Introduction
Business level strategy refers to the set of actions and decisions that a company takes to gain a competitive advantage in a specific market or industry. It involves determining how a company will compete against its rivals and create value for its customers. Business level strategy focuses on the specific business unit or division of a company, rather than the overall corporate strategy.
Understanding Business Level Strategy
Business level strategy is concerned with how a company differentiates itself from its competitors and positions itself in the market. It involves making choices about the target market, the value proposition, and the competitive advantage that the company will pursue.
Target Market: One of the key aspects of business level strategy is identifying the target market or customer segment that the company aims to serve. This involves understanding the needs and preferences of the target customers and tailoring the company’s products or services to meet those needs effectively.
Value Proposition: The value proposition is the unique combination of features, benefits, and value that a company offers to its customers. It is the reason why customers choose one company’s products or services over those of its competitors. The value proposition should be compelling and differentiated to attract and retain customers.
Competitive Advantage: Business level strategy also involves determining the competitive advantage that the company will leverage to outperform its rivals. This could be achieved through cost leadership, differentiation, or focus. Cost leadership strategy aims to provide products or services at a lower cost than competitors, while differentiation strategy focuses on offering unique and superior products or services. Focus strategy involves targeting a specific niche market or customer segment.
Types of Business Level Strategies
There are several types of business level strategies that companies can adopt, depending on their goals and the competitive dynamics of the industry. Some common types of business level strategies include:
Cost Leadership: Companies pursuing a cost leadership strategy aim to become the lowest-cost producer in the industry. This allows them to offer products or services at a lower price than competitors and attract price-sensitive customers. Cost leadership requires efficient operations, economies of scale, and tight cost control.
Differentiation: Differentiation strategy involves offering unique and superior products or services that are valued by customers. Companies pursuing differentiation focus on product innovation, superior quality, exceptional customer service, or other distinctive features that set them apart from competitors. Differentiation allows companies to command premium prices and build strong brand loyalty.
Focus: Focus strategy involves targeting a specific niche market or customer segment. Companies adopting a focus strategy concentrate their efforts on serving the unique needs of a particular group of customers. This allows them to develop deep expertise and tailor their products or services to meet the specific requirements of the target market.
Conclusion
In conclusion, business level strategy is a crucial aspect of a company’s overall strategy. It involves making choices about the target market, value proposition, and competitive advantage. By adopting the right business level strategy, companies can differentiate themselves from competitors, attract customers, and achieve sustainable competitive advantage.
References
– Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
– Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
– Hill, C. W., & Jones, G. R. (2012). Strategic Management Theory: An Integrated Approach. Cengage Learning.
