Chapter 8: Business Level
Strategy
Learning Outcomes per the module guide:
1. Explain the nature and necessity for business level strategies;
2. Distinguish between the different types of business level strategies.
3. Identify the business level strategies in an organisation;
4. Evaluate potential business level strategies for an organisation;
5. Recommend appropriate business level strategies for an organisation.
Introduction to business level strategies
Often referred to as competitive strategies because they relate to the organisation’s
deliberate decisions on how to meet its customers’ needs, how to counter the competitive
efforts of its rivals, how to cope with the existing market conditions, and how to sustain or
build its competitive advantage.
8.2: Levels of strategies
1. Corporate level strategy is concerned with the overall sale and scope of the
organisation and it deals with the purpose of the organisation
2. Business level / competitive strategy describes how to compete successfully in a
particular market and concerns the products and services that must be developed
and positioned in order to achieve a competitive advantage and long-term survival.
3. Operational strategy is concerned with how the component parts of an organisation
deliver the corporate and business level strategies and is predominantly focusses on
the shorter to medium term.
8.3 Factors that influence the choice of strategy
Before an organisation evaluates its various strategic options it is already familiar with its
unique resources and capabilities, its weaknesses, the potential sources of competitive
, advantage, and the opportunities and threats in the environment. Other factors that must be
considered include;
The organisations strategic intent as captured in the vision and mission statement.
Nature of competition in the industry (when the strengths and weaknesses of
competitors are known the strategic decision makers are able to devise plans and
strategies to outperform their competitors).
The impact of the chosen strategy on the organisation’s stakeholders is also a factor
that the organisation needs to consider.
8.4 Business level strategy
Overall cost leadership is a strategy that is built on low input costs. The savings
from the lower costs are then transferred to a large, price sensitive market.
Differentiation is a strategy that is built on unique and valued offerings. The target
market tends to be smaller, but is willing to pay more for the unique offering.
Focus is a strategy followed by organisations that direct their competitive efforts to a
specific niche in the marketplace.
The strategic decision makers in an organisation will define their scope of operations
according to the market it aims to serve. Each organisation will consider the strategic
decision enablers before opting for one business level strategy over another. When one
strips away the details to reach the real substance, the biggest and most significant
differences among competitive strategies are:
Whether an organisation’s target market is broad or narrow
Whether the organisation is pursuing a competitive advantage linked to low cost or
Product differentiation a combination of the above.
Strategy
Learning Outcomes per the module guide:
1. Explain the nature and necessity for business level strategies;
2. Distinguish between the different types of business level strategies.
3. Identify the business level strategies in an organisation;
4. Evaluate potential business level strategies for an organisation;
5. Recommend appropriate business level strategies for an organisation.
Introduction to business level strategies
Often referred to as competitive strategies because they relate to the organisation’s
deliberate decisions on how to meet its customers’ needs, how to counter the competitive
efforts of its rivals, how to cope with the existing market conditions, and how to sustain or
build its competitive advantage.
8.2: Levels of strategies
1. Corporate level strategy is concerned with the overall sale and scope of the
organisation and it deals with the purpose of the organisation
2. Business level / competitive strategy describes how to compete successfully in a
particular market and concerns the products and services that must be developed
and positioned in order to achieve a competitive advantage and long-term survival.
3. Operational strategy is concerned with how the component parts of an organisation
deliver the corporate and business level strategies and is predominantly focusses on
the shorter to medium term.
8.3 Factors that influence the choice of strategy
Before an organisation evaluates its various strategic options it is already familiar with its
unique resources and capabilities, its weaknesses, the potential sources of competitive
, advantage, and the opportunities and threats in the environment. Other factors that must be
considered include;
The organisations strategic intent as captured in the vision and mission statement.
Nature of competition in the industry (when the strengths and weaknesses of
competitors are known the strategic decision makers are able to devise plans and
strategies to outperform their competitors).
The impact of the chosen strategy on the organisation’s stakeholders is also a factor
that the organisation needs to consider.
8.4 Business level strategy
Overall cost leadership is a strategy that is built on low input costs. The savings
from the lower costs are then transferred to a large, price sensitive market.
Differentiation is a strategy that is built on unique and valued offerings. The target
market tends to be smaller, but is willing to pay more for the unique offering.
Focus is a strategy followed by organisations that direct their competitive efforts to a
specific niche in the marketplace.
The strategic decision makers in an organisation will define their scope of operations
according to the market it aims to serve. Each organisation will consider the strategic
decision enablers before opting for one business level strategy over another. When one
strips away the details to reach the real substance, the biggest and most significant
differences among competitive strategies are:
Whether an organisation’s target market is broad or narrow
Whether the organisation is pursuing a competitive advantage linked to low cost or
Product differentiation a combination of the above.
