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BUSINESS LEVEL STRATEGY ANALYSIS. The Positioning Approach. Porter’s 5 Forces. Value Chain Analysis. The Generic Strategies. The Positioning Approach. The oldest approach to military strategy.

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Business level strategy analysis l.jpg
BUSINESS LEVEL STRATEGY ANALYSIS

The Positioning Approach.

  • Porter’s 5 Forces.

  • Value Chain Analysis.

  • The Generic Strategies.


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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.

80


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Premises 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.

81


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Porter’s Five Forces Analysis

Breaking Apart Industry-Level Competition

87



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The 6 Barriers of Entry

  • Economies of Scale.

  • Product Differentiation.

  • Capital Requirements.

  • Cost Disadvantages Independent of Size.

  • Access to Distribution Channels.

  • Government Policy.

89



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Buyer Power Determinants

  • Bargaining Leverage.

    • Buyer Concentration

    • Buyer Volume.

    • Buyer Switching Costs.

    • Buyer Information.

    • Ability to Integrate Backward.

    • Substitute Products.

    • Pull-Through.

90


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Buyer Power Determinants

  • Price Sensitivity.

    • Price/Total Purchases

    • Product Differences.

    • Brand Identity.

    • Impact on Quality/Performance.

    • Buyer Profits.

    • Decision-Maker’s Incentives.

90



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Supplier 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.

90


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Porter’s Five Forces Analysis

Power

of

Substitutes


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Power of Substitutes

  • Relative Price Performance of Substitute.

  • Switching Costs.

  • Buyer Propensity to Substitute.

92


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Porter’s Five Forces Analysis

Competitive

Rivalry


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Determinants 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.

92


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Determinants of Rivalry

Competition 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.



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Value Chain Analysis

Margin

Inbound

Logistics

Outbound

Logistics

Marketing

& Sales

Service

Margin

Operations

Primary Activities

Figure 3


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Value Chain Analysis

A

C

T

I

V

I

T

I

E

S

S

U

P

P

O

R

T

Procurement

Human Resource Management

Margin

Technology Development

Procurement

Inbound

Logistics

Outbound

Logistics

Marketing

& Sales

Service

Margin

Operations

Primary Activities

Figure 3


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Value Chain Analysis

  • Importance of value-chain analysis is that it provides a framework for identifying or

    developing a distinctive competence.

82


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Devising a Plan of Action

  • Position the Company.

  • Influence the Balance of the Forces.

  • Anticipate Shifts in the Forces.

93


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Creating Families of Strategies

  • .Locating the core business.

  • . Distinguishing the core business.

  • . Elaborating the core business.

  • . Extending the core business.

  • . Reconceiving the core business.

94


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Creating Families of Strategies

  • .Locating the core business.

  • . Distinguishing the core business.

  • . Elaborating the core business.

  • . Extending the core business.

  • . Reconceiving the core business.

The Core Business is reflected in the

Choice of Generic Strategies


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Porter’s Generic Strategies

Cost Advantage

Lower Cost

Differentiation

Broad

Target

1. Cost Leadership

Competitive

Scope

Narrow

Target

99

Figure 4


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Porter’s Generic Strategies

Cost Advantage

Lower Cost

Differentiation

Broad

Target

1. Cost Leadership

2. Differentiation

Competitive

Scope

Narrow

Target

Figure 4


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Porter’s Generic Strategies

Cost Advantage

Lower Cost

Differentiation

Broad

Target

1. Cost Leadership

2. Differentiation

Competitive

Scope

Narrow

Target

3A. Cost Focus

Figure 4


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Porter’s Generic Strategies

Cost Advantage

Lower Cost

Differentiation

Broad

Target

1. Cost Leadership

2. Differentiation

Competitive

Scope

3B. Differentiation

Focus

Narrow

Target

3A. Cost Focus

Figure 4


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Strategies of Differentiation

  • Price Differentiation.

  • Image Differentiation.

  • Support Differentiation.

  • Quality Differentiation.

  • Design Differentiation.

  • Undifferentiation.

99


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Strategies of Scope

  • Unsegmentation.

  • Segmentation.

  • Niche.

  • Customizing.

100


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Elaborating the Core Business

  • Penetration Strategies.

  • Market Development Strategies.

  • Geographic Expansion Strategies.

  • Product Development Strategies.

101


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Elaborating the Core Business

  • Penetration Strategies.

  • Market Development Strategies.

  • Geographic Expansion Strategies.

  • Product Development Strategies.


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Ways to Elaborate a Given Business

Existing Product

New Product

Product

Development

Strategies

Penetration

Strategies

Existing

Market

Market

Development

Strategies

Diversification

Strategies

New

Market

Figure 5

101




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