Developing Business-Level Strategy Options Lecture 6

Learning outcomes After working through this chapter, you should be able to: Undertake a SWOT analysis Generate options on the environment-based view of the organisation Explore generic strategy options and evaluate their potential Outline the market options matrix and its contributions to developing industry-based options Generate options on the RBV view of the organisation Use the value chain in the development of resource- based options Develop options based on the distinctive capabilities and core competences of the organisation

Introduction SWOT analysis Key elements of organisation’s purpose Environmental options: Generic strategies Market options Expansion methods Resource-based options: Value chain RBV view Cost reduction Identify major options Choose between options: perspective Perhaps keep options open: emergent Lynch, 2006

Purpose and the SWOT analysis INTERNAL Strengths Market dominance Cost strength Economies of scale Los-cost reduction Leadership and management skills Weaknesses Share weaknesses Few core strengths and low on key skills Old plant with higher costs that competition Weak finances and poor cash flow EXTERNAL Opportunities New markets and segments New products Diversification opportunities Market growth Competitor weaknesses Threats New market entrants Increased competition Increased pressure from customers and suppliers Substitutes Lynch, 2006

Diagnosing Strategic Capabilities Internal factors Strengths (S) Weaknesses (W) External factors Opportunities (O) SO Strategic Options Generate options here that use strengths to take advantage of opportunities WO Strategic Options Generate options here that take advantage of opportunities by overcoming weaknesses Threats (T) ST Strategic Options Generate options here that use strengths to avoid threats WT Strategic Options Generate options here that minimise weaknesses and avoid threats Johnson, Whittington and Scholes (2006) Exploring strategy, 9th edition, Prentice Hall

Environment-based options: generic strategies Competitive Advantage Low Cost Differentiation Cost leadership Differentiation Broad Target Competitive Scope Focus Narrow Target Lynch, 2006

Low-cost leadership Lynch, 2006

Differentiation Lynch, 2006

Focus/niche strategy Definition: A focus strategy occurs when the organisation focuses on a specific niche in the market place and develops its competitive advantage by offering products especially developed for that niche.

The market options matrix Lynch, 2006

The expansion method matrix Company Inside Outside Internal development Merger Acquisition Joint venture Alliances Franchise Exporting Overseas office Overseas manufacture Multinational operation Global operation Turnkey Licensing Home country Geographical location International Lynch, 2006

Resource-based strategic options: the value chain http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/2516-porter-value-chain.html

Resource based strategic options: the RBV view Lynch, 2006

Resource based strategic options: cost reduction http://www.policonomics.com/experience-curve/