Strategic Management – Slide 7 Business Level Strategies
=> Porter’s Three Generic Strategies
=> Innovation as a Fourth Generic Strategy
=> Miles & Snow “Dynamic” Strategies
• Overall Cost Leadership
– Manage relationships throughout the entire value chain
– Non-price attributes for which customers will pay a premium
– May be actual or perceived
– Attain advantages through specialization and in-depth user knowledge.
• Tight cost and overhead control
• Avoidance of marginal customer accounts
• Cost minimization in all activities in the firm’s value chain?R&D, service, sales force, and advertising
– Refers to how business “learns” to lower costs as it gains experience with production processes.
– With experience, unit costs of production decline as output increases in most
• Customer service
• Dealer network
• Provides higher margins that enable the firm to deal with supplier power
• Establishes customer loyalty and hence less threat from substitutes
=> Firm selects a segment or group of segments (niche) and tailors its strategy to serve them.
=>Firm achieves competitive advantages by dedicating itself to these segments exclusively.
• Used to select niches that are least vulnerable to substitutes or where competitors are weakest.
• Customer Service
1) Harley Davison
3) Motel 6
1) Radio Shack
2) Guitar Center
3) Southwest Airlines (in the 1980s)
• Not sustainable through industry life cycle stages.
• Innovation: “Fourth” generic strategy
=> Separate from differentiation because innovation is a dynamic strategy
=> Apple as an example