1. BUSINESS-LEVEL/ GENERIC STRATEGIES Dr. Mark Fruin Business 290/291

2. WHAT IS BUSINESS-LEVEL STRATEGY? A PLAN OF ACTION TO GAIN COMPETITIVE ADVANTAGE IN A MARKET OR INDUSTRY BASED ON CUSTOMER NEEDS OR PRODUCT DIFF CUSTOMER GROUPS OR MARKET SEG HAVING DISTINCTIVE COMPETENCE IN REACHING ONE AND/OR THE OTHER

3. GENERIC STRATEGIES COST LEADERSHIP BROAD NARROW DIFFERENTIATION BROAD NARROW (FOCUS DIFFERENTIATION)

4. 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 & BATTLE SUBSTITUTE PRODUCTS (BY LOWERING PRICES) DISADVANTAGES MORE LIKELY STUCK IN A PARTICULAR TECH MORE LIKELY TO BE IMITATED MORE LIKELY STUCK IN C.L. STRATEGY (POSSIBLY LOSE SIGHT OF CHANGING CUSTOMER TASTES)

5. ADVANTAGES & DISADVAN-TAGES OF DIFFERENTIATION ADVANTAGES DIFFERENTIATORS DIFFERENTIATE IN MANY DIFFERENT WAYS HARD TO IMITATE (IF DONE WELL) BRAND LOYALTY HIGH IF ABLE TO CONVINCE BUYERS OF “UNIQUENESS” DISADVANTAGES MANY DIFFERENTIATION FACTORS ARE EASILY IMITATED FOR HOW LONG CAN “UNIQUENESS” BE PROTECTED

6. FOCUSED DIFFERENTIATION FD MEANS CONCENTRATING ON A PARTICULAR AREA (GEOGRAPHICALLY) A PARTICULAR CUSTOMER (WELL EDUCATED, HOUSEHOLD INCOME>$200K, ETC. PARTICULAR MARKET SEGMENT, SUCH AS DESIGNER CLOTHES, FAST CARS, SMALL FOOTPRINT APPLIANCES, ETC.

7. GENERIC STRATEGIES REQUIRE CAREFUL ATTENTION TO PRODUCT/TECH/MARKET CHOICES IF DONE WELL, CAN PROTECT FIRMS FROM 5 FORCES RIVALRIES BY MAKING COSTS OF IMITATION TOO HIGH REQUIRE CONTINUOUS UPGRADING OF INVESMENT CHOICES

8. 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

9. 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

10. GROWTH CYCLES (CONFUSION?) EMBRYONIC MAY INCLUDE EMBRYONIC AND EMERGING GROWTH MAY INCLUDE PLAIN OLD GROWTH AND SHAKEOUT GROWTH MATURE MAY INCLUDE PRODUCT DIFFERENTIATION & PROLIFERATION DECLINE ALSO INCLUDES CONSOLIDATION, CONCENTRATION & HARVEST (INCLUDE CASH COW STRAT)

11. QUESTIONS WHY DOES EACH GENERIC STRATEGY REQUIRE DIFFERENT SETS OF PRODUCT/MARKET/DIST COMPETENCY CHOICES? HOW SHOULD DIFFERENTIATION INVESTMENT CHOICES DIFFER IF YOU ARE IN STRONG OR WEAK COMPETITIVE POSITION?