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Chapter4 Business LevelStrategy MichaelA HittR DuaneIrelandRobertE Hoskisson 2000South WesternCollegePublishing CoreCompetency Theresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals Strategy Anintegratedandcoordinatedsetofactionstakentoexploitcorecompetenciesandgainacompetitiveadvantage CoreCompetency Theresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals Strategy Anintegratedandcoordinatedsetofactionstakentoexploitcorecompetenciesandgainacompetitiveadvantage BusinessLevelStrategy Actionstakentoprovidevaluetocustomersandgainacompetitiveadvantagebyexploitingcorecompetenciesinspecific individualproductmarkets CoreCompetency Theresourcesandcapabilitiesthathavebeendeterminedtobeasourceofcompetitiveadvantageforafirmoveritsrivals GenericBusinessLevelStrategies KeyCriteria CostLeadershipBusinessLevelStrategy Requirements Constantefforttoreducecoststhrough CostLeadershipBusinessLevelStrategy PrimaryActivities SupportActivities TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN MARGIN ValueCreatingActivitiesCommontoaCostLeadershipBusinessLevelStrategy PrimaryActivities SupportActivities ValueCreatingActivitiesCommontoaCostLeadershipBusinessLevelStrategy HowtoObtainaCostAdvantage 1 DetermineandControlCostDrivers 2 ReconfiguretheValueChainasneeded ReconfiguringtheValueChainofIowaBeefPackers IBP Saveonshippingandcattleweightloss Utilizecheapernon unionrurallabor ChoicesThatDriveCosts ThreeKeyQuestions 2 Howcanagroupoflinkedvalueactivitiesberegroupedorreordered 3 Howmightcoalitionswithotherfirmsloweroreliminatecosts Gallosoldwinethroughgrocerystoresratherthanliquorstoresbecausetheyweremoreefficientdistributors 1 Howcananactivitybeperformeddifferentlyoreveneliminated EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive BargainingPowerofBuyers ThreatofNewEntrants EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive CanmitigateBuyerPowerby ThreatofNewEntrants BargainingPowerofBuyers Drivingpricesfarbelowcompetitorswhichmaycauseexitandshiftpowerbacktofirm EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive BargainingPowerofSuppliers ThreatofNewEntrants ThreatofSubstituteProducts CanmitigateBuyerPowerby BargainingPowerofBuyers Drivingpricesfarbelowcompetitorswhichmaycauseexitandshiftpowerbacktofirm CanmitigateSupplierPowerby Lowcostpositionmakesthembetterabletoabsorbcostincreases Morelikelytomakeverylargepurchaseswhichreduceschanceofsupplierpower EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive EffectiveCostLeaderscanremainprofitableevenwhentheFiveForcesappearunattractive ThreatofNewEntrants BargainingPowerofSuppliers ThreatofSubstituteProducts RivalryAmongCompetingFirmsinIndustry CanmitigateBuyerPowerby BargainingPowerofBuyers Drivingpricesfarbelowcompetitorswhichmaycauseexitandshiftpowerbacktofirm MajorRisksofCostLeadershipBusinessLevelStrategy BreadthofCompetitiveScope SourceofCompetitiveAdvantage BroadTargetMarket NarrowTargetMarket Cost CostLeadership Uniqueness GenericBusinessLevelStrategies BreadthofCompetitiveScope SourceofCompetitiveAdvantage BroadTargetMarket NarrowTargetMarket Cost CostLeadership Differen tiation GenericBusinessLevelStrategies Uniqueness KeyCriteria DifferentiationBusinessLevelStrategy DifferentiationBusinessLevelStrategy Requirements PrimaryActivities SupportActivities TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN MARGIN ValueCreatingActivitiesCommontoaDifferentiationBusinessLevelStrategy TechnologicalDevelopment HumanResourceManagement FirmInfrastructure Procurement InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN MARGIN PrimaryActivities SupportActivities ValueCreatingActivitiesCommontoaDifferentiationBusinessLevelStrategy EffectivenesswithDifferentiationgrowsoutofValueChainactivities Examples DifferentiationBusinessLevelStrategy Creatingbarriersbyperceptionsofuniqueness Creatingswitchingcoststhroughdifferentiation RaisingBuyers Performance LoweringBuyers Costs CreatingSustainabilitythrough CreateValuewithDifferentiationby DriversofDifferentiation EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive ThreatofNewEntrants EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive ThreatofNewEntrants BargainingPowerofSuppliers CanmitigateBuyerPowerbecausewelldifferentiatedproductsreducecustomersensitivitytopriceincreases EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive ThreatofNewEntrants BargainingPowerofSuppliers CanmitigateBuyerPowerbecausewelldifferentiatedproductsreducecustomersensitivitytopriceincreases EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive ThreatofSubstituteProducts ThreatofNewEntrants BargainingPowerofSuppliers BargainingPowerofBuyers ThreatofSubstituteProducts CanmitigateBuyerPowerbecausewelldifferentiatedproductsreducecustomersensitivitytopriceincreases EffectiveDifferentiatorscanremainprofitableevenwhentheFiveForcesappearunattractive MajorRisksofaDifferentiationBusinessLevelStrategy BreadthofCompetitiveScope SourceofCompetitiveAdvantage BroadTargetMarket NarrowTargetMarket Cost CostLeadership Differen tiation Uniqueness GenericBusinessLevelStrategies BreadthofCompetitiveScope SourceofCompetitiveAdvantage BroadTargetMarket NarrowTargetMarket Cost CostLeadership Differen tiation FocusedDifferen tiation FocusedLowCost Uniqueness GenericBusinessLevelStrategies FocusedBusinessLevelStrategiesinvolvethesamebasicapproachasBroadMarketStrategies However opportunitiesmayexistbecause FocusedBusinessLevelStrategies FocusedBusinessLevelStrategies FocusedBusinessLevelStrategiesinvolvethesamebasicapproachasBroadMarketStrategies However opportunit

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