BUSINESS LEVEL STRATEGIES

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Elements of Strategic Business Units

Bases of Competition
Price Differentiation Hybrid Focus

Achieving Competition Advantage

Sustainability Hyper competition Collaboration Game Theory

SBU Strategies

Detailed Choices
Directions Methods
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Identifying Strategic Business Units

A Strategic Business Unit (SBU) is a part of an organization for which there is a distinct external market for goods or services that is different from another SBU.

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Bases of Competitive Advantage: The Strategy Clock

Competitive strategy is concerned with a business unit might achieve competitive advantage in its market. How it provides Best Value.

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Price- based Strategies (Routes 1 and 2)

Route 1: no frills strategy which combines a low price, low perceived product service benefits and a focus on a price- sensitive market segment. Route 2: low price strategy, seeks to achieve a lower price than competitors at the same time as trying to maintain similar perceived product or service benefits to those offered by competitors.
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The Hybrid Strategy (Route 3)

The hybrid strategy seeks simultaneously to achieve differentiation and a price lower than that of competitors. The success of the strategy depends on the ability to deliver enhanced benefits to customers together with low price.

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Differentiation Strategies (Route 4)

A differentiation strategy seeks to provide products or services benefits that are different from those of competitors and that are widely valued by buyers. The aim is to achieve competitive advantage by offering better products or services at the same price or enhancing margins by pricing slightly higher.
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Focused Differentiation (Route 5)

Focused differentiation strategy seeks to provide high perceived product/service benefits justifying substantial price premium, usually to select market segment.

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Failure Strategies (Routes 6,7 and 8)

A failure strategy is one which does not provide perceived value-for-money in terms of product features, price or both. Route 6 suggests increasing price without increasing product/service benefits to the customers. Route 7 is involving the reduction in product/service benefits at the same time as increasing relative price. Route 8- reduction in benefits whilst maintaining price- is also dangerous.
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