1. BUSINESS LEVEL
STRATEGY ANALYSIS
T P
he ositioning Approach.
P
orter’s 5 F
orces.
Value Chain Analysis.
T Generic Strategies.
he

2. The Positioning
Approach
The oldest approach to military
strategy.
The newest of the three prescriptive
approaches to strategy .
Design and Planning Approaches were
explained in Chapter 3.
Focuses on how firms in a given
context differ in product market
positions compared to the competition.
80

3. Premises of The
Positioning Approach
Strategy follows structure.
Looks at the groups of competitors in
an industry.
Relies more heavily on calculation than
the design or planning schools.
Places even more emphasis on the role
of strategic planners.
81

4. Porter’s Five
Forces Analysis
B
reaking Apart Industry-L
evel
Competition
87

5. Porter’s Five
Forces Analysis
Threat of
Entry

6. The 6 Barriers of
Entry
Economies of Scale.
Product Differentiation.
Capital Requirements.
Cost Disadvantages Independent of Size.
Access to Distribution Channels.
Government Policy.
89

7. Porter’s Five
Forces Analysis
Power of
Buyers

8. Buyer Power
Determinants
Bargaining Leverage.







Buyer Concentration
Buyer Volume.
Buyer Switching Costs.
Buyer Information.
Ability to Integrate Backward.
Substitute Products.
Pull-Through.
90

9. Buyer Power
Determinants
Price Sensitivity.






Price/Total Purchases
Product Differences.
Brand Identity.
Impact on Quality/Performance.
Buyer Profits.
Decision-Maker’s Incentives.
90

10. Porter’s Five
Forces Analysis
Power
of
Suppliers

11. Supplier Power
Determinants
Differentiation of Inputs.
Switching Costs of Suppliers.
Presence of Substitute Products.
Supplier Concentration.
Importance of Volume to Supplier.
Cost Relative to Total Purchases in
90

12. Porter’s Five
Forces Analysis
Power
of
Substitutes

13. Power of
Substitutes
Relative Price Performance of
Substitute.
Switching Costs.
Buyer Propensity to Substitute.
92

14. Porter’s Five
Forces Analysis
Competitive
Rivalry

15. Determinants of
Rivalry
Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers.
92

16. Determinants of
Rivalry
Industry Growth.
Fixed Costs/Value Added.
Intermittent Overcapacity.
Product Differences.
Brand Identity.
Switching Costs.
Concentration and Balance.
Informational Complexity.
Diversity of Competitors.
Corporate Stakes.
Exit Barriers.
Competition is
Everything!!!

17. Value Chain Analysis
Figure 3
98

18. Value Chain Analysis
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19. Value Chain Analysis
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Human Resource Management
Technology Development
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20. Value Chain Analysis
Importance of value-chain
analysis is that
it provides a framework for
identifying or
82

21. Devising a Plan of Action
Position the Company.
Influence the Balance of the Forces.
Anticipate Shifts in the Forces.
93

22. Creating Families of Strategies
1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.
94

23. Creating Families of Strategies
1 . Locating the core business.
2 . Distinguishing the core business.
3 . Elaborating the core business.
4 . Extending the core business.
5 . Reconceiving the core business.
The Core Business is reflected in the
Choice of Generic Strategies

24. Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target
Differentiation
1. Cost Leadership
Competitive
Scope
Narrow
Target
Figure 4
99

25. Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target
Competitive
Scope
Narrow
Target
Figure 4
1. Cost Leadership
Differentiation
2. Differentiation

26. Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target
1. Cost Leadership
Competitive
Scope
Narrow
Target
Figure 4
3A. Cost Focus
Differentiation
2. Differentiation

27. Porter’s Generic
Strategies
Cost Advantage
Lower Cost
Broad
Target
1. Cost Leadership
2. Differentiation
3A. Cost Focus
3B. Differentiation
Focus
Competitive
Scope
Narrow
Target
Figure 4
Differentiation

28. Strategies of Differentiation
Price Differentiation.
Image Differentiation.
Support Differentiation.
Quality Differentiation.
Design Differentiation.
Undifferentiation.
99

29. Strategies of Scope
Unsegmentation.
Segmentation.
Niche.
Customizing.
100

30. Elaborating the Core Business
Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Product Development Strategies.
101

31. Elaborating the Core Business
Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Product Development Strategies.

32. Ways to Elaborate a Given
Business
Existing Product
New Product
Existing
Market
P
enetration
Strategies
P
roduct
Development
Strategies
New
Market
M
arket
Development
Strategies
Diversification
Strategies
Figure 5
101

33. Questions ?

34. End of Presentation