ch05 discussion blue

8/8/2019 Ch05 Discussion Blue

1/56

2004 by South-Western/Thomson Learning 1

Business-Level StrategyBusiness-Level Strategy

Robert E. Hoskisson

Michael A. Hitt

R. Duane Ireland

Chapter 5Chapter 5


2/56

2

Chapter 2Chapter 2

Strategic LeadershipStrategic Leadership

Chapter 4Chapter 4

The InternalThe Internal

OrganizationOrganization

Chapter 6Chapter 6

Competitive Rivalry andCompetitive Rivalry and

Competitive DynamicsCompetitive Dynamics

Chapter 9Chapter 9

International StrategyInternational Strategy

Chapter 1Chapter 1

Introduction toIntroduction to

Strategic ManagementStrategic Management

Chapter 3Chapter 3

The ExternalThe External

EnvironmentEnvironment

Chapter 5Chapter 5

Business-LevelBusiness-Level

StrategyStrategy

Chapter 8Chapter 8Acquisition andAcquisition and

Restructuring StrategiesRestructuring Strategies

Chapter 11Chapter 11

Corporate GovernanceCorporate Governance

Strategic IntentStrategic Intent

Strategic MissionStrategic Mission

Chapter 7Chapter 7

Corporate-Level StrategyCorporate-Level Strategy


Cooperative StrategyCooperative Strategy


Strategic EntrepreneurshipStrategic Entrepreneurship

Strategic

Analysis

Strategic

Thinking

Creating

Competitive

Advantage

Monitoring

And Creating

EntrepreneurialOpportunities

The Strategic Management ProcessThe Strategic Management Process

Chapter 5Chapter 5

Business-LevelBusiness-Level

StrategyStrategy


3/56

3

Discussion QuestionsDiscussion Questions

1. What role does the organizationsconcern for customers play in shapingits strategy?

2. What is business level strategy? Whatare some types of business levelstrategy?

3. What type of customers are necessary

to pursue a cost leadership strategy?How is a cost leadership strategydeveloped?

Click

Here

ClickHere

Click

Here More discussion questions

Click

Here


4/56

4

Discussion Questions (cont.)Discussion Questions (cont.)

4. How does establishing the cost leadershipposition deal with the five competitive forces?What are the risks of pursuing costleadership?

5. What type of customers are necessary topursue a differentiation strategy? How is adifferentiation strategy developed?

6. How does establishing differentiation help a

firm fend off threats from the five forces?What are the risks of pursuing differentiation?

Click

Here

Click

Here

Click

Here


5/56

5

Discussion Questions (cont.)Discussion Questions (cont.)

7. When should a focus strategy beimplemented? What are the risksof a focus strategy?

8. What is the integrated low-costdifferentiation strategy? What arethe arguments as to why it is

increasing in importance? Whatare the risks associated with theintegrated strategy?

Click

Here

Click

Here


6/56

6

Discussion Question 1Discussion Question 1

What role does the organizationsconcern for customers play inshaping its strategy?


7/56

7

Managing Relationships WithManaging Relationships With

CustomersCustomersCustomer relationships are strengthened byCustomer relationships are strengthened by

offering them superior valueoffering them superior value

help customers to develop a new competitivehelp customers to develop a new competitive

advantageadvantage

enhance the value of existing competitiveenhance the value of existing competitive

advantagesadvantages

Successful companies chart newSuccessful companies chart newcompetitive space in order to serve newcompetitive space in order to serve new

customers as they simultaneously try tocustomers as they simultaneously try to

find new ways to better server existingfind new ways to better server existing

customerscustomers


8/56

8

Managing Relationships WithManaging Relationships With

CustomersCustomers Establish a competitive advantage alongEstablish a competitive advantage along

these dimensions:these dimensions:

ReachReach

the firms access and connection to customersthe firms access and connection to customers

