View
215
Download
0
Embed Size (px)
Citation preview
WHAT IS BUS-LEVEL STRATEGY?• FIRM-SPECIFIC PLAN OF ACTION FOR GAINING
COMPETITIVE ADVANTAGE IN A MARKET OR INDUSTRY (TAKE BUSINESS FROM RIVALS)
• IMPLEMENT B-L STRATEGIES THAT MAKE FULL USE OF FUNCTIONAL LEVEL STRATEGIES
• INDUSTRIES = PRODUCT/MARKET SEGMENTS• BASED ON
– PRODUCT DIFFERENCES
– CUSTOMER GROUPS OR MARKET SEGMENTS
– LOCATION (SEGMENTS OFTEN DIFFER BY LOCATION)
– HAVING DISTINCTIVE COMPETENCES• FOLLOWING PORTER, COST LEADERSHIP OR
DIFFERENTIATION ADVANTAGES/THESE ARE PRODUCT-LEVEL STRAT
BL & FL STRATEGIES• DISTINGUISH BETWEEN BUSINESS LEVEL &
FUNCTIONAL LEVEL STRATEGIES– IS ONE MORE APPROPRIATE AT CERTAIN TIMES
& STAGES?– CAN BOTH BE PURSUED SIMULTANEOUSLY?– IS THE COMPETITION BETWEEN TOYOTA & GM
(AND NOW VW) TO BE THE LARGEST AUTO MAKER IN THE WORLD, A BL OR FL COMPETITON?
COMPETITIVE POSITIONING• TO BE IN A POSITION OF COMPETITIVE
ADVANTAGE, A FIRM MUST MAKE CHOICES• PURSUE COST LEADERSHIP OR DIFFERENTIATION?
– WHAT PRODUCT FEATURES?
– WHAT CUSTOMER CHARACTERISTICS OR CUSTOMER GROUPINGS
– WHERE (WHEN & HOW)
– WILL PRODUCT BE COMPETITIVELY POSITIONED ACCORDING TO (BEGIN & END HERE BECAUSE WHAT IT TAKES TO SUCCEED WITH ONE SO DIFF FROM OTHER)
• COST LEADERSHIP?
• DIFFERENTIATION?
SEGMENTATION STRATEGIES• FIGURE 5.2 (SEE FIGURE 5.1 AS WELL)• 3 MAIN APPROACHES
– NO MARKET SEGMENTATION - THE MARKET TAKEN AS AN UNDIFFERENTIATED WHOLE
– HIGH MARKET SEGMENTATION - LOTS OF DIFFERENT PRODUCT/MARKET SEGMENTS
• LOTS OF DIFF PRODUCTS FOR LOTS OF DIFF MKTS
– FOCUSED MARKET SEGMENTATION - A FEW SEGMENTS ARE SELECTIVELY TARGETED
• LOTS OF OTHERS ARE IGNORED (FOR NOW)
SEGMENTATION AND THE BUSINESS MODEL
• CHAPTER TALKS A LOT ABOUT BUSINESS MODELS RATHER THAN STRATEGIES
• WHAT’S THE DIFFERENCE AGAIN?
• BM IS HOW ARE WE GOING TO MAKE MONEY
• STRATEGY IS HOW ARE WE GOING TO IMPLEMENT/EFFECT/PUT INTO PLACE BM
WAL-MART’S BUSINESS MODEL• WAL-MART’S BUSINESS MODEL ON P. 157,
FIGURE 5.3• BALOONS ARE ACTIVITIES/CAPABILITIES THAT
DISTINGUISH W-M’S BUSINESS MODEL AND PROD/MKT SEGMENTATION– WHICH BALOONS HAVE THE MOST LINKS– WHY? WHAT DOES MORE LINKS MEAN?
