Costs.Buyer Information.Ability to Integrate Backward.Substitute Products. Pull-Through. 90Buyer Power DeterminantsPrice Sensitivity.Price/Total Purchases Product Differences.Brand Identity.Impact on Quality/Performance.Buyer Profits.Decision-Maker’s Incentives.90Porter’s Five Forces AnalysisPowerof SuppliersSupplier Power DeterminantsDifferentiation of Inputs.Switching Costs of Suppliers. Presence of Substitute Products. Supplier Concentration. Importance of Volume to Supplier.Cost Relative to Total Purchases in the Industry.Impact of Inputs on Cost or Differentiation. 90Porter’s Five Forces AnalysisPowerof SubstitutesPower of SubstitutesRelative Price Performance of Substitute.Switching Costs.Buyer Propensity to Substitute. 92Porter’s Five Forces AnalysisCompetitiveRivalryDeterminants of Rivalry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. 92Determinants of RivalryCompetition is Everything!!!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. Value Chain AnalysisFigure 398Value Chain AnalysisInboundLogisticsOperationsOutbound LogisticsMarketing & SalesServiceMarginMarginPrimary ActivitiesFigure 3Value Chain AnalysisInboundLogisticsOperationsOutbound LogisticsMarketing & SalesServiceProcurementHuman Resource ManagementTechnology DevelopmentProcurementSUPPORTACTIVITIESPrimary ActivitiesFigure 3MarginMarginValue Chain AnalysisImportance of value-chain analysis is that it provides a framework for identifying or developing a distinctive competence.82Devising a Plan of ActionPosition the Company.Influence the Balance of the Forces.Anticipate Shifts in the Forces.93Creating Families of Strategies1.Locating the core business. 2. Distinguishing the core business.3. Elaborating the core business.4. Extending the core business.5. Reconceiving the core business.94Creating Families of Strategies1.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 StrategiesPorter’s Generic StrategiesCost AdvantageCompetitiveScopeBroad TargetNarrowTargetLower CostDifferentiation1. Cost LeadershipFigure 499Porter’s Generic StrategiesCost AdvantageCompetitiveScopeBroad TargetNarrowTargetLower CostDifferentiation1. Cost Leadership2. DifferentiationFigure 4Porter’s Generic StrategiesCost AdvantageCompetitiveScopeBroad TargetNarrowTargetLower CostDifferentiation1. Cost Leadership2. Differentiation3A. Cost FocusFigure 4Porter’s Generic StrategiesCost AdvantageCompetitiveScopeBroad TargetNarrowTargetLower CostDifferentiation1. Cost Leadership2. Differentiation3A. Cost FocusFigure 43B. Differentiation FocusStrategies of DifferentiationPrice Differentiation.Image Differentiation.Support Differentiation.Quality Differentiation.Design Differentiation.Undifferentiation.99Strategies of ScopeUnsegmentation.Segmentation.Niche.Customizing.100Elaborating the Core BusinessPenetration Strategies.Market Development Strategies.Geographic Expansion Strategies.Product Development Strategies.101Elaborating the Core BusinessPenetration Strategies.Market Development Strategies.Geographic Expansion Strategies.Product Development Strategies.Existing ProductNew ProductExisting MarketNew MarketPenetrationStrategiesMarket DevelopmentStrategiesProductDevelopmentStrategiesDiversificationStrategiesWays to Elaborate a Given BusinessFigure 5101Questions ?End of Presentation