RichnessRichness

the depth and detail of the two-way flow ofthe depth and detail of the two-way flow of

information between the firm and customersinformation between the firm and customers

AffiliationAffiliation

facilitating useful interactions with customersfacilitating useful interactions with customers


9/56

9

The Central Role of CustomersThe Central Role of Customers

In selecting a business-levelIn selecting a business-level

strategy, the firm determinesstrategy, the firm determines

1.1. whowho it will serveit will serve2.2. whatwhat needs those target customersneeds those target customers

have that it will satisfyhave that it will satisfy

3.3. howhow those needs will be satisfiedthose needs will be satisfied


10/56

10

CustomersCustomers

Basis for Customer SegmentationBasis for Customer Segmentation

ConsumerConsumer

MarketsMarkets

IndustrialIndustrial

MarketsMarkets


11/56

11

Market Segmentation:Market Segmentation: Consumer MarketsConsumer Markets

Demographic factorsDemographic factors

ConsumerConsumer

MarketsMarkets

Socioeconomic factorsSocioeconomic factors

GeographicGeographic

factorsfactorsPsychological factorsPsychological factors

Consumption patternsConsumption patterns

Perceptual factorsPerceptual factors

Dem.

Soc.

Geo.Psy.

Con.

Per.


12/56

12

Market Segmentation:Market Segmentation: Industrial MarketsIndustrial Markets

IndustrialIndustrial

MarketsMarkets

End-use segmentsEnd-use segments

Product segmentsProduct segments

Geographic segmentsGeographic segments

Common buying factorCommon buying factor

segmentssegments

Customer size segmentsCustomer size segments

End

Pro.

Geo.

Buy.

Size

Click

Here Return to Discussion Questions


13/56

13


What is business level strategy?What are some types of businesslevel strategy?


14/56


15/56

15

Business-Level StrategyBusiness-Level Strategy

Business-level strategyBusiness-level strategy: an integrated and: an integrated and

coordinated set of commitments and actionscoordinated set of commitments and actions

the firm uses to gain a competitivethe firm uses to gain a competitive

advantage by exploiting core competenciesadvantage by exploiting core competencies

in specific product marketsin specific product markets


16/56

16

Key Issues of Business-LevelKey Issues of Business-Level

StrategyStrategyWhat good or service to offer customersWhat good or service to offer customers

How to manufacture or create the good orHow to manufacture or create the good or

serviceservice

How to distribute the good or service inHow to distribute the good or service in

the marketplacethe marketplace


17/56

17

Types of Business-Level StrategiesTypes of Business-Level Strategies

Business-level strategies are intended toBusiness-level strategies are intended to

create differences between the firmscreate differences between the firms

position relative to those of its rivalsposition relative to those of its rivals

To position itself, the firm must decideTo position itself, the firm must decide

whether it intends to perform activitieswhether it intends to perform activities

differently or to perform different activitiesdifferently or to perform different activities

as compared to its rivalsas compared to its rivals


18/56

18

Five Generic StrategiesFive Generic Strategies

Competitive AdvantageCompetitive Advantage

Compe

tit i

veS

co

pe

Compe

tit i

veS

co

pe

CostCost UniquenessUniqueness

Bro

ad

Broad

targe

t

tar

ge

t

Narrow

Narrow

targe

t

targe

t

CostCost

LeadershipLeadership

DifferentiationDifferentiation

Focused CostFocused Cost

LeadershipLeadership

FocusedFocused


Integrated CostIntegrated Cost

Leadership/Leadership/


Click

Here

Return to

Discussion

Questions


19/56

19


What type of customers are

necessary to pursue a costleadership strategy? How is a cost

leadership strategy developed?