• HOW ARE W-M’S CAPABILITIES IMPLEMENTED/PUT INTO PLAY???– FUNCTIONAL LEVEL STRATEGIES– GENERIC COMPETITIVE STRATEGIES
FIGURES 5.5, 5.6, 5.8, 5.9 & 5.10• ILLUSTRATE WHAT WE HAVE JUST SAID• BUSINESS-LEVEL STRATEGIES REQUIRE
– TARGET SEGMENTS (MAKE CHOICES)– CARRY OUT FUNCTIONAL LEVEL STRATEGIES
(STRATEGY STACK IN ACTION)• MAKE CHOICES
– DEVELOP ACTIVITIES/CAPABILITIES THAT IMPLEMENT TARGETED SEGMENTS
• MAKE CHOICES
– EXCEL IN ONE OR ANOTHER GENERIC COMPETITIVE STRATEGY (MAKE CHOICES)
GENERIC STRATEGIES
• COST LEADERSHIP (VALUE PROPOSITION STRATEGY)– BROAD– NARROW
• DIFFERENTIATION (PRICE PREMIUM STRATEGY)– BROAD – NARROW (FOCUS DIFFERENTIATION)
CUSTOMER GROUPS & MARKET SEGMENTATION
• HOW MUCH ARE CUSTOMERS WILLING TO PAY VERSUS WHAT CUSTOMERS ARE BEING SERVED?
• THREE ALTERNATIVE STRATEGIES– FOCUS ON “AVERAGE” CUSTOMER
– SEGMENT MARKET INTO MANY DIFFERENT CONSTITUENCIES/CLUSTERS
– CONCENTRATE ON “NICHES” ONLY• WHY DO THIS?
CAN A FIRM OFFER TOO MANY PRODUCTS?
• HOW MANY PRODUCTS ARE THE “RIGHT” NUMBER OF PRODUCTS?
• INDUSTRY CYCLE EFFECTS• MACROECONOMIC EFFECTS• SIGNALS & SIGNS OF TOO FEW OR TOO MANY
PRODUCTS?– HOW MANY MODELS DO BOEING AND AIRBUS OFFER?
• TOO MANY/TOO FEW & WHY?
– RECENTLY GM REDUCED # OF MODELS OFFERED• A GOOD MOVE OR NOT & WHY?
ADVANTAGES & DISADVANTAGES OF C.L.
• ADVANTAGES– USING 5 FORCES MODEL: COST LEADER HAS
• MORE POWER RELATIVE TO SUPPLIERS• MORE POWER RELATIVE TO BUYERS• BETTER ABLE TO DETER ENTRY OF NEW COMPETITORS &
BATTLE SUBSTITUTE PRODUCTS (BY LOWERING PRICES)
• DISADVANTAGES– MORE LIKELY STUCK IN PARTICULAR TECH/SEGMNT
• WHY?
– MORE LIKELY TO BE IMITATED• WHY?
– MORE LIKELY STUCK IN C.L. STRATEGY (AND POSSIBLY LOSE SIGHT OF CHANGING CUST. TASTES)
• DISTRUPTIVE/DISCONTINUOUS INNOVATION (C. CHRISTENSEN)
ADVANTAGES & DISADVAN-TAGES OF DIFFERENTIATION
• ADVANTAGES– DIFFERENTIATORS TRY TO DIFFERENTIATE IN
MANY DIFFERENT WAYS– HARD TO IMITATE (IF DONE WELL)– BRAND LOYALTY HIGH IF CONVINCE BUYERS OF
“UNIQUENESS,” “UNUSUALNESS,” & “SPECIALNESS”
• DISADVANTAGES– DIFFERENTIATION IS EXPENSIVE– MANY DIFFERENTIATION FACTORS ARE EASILY
IMITATED– FOR HOW LONG CAN “UNIQUENESS” BE
SUSTAINED/PROTECTED
FOCUSED DIFFERENTIATION
• FD MEANS CONCENTRATING ON– A PARTICULAR AREA (GEOGRAPHICALLY)– A PARTICULAR CUSTOMER (WELL EDUCATED,
PART. HOUSEHOLD INCOME, ETC.– PARTICULAR MARKET SEGMENT, SUCH AS
DESIGNER CLOTHES, FAST CARS, SMALL FOOTPRINT APPLIANCES, ETC.
GENERIC STRATEGIES• REQUIRE CAREFUL ATTENTION TO
PRODUCT/TECH/MARKET CHOICES– LOOKING FOR THE SWEET SPOTS
• CAN PROTECT FIRMS FROM 5 FORCES RIVALRIES - WHY?
• REQUIRE CONTINUOUS UPGRADING OF INVESMENT CHOICES - WHY?
