Chapter 5: Selecting Business-Level Strategy

Conclusion

This chapter explained generic business-level strategies that executives must choose between to keep their firms competitive. Executives must identify their firm’s source of competitive advantage by choosing to compete based on low-cost versus (often) more expensive features that differentiate their firm from competitors. In addition, targeting either a narrow or broad market helps firms further understand their customer base. Based on these choices, firms will follow cost leadership, differentiation, focused cost leadership, or focused differentiation strategies. Another potentially viable business strategy, best cost, exists when firms offer relatively low prices while still managing to differentiate their goods or services on some important value-added aspects.

One predictor of long(er)-term business success is the firm’s ability to stick to strategy.  Low cost firms that venture into additional features or services often find that they have to increase prices to pay for these additional features, decreasing their ability for cost leadership.  Similarly, firms that differentiate need to invest sufficiently in R&D to ensure the element of differentiation remains both current and desirable. Whatever their strategy, all firms can fall victim to being “stuck in the middle” by not offering sufficiently unique features or competitive prices.

Exercises

  1. Divide your class into four or eight groups, depending on the size of the class. Each group should select a different industry. Find examples of each generic business-level strategy for your industry. Discuss which strategy seems to be the most successful in your selected industry.
  2. This chapter discussed Target and other retailers. If you were assigned to turn around a struggling retailer such as Kmart, what actions would you take to revive the company?

Attributions

Figure 5.2:
Remodeled Walmart by GeneralCheese (http://en.wikipedia.org/wiki/File:Remodeld_walmart.jpg) is in the Public Domain (first);

Holt Renfrew Opening 1 by anjuliruth (http://commons.wikimedia.org/wiki/File:Holt_Renfrew_Opening_1.jpg) used under CC BY 2.0 Licence (second);

Fun at the 1$ store! by Cosmic Kitty (https://www.flickr.com/photos/cosmickitty/35922747/) used under CC BY 2.0 Licence  (third);

MAC in SM Aura, BGC by Hans Olav Lien (http://commons.wikimedia.org/wiki/File:MAC_in_SM_Aura,_BGC.jpg) used under CC BY-SA 2.0 Licence (fourth)

Figure 5.3:
IKEA of Sweden by Håkan Dahlström (https://www.flickr.com/photos/dahlstroms/4406947248/) used under CC BY 2.0 Licence  (first);

Darkoakadelaidesside by ASuitableWardrobe (http://commons.wikimedia.org/wiki/File:Darkoakadelaidesside.jpg) used under CC BY 2.0 Licence (second);

Hairdressing by unknown (https://pxhere.com/en/photo/580317)used under CC0 Licence (third);

Oh thank heaven by waferboard (https://www.flickr.com/photos/waferboard/3806352731/) used under CC BY 2.0 Licence (fourth)

Figure 5.5:
Camping in Exmouth, Western Australia by Joanna Penn (https://www.flickr.com/photos/38314728@N08/4116215148/) used under  CC BY 2.0 Licence  (first);

TV and Computer Monitor Recycling Pen – geograph.org.uk – 1025508 by David Wright (http://commons.wikimedia.org/wiki/File:TV_and_Computer_Monitor_Recycling_Pen_-_geograph.org.uk_-_1025508.jpg) used under CC BY-SA 2.0 Licence  (second)

Figure 5.7:
typographic tour of chicago part 2: morton salt factory (3/3) by _nickd (http://www.flickr.com/photos/_nickd/2313836162/) used under CC BY 2.0 Licence  (first);

Fedex.a310-200.n420fe.arp by Arpingstone (http://en.wikipedia.org/wiki/File:Fedex.a310-200.n420fe.arp.jpg) is in the Public Domain (second);

chevelle SS ’69 hot wheels by Guillermo Vasquez (http://www.flickr.com/photos/megavas/3302486505/) used under CC BY 2.0 Licence  (third);

Zoom elite 2 by ChunkySoup (http://en.wikipedia.org/wiki/File:Zoom_elite_2.png) is in the Public Domain (fourth);

Day 4 – Magic Kingdom by Derek Hatfield (http://www.flickr.com/photos/loimere/5068068920/) used under CC BY 2.0 Licence  (fifth)

Figure 5.10:
Coach Bag by slgckgc (http://www.flickr.com/photos/slgc/5379074286/) used under CC BY 2.0 Licence (first);

Handbag BrownBlue FW2010 by Parfois (http://commons.wikimedia.org/wiki/File:Handbag_BrownBlue_FW2010.JPG) is in the Public Domain (second);

elisha_cuthbert_chanel-purple-handbag by Ashley Cooper (http://www.flickr.com/photos/classicchanelhandbags/4988644763/) used under CC BY 2.0 Licence  (third);

fake purse by EvelynGiggles (http://www.flickr.com/photos/evelynishere/5300824118/) used under CC BY 2.0 Licence  (fourth)

