1. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-1 Chapter 6: Business-Level Strategy Text by Charles W. L. Hill Gareth R. Jones Multimedia Slides by Milton M. Pressley Univ. of New Orleans

2. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-2 Preview 4What Is Business-Level Strategy? 4Choosing a Generic Business- Level Strategy 4Strategic Groups and Business- Level Strategy 4Choosing an Investment Strategy at the Business Level

3. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-3 What Is Business-Level Strategy? Business-Level Strategy DefinedBusiness-Level Strategy Defined Customer NeedsCustomer Needs Product DifferentiationProduct Differentiation Market SegmentationMarket Segmentation Deciding on Distinctive CompetenciesDeciding on Distinctive Competencies

4. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-4 Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies Choosing a Generic Business-Level Strategy

5. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-5 Choosing a Generic Business- Level Strategy (Continued) 4Advantages and Disadvantages of a Cost Leadership Strategy Related to Threats From: –Competitors –Powerful Suppliers –Powerful Buyers –Substitute Products –New Entrants

6. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-6 Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies Choosing A Generic Business- Level Strategy (Continued)

7. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-7 QualityQuality InnovationInnovation Responsiveness to CustomersResponsiveness to Customers Choosing a Generic Business- Level Strategy (Continued) Product Differentiation Is Achieved Principally Through:

8. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-8 Choosing a Generic Business- Level Strategy (Continued) 4Advantages and Disadvantages of the Differentiation Strategy Related to Threats From: –Competitors –Powerful Suppliers –Powerful Buyers –Substitute Products –New Entrants

9. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-9 Choosing a Generic Business- Level Strategy (Continued) Cost Leadership and Differentiation Cost Leadership and Differentiation CostLeadershipBenefits DifferentiationBenefits

10. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-10 Choosing a Generic Business- Level Strategy (Continued) Cost Leadership and Differentiation Cost Leadership and Differentiation CostLeadershipBenefits DifferentiationBenefits FlexibleManufacturingTechnologies CombinedBenefits

11. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-11 Table 6.1: Product/Market/ Distinctive-Competency Choices and Generic Competitive Strategies Choosing a Generic Business- Level Strategy (Continued) Product Differentiation Market Segmentation Distinctive Competency DifferentiationFocus High (Principally by Uniqueness) Low to High (Price or Uniqueness) High (Many Market Segments) Low (One or a Few Segments) R&D, Sales and Marketing Any Kind of Distinctive Competency Low (Principally by Price) Low (Mass Market) Manufacturing and Materials Management Cost Leadership

12. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-12 Figure 6.1: Types of Business-Level Strategies Offers Products to Only One Group of Customers Offers Products to Many Kinds of Customers Offers Low- Priced Products to Customers Offers Unique or Distinctive Products to Customers Focused Cost- Leadership Strategy Focused Differentiation Strategy Differentiation Strategy Cost- Leadership Strategy Choosing a Generic Business- Level Strategy (Continued)

13. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-13 Choosing a Generic Business- Level Strategy (Continued) 4A Focused Company’s Advantages and Disadvantages Related to Threats From: –Competitors –Powerful Suppliers –Powerful Buyers –Substitute Products –New Entrants

14. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-14 STUCK IN THE MIDDLE MY FIRM HAS A COMPETITIVE ADVANTAGE MY FIRM HAS A COMPETITIVE ADVANTAGE Choosing a Generic Business- Level Strategy (Continued)

15. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-15 Strategic Groups and Business-Level Strategy Implications for Business-Level StrategyImplications for Business-Level Strategy –Immediate Competitors Are Companies Pursuing Same Strategy in the Same Strategic Group –Different Strategic Groups Can Have A Different Standing with Respect to Each of Porter’s Five Competitive Forces First Mover AdvantageFirst Mover Advantage

16. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-16 Choosing an Investment Strategy at the Business Level Investment Strategy DefinedInvestment Strategy Defined Competitive PositionCompetitive Position –Market Share –Distinctive Competencies Life Cycle EffectsLife Cycle Effects

17. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-17 Table 6.2: Choosing an Investment Strategy at the Business Level Choosing An Investment Strategy at the Business Level (Continued)

18. Copyright  1998 by Houghton Mifflin Company. All rights reserved. 6-18 Chapter Summary   WHAT IS BUSINESS-LEVEL STRATEGY?   CHOOSING A GENERIC BUSINESS- LEVEL STRATEGY   STRATEGIC GROUPS AND BUSINESS- LEVEL STRATEGY   CHOOSING AN INVESTMENT STRATEGY AT THE BUSINESS LEVEL