Business-level strategies
Business-level strategies
Learning objectives
1. Explain the role of business-level strategies in the business strategy process
2
Identify and discuss the specific business-level strategies within these three
typologies and how these specific strategies may relate to one another
Business-level strategies
Outline
Introduction
Business-level strategies
References
Article 5(b): Johnson et al., (2008) (especially pp. 257-262 and 278-280)
Strategic analysis
3.
Analyse the
environment
Strategic
direction-setting
6.
Identify the
organisations
current vision,
mission and
strategic
objectives
Reassess the
organisations
vision, mission
and strategic
objectives
Analyse the
organisations
resources
Strategic
Strategic
implementation evaluation
Identify
opportunities
and threats
1.
4.
Strategic choice
7.
Formulate
business
strategies
8.
9.
Implement
strategies
Evaluate
results
5.
Identify
strengths and
weaknesses
(Source: Robbins, S. P., Bergman, R., Stagg, I. and Coulter, M. 2009. Management, 5th edition, Pearson Education,
Australia: 276; and Robbins, S. P., Bergman, R., and Stagg, I. 1997. Prentice Hall, Australia: 248 ).
Introduction
The previous topic examined strategy at the corporate level: that is,
strategies pursued by corporations with multiple businesses in different
industries/ markets.
Introduction
A reminder: What is strategy?
A strategy is a comprehensive plan or blueprint that sets out coordinated commitments and activities that will be implemented
in order to achieve strategic objectives.
(Hanson et al., 2014: 4-6)
Introduction
Levels of strategy
(Based on deWit and Meyer, 2010: 9)
Introduction
Business-level strategies
We examine three contemporary business-level strategic
typologies frequently adopted in practice:
Ansoffs product/ market business-level strategies
Miles and Snows adaptive business-level strategies
Porters competitive business-level strategies.
Business-level strategies
Ansoffs product/market strategies
Market penetration
Market development
Product development
Diversification
(Johnson et al., 2008: 257-262).
Markets/
Clients
Products/
Services
Same
Same
Market
Penetration
New
Product
Development
Least risk
New
Market
Development
More risk
Diversification
More risk
Most risk
Business-level strategies
Ansoffs product/market strategies
Market penetration (or expansion) strategy
Market share will usually come at the expense of competitors, who may
retaliate: a source of risk
Market penetration may reach a limit if regulators deem the firm has
gained excessive market power: another source of risk
Business-level strategies
Ansoffs product/market strategies
Market development strategy
New markets may include new market segments, new users, new regions,
states or countries not currently served by the firms existing products or
services: the newness of these markets is a source of risk
Business-level strategies
Ansoffs product/market strategies
Product development strategy
Business-level strategies
Ansoffs product/market strategies
Diversification strategy
Prospector strategy
Analyser strayegy
Defender strategy
Reactor strategy.
Miles and Snow link these four types of business level strategies to
the degree of turbulence found in the marketplace.
(Source: Robbins, S. P., Bergman, R., and Stagg, I 1997. Management, Prentice Hall, Australia: 257-260; and Miles, R.E.,
Snow, C.C., Meyer, A.D and Coleman, H.J. 1978. Organizational Strategy, Structure and Process. The Academy of
Management Review, July: 546-562).
Unit
cost
Experience Curve
Accumulated volume
of production
Pe ar son Education Australia 2000
Strategies for each functional or discipline area in a business that combine to implement
business level strategies
Sales
Marketing
Product development
Finance
Manufacturing
Systems
Accounting
IT
HR
Logistics
Stars
Cash Cows
Dogs
Cash
movement
Product
Movement
35
Pe ar son Education Australia 2000
Is there evidence of strategic drift or strategic flux? Again, this may indicate
wrong or poorly executed strategies
Has the firm reached Point A or Point B on the sigmoid curve? Have they
Conclusion
Strategic decision-making is too complex for perfect decisions to
be made: they tend to be satisfactory rather than optimal
A good choice today may be a poor choice tomorrow:
Ongoing strategic decisions needed
Strategy must be flexible enough to continue to change