Figure 5.12:
Redbox1 by IlliniGradResearch (http://commons.wikimedia.org/wiki/File:Redbox1.JPG) used under CC BY-SA 2.0 Licence   (first);

Pepperoni pizza fast food by Jon Sullivan (http://commons.wikimedia.org/wiki/File:Pepperoni_pizza_fast_food.jpg) is in the Public Domain (second);

Claires by TenPoundHammer (http://commons.wikimedia.org/wiki/File:Claires.jpg) used under CC BY 2.0 Licence  (third);

Big Buford by Gaming4JC (http://commons.wikimedia.org/wiki/File:Big_Buford.jpg) is in the Public Domain (fourth)

Figure 5.14:
Whole Foods Market Cranbrook Village Ann Arbor Michigan by Dwight Burdette (http://commons.wikimedia.org/wiki/File:Whole_Foods_Market_Cranbrook_Village_Ann_Arbor_Michigan.JPG) used under CC BY 2.0 Licence  (first);

Build-A-BearWorkshopVaughanMills by Raysonho (http://commons.wikimedia.org/wiki/File:Build-A-BearWorkshopVaughanMills.JPG) used under CC0 Licence   (second);

Cinnabon by rjp (http://www.flickr.com/photos/zimpenfish/385384830/) used under CC BY 2.0 Licence (third);

Mercedes-Benz SLR McLaren 2 cropped by Cars en travel (http://commons.wikimedia.org/wiki/File:Mercedes-Benz_SLR_McLaren_2_cropped.jpg) is in the Public Domain (fourth)

Figure 5.16:
Stocking caps by Lisa Dusseault (https://www.flickr.com/photos/milele/6463957255/) used under CC BY 2.0 Licence  (first);

Richardsson Daniel Tour de Ski 2010 by Iso76 (http://commons.wikimedia.org/wiki/File:Richardsson_Daniel_Tour_de_Ski_2010.jpg) used under CC BY-SA 2.0 Licence  (second);

En-Mauser 98k based hunting rifle by Francis Flinch (http://commons.wikimedia.org/wiki/File:En-Mauser_98k_based_hunting_rifle.jpg) is in the Public Domain (third)

Figure 5.19:
WestJet Boeing 737-8CT | C-GWSZ / 812 | “Walt Disney Livery” | Flight WS2660 from YYZ to MBJ by Lord of the Wings© (https://www.flickr.com/photos/aseemsjohri/14513060711/) used under CC BY-SA 2.0 Licence (first);

Two Americano soft tacos (8009893681) by Jim G (http://commons.wikimedia.org/wiki/File:Two_Americano_soft_tacos_(8009893681).jpg) used under CC BY 2.0 Licence (second);

Target by Kevin Dooley (https://www.flickr.com/photos/pagedooley/5313218644/) used under CC BY 2.0 Licence (third);

Pabst Blue Ribbon Neon Sign by Charles Roberts (http://www.flickr.com/photos/ckroberts61/4399109703/) used under CC BY 2.0 Licence  (fourth)

Figure 5.21:
Sushi Sashimi Medium Platter – Yama-ya by Alpha (https://www.flickr.com/photos/avlxyz/2570349350/) used under CC BY-SA 2.0 Licence  (first);

vijs-at-home-cookbook-launch-20100918-IMG_6335.jpg by Roland Tanglao (https://www.flickr.com/photos/roland/5003057345/) used under CC BY 2.0 Licence (second);

arturo’s mexico to go – 050420116656 by Roland Tanglao (https://www.flickr.com/photos/roland/5688155762/) used under CC BY 2.0 Licence (third);

Poutine by shankar s. (https://www.flickr.com/photos/shankaronline/8391133171/) used under CC BY 2.0 Licence  (first)

Figure 5.23:
Arby’s Roast Beef Sign by Ethan Prater (http://www.flickr.com/photos/eprater/4592959910/) used under CC BY 2.0 Licence (first);

TheSourcePromenade by Raysonho (http://commons.wikimedia.org/wiki/File:TheSourcePromenade.JPG) used under CC0 Licence  (second);

Sears – Aids That Every Woman Appreciates by Rachel P. Maines (http://en.wikipedia.org/wiki/File:Sears_-_Aids_That_Every_Woman_Appreciates.jpg) is in the Public Domain (third);

Big Kmart, Ontario, Oregon 2006 by Caldorwards4 (http://en.wikipedia.org/wiki/File:Big_Kmart,_Ontario,_Oregon_2006.jpeg) is in the Public Domain (fourth)