20/56

20

Cost Leadership StrategyCost Leadership Strategy

An integrated set of actions designed toAn integrated set of actions designed to

produce or deliver goods or services at theproduce or deliver goods or services at the

lowest costlowest cost,, relative to competitorsrelative to competitors withwith

features that are acceptable to customersfeatures that are acceptable to customers

relatively standardized productsrelatively standardized products

features acceptable to many customersfeatures acceptable to many customers

lowest competitive pricelowest competitive price


21/56

21

Cost Leadership StrategyCost Leadership Strategy

Cost saving actions required by this strategy:Cost saving actions required by this strategy:

building efficient scale facilities

tightly controlling production costs and

overhead

minimizing costs of sales, R&D and service

building efficient manufacturing facilities

monitoring costs of activities provided byoutsiders

simplifying production processes


22/56

22

How to Obtain a Cost AdvantageHow to Obtain a Cost Advantage

Cost DriversCost Drivers Value ChainValue Chain

Determine andDetermine and

controlcontrolReconfigure, ifReconfigure, if

neededneeded

Alter production process Alter production process

Change in automation Change in automation

New distribution channelNew distribution channel

Direct sales in place ofindirect sales

Direct sales in place ofindirect sales

New advertising mediaNew advertising media

New raw materialNew raw material

Backward integration Backward integration

Forward integration Forward integration

Change locationrelative to suppliers or

buyers

Change locationrelative to suppliers or

buyers


23/56

23

q Product featuresq Performanceq Mix & variety of

productsq Service levelsq Small vs. large buyersq Process technologyq Wage levelsq Product featuresq Hiring, training,

motivation

Factors That Drive CostsFactors That Drive Costs

q Economies of scaleq Asset utilizationq Capacity utilization

pattern Seasonal, cyclical

q Interrelationshipsq Order processing

and distributionq Value chain linkages

Marketing & sales Logistics &

operations

Service


24/56

24

Questions Leading to Lower CostsQuestions Leading to Lower Costs

1.1. How can an activity be performedHow can an activity be performed

differently or even eliminated?differently or even eliminated?

2.2. How can a group of linked value activitiesHow can a group of linked value activities

be regrouped or reordered?be regrouped or reordered?

3.3. How might coalitions with other firmsHow might coalitions with other firms

lower or eliminate costs?lower or eliminate costs?

Click



25/56

25


How does establishing the costleadership position deal with thefive competitive forces? What arethe risks of pursuing costleadership?


26/56

26

Cost Leadership Strategy and theCost Leadership Strategy and the

Five Forces of CompetitionFive Forces of Competition

Rivalry Among CompetingRivalry Among Competing

FirmsFirms

Can use cost leadershipCan use cost leadership

strategy to advantage since:strategy to advantage since:q competitors avoid pricecompetitors avoid price

wars with cost leaders,wars with cost leaders,

creating higher profits forcreating higher profits forthe entire industrythe entire industry

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers

Bargaining PowerBargaining Power

of Suppliersof Suppliers

Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts

Five Forces ofFive Forces ofCompetitionCompetition


27/56

27



Bargaining Power ofBargaining Power of

BuyersBuyers

Can mitigate buyers power by:Can mitigate buyers power by:q driving prices far belowdriving prices far below

competitors, causing themcompetitors, causing them

to exit and shifting powerto exit and shifting power

with buyers back to thewith buyers back to thefirmfirm

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



28/56

28



Bargaining Power ofBargaining Power of

SuppliersSuppliers

Can mitigate suppliers powerCan mitigate suppliers power

by:by:q being able to absorb costbeing able to absorb cost

increases due to low costincreases due to low cost

positionpositionq being able to make very largebeing able to make very large

purchases, reducing chancepurchases, reducing chance

of supplier using powerof supplier using power

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



29/56

29


Five Forces of CompetitionFive Forces of CompetitionRivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts


