BLS old.ppt
- 1. 1 BUSINESS LEVEL STRATEGIES… CREATING STRATEGIC MIND SET (cont’d…)
- 2. TASKS 2 • I - QUICK RECAP • II - BUSINESS STRATEGY (INTEGRATED) • III - SUMMARY • IV - EXERCISE/ ASSIGNMENT
- 3. RECAP ■ WHY ??? ■ WHEN ??? ■ WHAT ??? STRATEGY 3
- 4. WHY ???
- 5. 5 WHEN ??? Triggering event •New CEO •External intervention •Threat of change in ownership •Performance gap •Strategic inflection point Stimulus for change in strategy INITIATION OF STRATEGY
- 6. WHAT ???
- 7. 7 BUSINESS LEVEL STRATEGY • Firm-specific business model • Allows a company to gain competitive advantage • Aims at improving company’s effectiveness efficiency Quality thru innovation customer responsiveness Cost Ldrshp & or Diffrn Strats
- 9. 10 Distinctive Competencies… They are firm specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs than its rivals and thus gain a competitive advantage. E.g. Toyota… They arise from two sources: 1) Resources 2) Capabilities
- 11. 12 Competitive positioning and business – level strategy ■ Strategic group Analysis ■ Investment Analysis ■ Game Theory
- 12. 13 Strategic group Analysis ■ Strategic group analysis helps a company identify the strategies that its industry rivals are pursuing. ■ It allows managers to uncover the most important basis of competition in an industry and identify products and market segments where they can compete most successfully for customers. ■ Such analysis also helps to reveal what competencies are likely to be most valuable in the future so that companies can make the right investment decision.
- 13. 14 Investment Analysis ■ An Investment Strategy sets the amount and type of resources – human, financial and functional – that must be invested to maximize a company’s profitability over time. ■ Two factors are crucial in choosing an investment strategy: ■ The strength of a company’s position in an industry relative to its competitors. ■ The stage of the industry’s life cycle in which the company is competing.
- 14. 15 Game Theory ■ Game such as chess, player move in turn, and one player can select a strategy to pursue after considering its rival’s choice of strategies or the players act at the same time, in ignorance of their rival’s current action.
- 15. 16 Business Level Strategies Help To Improve 1.Efficiency 2.Quality 3.Innovation 4.Customer responsiveness
- 16. 17 Stages of the Industry Life Cycle Generic strategies Differentiation Differentiation Differentiation Overall cost Overall cost leadership leadership Focus Market growth rate Low Very large Low to Negative moderate Number of segments Very few Some Many Few Intensity of competition Low Increasing Very intense Changing Emphasis on product design Very high High Low to Low moderate Stage Introduction Growth MaturityDecline Factor
- 17. 18 Stages of the Industry Life Cycle Emphasis on process design Low Low to High Low moderate Major functional area(s) of concern Research and Sales and Production General Development marketing management and finance Overall objective Increase Create Defend Consolidate, market share consumer market share maintain, awareness demand and extend harvest, or product life exit cycles Stage Factor Introduction Growth MaturityDecline
- 18. 19 Evaluation and Control Traditional Financial Measures Return on Investment (ROI) Earnings per Share (EPS) Return on Equity (ROE)
- 19. 20 THANK YOU.
- 20. INTEGRATED/HYBRID STRATEGY ■ A combination competitive strategy - involving high level of emphasis on both cost-leadership and differentiation strategies simultaneously ■ Seeks simultaneously to achieve differentiation and low price relative to competitors ■ Deliver enhanced benefits to the customers with low price while achieving sufficient margins to reinvest, maintain and develop bases of differentiation
- 21. 22 Tesco supermarket (Strategy Explorer, 2010) INTEGRATED/HYBRID STRATEGY
- 22. NEED ANALYSIS 23 Increase in global competition Produce products with differentiated features or characteristics that customers value Provide these differentiated products at a low cost, compared to competitors’ products Improve ability to adapt quickly to environmental changes Learn new skills and technologies Leverage core competencies across business units and product lines more effectively
- 23. MERITS 24 • Will generate superior incremental performance as compared to single competitive strategies. • Multiple sources of competitive advantage (e.g., economies of scale and brand/customer loyalty) as compared to advantages gained through pursuit of single competitive strategies. • Achieve a low-cost position by emphasizing efficiency in their value creating activities, thereby further strengthening their competitive position vis-a-vis their rivals.
- 24. SUCCESS STORIES 25 Toyota Canon Honda simultaneous pursuit of cost leadership and differentiation strategies
- 25. SUMMARY OF APPLICATION 26 Business Strategy Where has the strategy been applied Example of Products/Services Cost Leadership Developing, transition and developed economies (Worldwide) Cars industry (Toyota), Airline business (Air Asia), Retail business (Giant and Carrefour Supermarket) Differentiation Developing, transition and developed economies (Worldwide) Cars and Motor cycle ( Mercedes Benz and Harley Davidson - by Brand) Watches (Titan Watches - by design) Domino Pizza (by positioning) Apple Computers (by technology) 3M (by Innovation) Hybrid (Combination of Cost Leadership and Differentiation strategy) Developing, transition and developed economies (Worldwide) Car Industry (Toyota, Honda) Furniture Industry (IKEA)
- 26. CONCLUSION 27 • Will the hybrid strategy become a new trend of competitive strategy in the business world? ? ? • This question needs further research and investigation into the theory of hybrid strategy and its implementation strategies for process and system development in the business companies.
- 27. • 2 nd INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMIC RESEARCH (2nd ICBER 2011) PROCEEDING • Acquaah, M. & Yasai-Ardekani, M. (2006) - Does the implementation of a combination competitive strategy yield incremental performance benefit? Journal of Business Research 61, 346 – 354. • Allen, R.S. & Helms, M.M. (2006) - Linking Strategic Practices and Organizational Performance to Porter’s Generic Strategies. Business Process management 12 (4), 433-454. Anderer, M. (1997). • Achieving Superior Financial Performance in China - Differentiation, Cost Leadership or Both? American Marketing Association, Journal of International Marketing, Vol. 16(3), 1-22. • Daan Assen’s Learning, (2010) - Hybrid strategy: sustainable competitive advantage. http://www.daanassen.com/hybrid-strategy-sustainable-competitive- advantage (3 Jan, 2011). • Gopalakrishna P. & Subramanian, R. (2001). Revisiting the Pure versus Hybrid Dilemma: Porter’s Generic Strategies in Developing Economy. Journal of Global Marketing Vol.15 (2), 61-79. • Miller, D. (1992). Generic strategies - classification, combination and context. In: Srivastava, P. (Ed), Advances in Strategic Management, Vol. 8. Jai Press, Greenwich/CT, 391-408. REFERENCES
- 28. EXERCISE