Chapter 8: Business Level Strategy

Question 1

How is business level strategy determined?

Answer 1

By looking at the company’s strategic intent, outlined in the vision and mission.
Then considering internal capabilities, resources, strengths and weaknesses, and linking them with external industry and macro threats and opportunities in order to develop sustainable competitive advantages.

Question 2

What are the different types of business strategies?

Answer 2

• Low-cost strategy: achieved through economies of scale or access to more efficient production methods/cheaper inputs
• Differentiation: Competing based on superior quality of your product or some other differentiating factor that customers are willing to pay for
• Focus strategy: Segmenting the market to focus on a profitable niche (Can choose low-cost or differentiation technique within the chosen niche)
• Integrated Strategy: Combination of Cost-leadership & differentiation (Targets value-conscious buyers)

Question 3

What metrics do you use to evaluate strategies?

Answer 3

• Approriateness-
• How well does the strategy fit with key success factors/drivers/changes in environment. Fit with internal capabilities
• Measure using SWOT matrix, decision trees & scenario planning
• Feasibility
• Can strategy achieve objectives it addresses, be implemented effectively and are there sufficient finances/resources to implement it?
• Desirability
• Can strategy produce sufficient results in short & longterm & how how much risk is involved in implementing it?
• Consistency
• Does strategy align with strategic intent and longterm objectives of company?
• Validity
• Is information/intelligence on which strategy is based reliable?
• Stakeholder Attractiveness
• Is strategy appealing to stakeholders, will they be satisfied with it?