Threat of New EntrantsThreat of New Entrants

Can frighten off new entrantsCan frighten off new entrants

due to:due to:q their need to enter on a largetheir need to enter on a large

scale in order to be costscale in order to be cost

competitivecompetitiveq the time it takes to movethe time it takes to move

down the learning curvedown the learning curve


30/56

30



Threat of SubstituteThreat of Substitute

ProductsProducts

Cost leader is well positionedCost leader is well positioned

to:to:q make investments to bemake investments to be

first to create substitutesfirst to create substitutesq

buy patents developed bybuy patents developed bypotential substitutespotential substitutesq lower prices in order tolower prices in order to

maintain value positionmaintain value position

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



31/56

31

Structure for Cost LeadershipStructure for Cost Leadership

StrategyStrategy

Office of the PresidentOffice of the President

Centralized StaffCentralized Staff

MarketingMarketing PersonnelPersonnel

EngineeringEngineering OperationsOperations AccountingAccounting

Operations is main functionOperations is main function Process engineering isProcess engineering is

emphasized over R&Demphasized over R&D

Large centralized staffLarge centralized staff

Formalized proceduresFormalized procedures Structure is mechanical, jobStructure is mechanical, job

roles highly structuredroles highly structured


32/56

32

Risks of Cost Leadership StrategyRisks of Cost Leadership Strategy

Processes used by the cost leader to produceProcesses used by the cost leader to produceand distribute its good or service couldand distribute its good or service couldbecome obsolete because of competitorsbecome obsolete because of competitors

innovationsinnovations Too much focus by the cost leader on costToo much focus by the cost leader on cost

reductions may occur at the expense of tryingreductions may occur at the expense of tryingto understand customers perceptions ofto understand customers perceptions ofcompetitive levels of differentiationcompetitive levels of differentiation

Competitors may learn how to successfullyCompetitors may learn how to successfullyimitate the cost leaders strategyimitate the cost leaders strategy

Click



33/56

33


What type of customers are

necessary to pursue a differentiationstrategy? How is a differentiation

strategy developed?


34/56

34

Differentiation StrategyDifferentiation Strategy

An integrated set of actions designed by aAn integrated set of actions designed by a

firm to produce or deliver goods or servicesfirm to produce or deliver goods or services

(at an acceptable cost) that customers(at an acceptable cost) that customers

perceive as being different in ways that areperceive as being different in ways that areimportant to themimportant to them

price for product can exceed what the firmsprice for product can exceed what the firms

target customers are willing to paytarget customers are willing to pay

nonstandardized productsnonstandardized products

customers value differentiated features morecustomers value differentiated features more

than they value low costthan they value low cost


35/56

35


Value provided byValue provided by unique features andunique features and

value characteristicsvalue characteristics

Command premium priceCommand premium price

High customer serviceHigh customer service

Superior qualitySuperior quality

Prestige or exclusivityPrestige or exclusivity

Rapid innovationRapid innovation


36/56

36


Differentiation actions required by this strategy:Differentiation actions required by this strategy:

developing new systems and processesdeveloping new systems and processes

shaping perceptions through advertisingshaping perceptions through advertising

quality focusquality focus

capability in R&Dcapability in R&D

maximize human resource contributionsmaximize human resource contributions

through low turnover and high motivationthrough low turnover and high motivation


37/56

37

How to Obtain a DifferentiationHow to Obtain a Differentiation

AdvantageAdvantage

Cost DriversCost Drivers Value ChainValue Chain

Control ifControl if

neededneededReconfigure toReconfigure to

maximizemaximize

customer perceptions of uniquenesscustomer perceptions of uniquenesscustomer perceptions of uniquenesscustomer perceptions of uniqueness

customer reluctance to switch to non-unique productcustomer reluctance to switch to non-unique productcustomer reluctance to switch to non-unique productcustomer reluctance to switch to non-unique product

Raise performance of product or serviceRaise performance of product or service

Lower buyers costsLower buyers costs

Create sustainability through:Create sustainability through:


38/56

38

Factors That Drive DifferentiationFactors That Drive Differentiation

Unique product featuresUnique product featuresUnique product performanceUnique product performance Exceptional servicesExceptional servicesNew technologiesNew technologiesQuality of inputsQuality of inputs Exceptional skill or experienceExceptional skill or experience