• CREATE STRATEGIC GROUPINGS (OF FIRMS FOLLOWING SAME STRATEGIES)
STRATEGIC GROUPS• WITHIN MOST INDUSTRIES, STRATEGIC
GROUP EMERGE
• A STRATEGIC GROUP IS DEFINED BY COMPANIES PURSUING THE SAME GENERIC STRATEGY
• MOBILITY BARRIERS INHIBIT THE MOVEMENT OF COMPANIES FROM ONE STRATEGIC GROUP TO ANOTHER
COMPETITIVE ADVANTAGE & INVESTMENT STRATEGY
• WHAT TYPE OF INVESTMENTS MUST FIRMS MAKE TO SUSTAIN COMPETITIVE ADVANTAGE?
• OBVIOUS– HUMAN RESOURCES– FUNCTIONAL-LEVEL STRATEGIES– PURSUIT OF FINANCIAL ADVANTAGE– GLOBALIZATION & OUTSOURCING
• NOT SO OBVIOUS? – INTANGIBLE RESOURCES– TACIT CAPABILITIES– SOCIAL PROCESSES– HIGHER LEVEL HR INVESTMENTS
BUSINESS LEVEL INVESTMENT STRATEGIES
• COMPETITIVE POSITION BASED ON– MARKET SHARE– STRENGTH OF DISTINCTIVE COMPETENCIES
• (PRODUCT) LIFE CYCLE EFFECTS– EMBRYONIC, GROWTH, MATURE, DECLINE
• INDUSTRY CYCLE EFFECTS– EMBRYONIC, GROWTH, MATURE, DECLINE
INDUSTRIES NOT GOVERNED BY 5 FORCES & POSSIBLY
LIFE-CYCLE EFFECTS?• WHERE THERE ARE NO ECONOMIES OF SCALE
AND SCOPE• WHERE NO INDUSTRY CONCENTRATION
– CONCENTRATION RATIOS IN MATURE INDUSTRIES
• SO-CALLED FRAGMENTED “INDUSTRIES”– HAIRCUT, DRY CLEAN, NAIL SALON, SALOON,
POSSIBLY OTHER CONVENIENCE & SERVICE- ORIENTED BUSINESSES
GROWTH CYCLES(CONFUSION?)
• EMBRYONIC MAY INCLUDE EMBRYONIC AND EARLY EMERGING
• GROWTH MAY INCLUDE PLAIN OLD GROWTH (SOMETIMES CALLED EMERGING) AND SHAKEOUT GROWTH
• MATURE MAY INCLUDE PRODUCT DIFFERENTIATION & PROLIFERATION
• DECLINE ALSO INCLUDES CONSOLIDATION, CONCENTRATION & HARVEST (INCLUDE CASH COW STRAT)
INVESTMENT STRATEGY TYPES (MATCHED TO LIFE CYLE MODEL)
• TYPICAL STRATEGIES PURSUED AT DIFFERENT STAGES OF ILC– GROWTH
• SHARE BUILDING• GROWTH • SHARE INCREASING
– MATURE• HOLD-AND-MAINTAIN• PROFIT • MARKET CONCENTRATION
– DECLINING• ASSET REDUCTION• HARVEST• TURNAROUND• LIQUIDATE• DIVESTITURE
QUESTIONS• WHY DOES EACH GENERIC STRATEGY REQUIRE
DIFFERENT SETS OF PRODUCT/MARKET/ DISTINCTIVE COMPETENCY CHOICES?– EXAMPLES OF FIRM PAIRS MAKING DIFFERENT
CHOICES; ARE THEY IN SAME STRATEGIC GROUP?• HONDA VS. TOYOTA• FORD VS GM
• HOW SHOULD DIFFERENTIATION INVESTMENT CHOICES VARY IF YOU ARE IN STRONG OR WEAK COMPETITIVE POSITION?– STRONG: ?– WEAK: ?
STUDY GROUP QUESTIONS• WHICH FIRM (OF THE PAIR) PERFORMS BEST IN
TERMS OF FUNCTIONAL-LEVEL STRATEGIES?– FL STRATEGIES INDIVIDUALLY & TOGETHER– USE DUPONT ROI FORMULA, pp. 94-95
• DO THE TWO FIRMS BELONG TO THE SAME STRATEGIC GROUP IN THE INDUSTRY?
• DO BOTH FIRMS PURSUE THE SAME BL STRATEGIES? (TARGET THE SAME CUSTOMERS WITH SIMILAR PRODUCTS?)
• WHICH FIRM IS MORE PROFITABLE & WHY?– ARE FL OR BL STRATEGIES MORE IMPORTANT?
• USE DUPONT ROI FORMULA, pp. 94-95