Professional Documents
Culture Documents
BUSINESS LEVEL
STRATEGY
Corporate level strategies provides broad
direction to the organisation
Business level strategies individual business
or industry level strategies where most competitive
interaction occurs and where competitive
advantage is ultimately won or lost.
I. Competitive advantage
II. Competitive scope
I. Competitive Advantage can arise due to two
factors
Breadth means –
The range of products
Distribution channels
Types of buyers
The geographic areas served
The array of related industries in which
the firm would also compete.
1. Market Leaders – Organisations with largest market
share
2. Market Challengers - Organisations that either
challenge the market leaders and choose not to
follow them
3. Market Followers – Organisations that imitate the
market leaders but do not upset the balance of
competitive power in the industry
4. Market Nichers – Organisations that carve out a
distinct niche that is left uncovered by the other
organisations in the industry
1. First Movers – The first company to
manufacture and sell a new product or service
is called the pioneer or the first mover.
2. Late Movers – The organisations which enter
the industry subsequently are late mover
organisations.
Embryonic
Market Size
0 Time
STAGES IN INDUSTRY LIFE CYCLE
The concept of the experience curve is akin to a
learning curve, which explains that efficiency increases
as learning is gained by workers through repetitive
productive work. The experience curve is based on the
commonly observed phenomenon that unit cost
declines as a firm accumulates experience in terms of
the cumulative volume of production.
In simple terms, the more a company produces, the
more experience it accumulates. The implication is that
larger firms in an industry would tend to have lower
unit costs as compared to smaller companies, thereby
gaining a competitive cost advantage.
An experience curve results from a variety of factors
such as learning effects, economies of scale, product
redesign and technological improvements in
production.
Campbell, Goold and Alexander suggest that two
issues must be addressed by the diversified
corporation: (a) What businesses should a
diversified corporation own and why and (b) What
organisational structure, management processes
and philosophy will foster superior performance
from the corporation’s individual business units?
They proposed the concept of corporate parenting
to consider the role of the corporate headquarters
in managing a set of businesses in a portfolio. A
diversified corporation or a multi-business
company is often viewed as consisting of a
corporate headquarter or centre with SBUs acting
as satellites. The manner in which the centre
manages and nurtures the individual businesses is
termed as corporate parenting.
The total corporation is viewed in terms of
resources and capabilities that can be used to build
individual businesses as well as create synergies
across these businesses. In this manner, corporate
parenting attempts to do away with one major
drawback of the corporate portfolio techniques.
While portfolio techniques consider the industry
attractiveness of various industries and focusses
on the cash contributions that each business could
make to the overall portfolio of businesses,
corporate parenting views the organisation in its
totality as a diversified corporation and focuses on
the value created from the relationship between
the parent and its businesses.