Detailed informationDetailed information Extensive personal relationships withExtensive personal relationships with

buyers and suppliersbuyers and suppliers


39/56

39

Differentiation Strategy and theDifferentiation Strategy and the

Five Forces of CompetitionFive Forces of CompetitionRivalry Among CompetingRivalry Among Competing

FirmsFirms

Can defend againstCan defend against

competition because:competition because:q brand loyalty tobrand loyalty to

differentiated productdifferentiated product

offsets price competitionoffsets price competition

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts


Click



40/56

40


How does establishing differentiation

help a firm fend off threats from thefive forces? What are the risks of

pursuing differentiation?


41/56

41


Five Forces of CompetitionFive Forces of CompetitionBargaining Power of BuyersBargaining Power of Buyers

Can mitigate buyer powerCan mitigate buyer power

because:because:

q well differentiated productswell differentiated productsreduce customer sensitivityreduce customer sensitivity

to price increasesto price increases

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



42/56

42


Five Forces of CompetitionFive Forces of CompetitionBargaining Power ofBargaining Power of

SuppliersSuppliers

Can mitigate suppliers powerCan mitigate suppliers power

by:by:q absorbing price increasesabsorbing price increases

due to higher marginsdue to higher marginsq

passing along higherpassing along higher

supplier prices becausesupplier prices because

buyers are loyal tobuyers are loyal to

differentiated branddifferentiated brand

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



43/56

43


Five Forces of CompetitionFive Forces of CompetitionThreat of New EntrantsThreat of New Entrants

Can defend against newCan defend against new

entrants because:entrants because:

q new products must surpassnew products must surpassproven products or,proven products or,

q new products must be atnew products must be at

least equal to performanceleast equal to performance

of proven products, butof proven products, but

offered at lower pricesoffered at lower prices

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



44/56

44


Five Forces of CompetitionFive Forces of CompetitionThreat of SubstituteThreat of Substitute

ProductsProducts

Well positioned relative toWell positioned relative to

substitutes because:substitutes because:q brand loyalty to abrand loyalty to a

differentiated product tendsdifferentiated product tends

to reduce customers testingto reduce customers testing

of new products orof new products or

switching brandsswitching brands

RivalryAmong

RivalryAmong

CompetingFirms

CompetingFirms

Bargainin

gPow

er

Bargainin

gPow

er

ofB

uyers

ofB

uyers



Threato

fNew

Threato

fNew

Entrants

Entrants

Thre

atof

Thre

atof

Subs

titut

ePro

ducts

Subs

titut

ePro

ducts



45/56

45

OperationsOperations HumanHumanResourcesResources

Structure for DifferentiationStructure for Differentiation

StrategyStrategyPresident andPresident and

Limited StaffLimited Staff

MarketingMarketing

New ProductNew ProductR&DR&D

Marketing is the main function for tracking new product ideasMarketing is the main function for tracking new product ideas New product R&D is emphasizedNew product R&D is emphasized Most functions are decentralizedMost functions are decentralized Formalization is limited to foster change and promote new ideasFormalization is limited to foster change and promote new ideas

Overall structure is organic; job roles are less structuredOverall structure is organic; job roles are less structured

R&DR&D

FinanceFinanceMarketingMarketing


46/56

46

Major Risks of DifferentiationMajor Risks of Differentiation

StrategyStrategy

Customers may decide that the priceCustomers may decide that the price

differential between the differentiateddifferential between the differentiated

product and the cost leaders product isproduct and the cost leaders product is

too largetoo largeMeans of differentiation may cease toMeans of differentiation may cease to

provide value for which customers areprovide value for which customers are

willing to paywilling to pay


47/56

47

Major Risks of DifferentiationMajor Risks of Differentiation

StrategyStrategy

Experience may narrow customersExperience may narrow customers

perceptions of the value of differentiatedperceptions of the value of differentiated

features of the firms productsfeatures of the firms products

Makers of counterfeit goods may attemptMakers of counterfeit goods may attempt

to replicate differentiated features of theto replicate differentiated features of the

firms productsfirms products

Click



48/56

48


When should a focus strategy be

implemented? What are the risksof a focus strategy?


