Management

Chapter 4. Business Level Strategy
Business level strategy this refers to a set of actions a business organization (firm) intends to undertake in order to improve on its competitiveness, service delivery and customer relations. It involves identification of competencies in core areas in order to gain comparative advantage over other firms. A business level strategy is the key to market possession and penetration to new areas due to low cost of operations. Satisfying customers is the foundation of successful business strategies.
The firm needs to choose a competitive advantage, between “Cost” and “Differentiation”, in the first type they have to compare whether if their prices are lower or higher than the prices in the other firms. And differentiation means “uniqueness”, if they’re somehow different than the others and if not, they have to change that.
There are five strategies that the firms can choose to establish and defend their desired strategic position against their competitors. These are divided into two: Cost strategies and Focus strategies
The first one is cost leadership, this is an integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors. This involves the rivalry with existing competitors, bargaining power of buyers, power of suppliers, potential entrants, product substitutes and competitive risk of the cost leadership strategy. They have to reduce costs of value chain activities. The cost leaders need to absorb supplier price increases and relationship demands, and force suppliers to hold down their prices. Their risks are that the source of cost advantage becomes obsolete, the focus on cost may cause the firm to overlook important customer preferences, and there’s the possibility of being imitated by the competitors.
The second is differentiation, when a firm provides their customers with products that have different features. It’s an...