49/56

49

Focused Business-LevelFocused Business-Level

StrategiesStrategiesA focus strategy must exploit a narrowA focus strategy must exploit a narrowtargets differences from the balance oftargets differences from the balance of

the industry by:the industry by:

isolating a particular buyer groupisolating a particular buyer group

isolating a unique segment of a productisolating a unique segment of a product

lineline

concentrating on a particularconcentrating on a particulargeographic marketgeographic market

finding their nichefinding their niche


50/56

50

Factors That May Drive FocusedFactors That May Drive Focused

StrategiesStrategies Large firms may overlook small nichesLarge firms may overlook small niches

Firm may lack resources to compete in theFirm may lack resources to compete in the

broader marketbroader market

May be able to serve a narrow marketMay be able to serve a narrow market

segment more effectively than can largersegment more effectively than can larger

industry-wide competitorsindustry-wide competitors

Focus may allow the firm to directFocus may allow the firm to directresources to certain value chain activitiesresources to certain value chain activities

to build competitive advantageto build competitive advantage


51/56

51

Major Risks of Focused StrategiesMajor Risks of Focused Strategies

Firm may be outfocused by competitorsFirm may be outfocused by competitors

Large competitor may set its sights onLarge competitor may set its sights on

your niche marketyour niche market

Preferences of niche market may changePreferences of niche market may change

to match those of broad marketto match those of broad market

Click



52/56

52


What is the integrated low-costdifferentiation strategy? What are

the arguments as to why it isincreasing in importance? Whatare the risks associated with theintegrated strategy?


53/56

53

Advantages of Integrated StrategyAdvantages of Integrated Strategy

A firm that successfully uses anA firm that successfully uses an

integrated cost leadership/differentiationintegrated cost leadership/differentiation

strategy should be in a better position to:strategy should be in a better position to:

adapt quickly to environmental changesadapt quickly to environmental changes

learn new skills and technologies morelearn new skills and technologies more

quicklyquickly

effectively leverage its coreeffectively leverage its corecompetencies while competing againstcompetencies while competing against

its rivalsits rivals


54/56

54

Benefits of Integrated StrategyBenefits of Integrated Strategy

Successful firms using this strategy haveSuccessful firms using this strategy have

above-average returnsabove-average returns

Firm offers two types of values toFirm offers two types of values to

customerscustomers

some differentiated features (but lesssome differentiated features (but less

than a true differentiated firm)than a true differentiated firm)

relatively low cost (but now as low asrelatively low cost (but now as low asthe cost leaders price)the cost leaders price)


55/56

55

Using the Functional StructureUsing the Functional Structure

The integrated form of the functional

structure

must have decision-making patterns that are

partially centralized and partially decentralized will have semi-specialized jobs and rules and

procedures that call for some formal and some

informal job behavior

Strategic flexibility is obtained via flexible manufacturing systems

information networks

total quality management systems


56/56

56

Major Risks of Integrated StrategyMajor Risks of Integrated Strategy

An integrated cost/differentiation businessAn integrated cost/differentiation business

level strategy often involves compromiseslevel strategy often involves compromises

(neither the lowest cost nor the most(neither the lowest cost nor the most

differentiated firm)differentiated firm) The firm may become stuck in theThe firm may become stuck in the

middle lacking the strong commitmentmiddle lacking the strong commitment

and expertise that accompanies firmsand expertise that accompanies firms

following either a cost leadership or afollowing either a cost leadership or a

differentiated strategydifferentiated strategy

ch05 discussion blue

Documents