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Slide1
Business Strategies and Their Marketing Implications
Chapter 3
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.Slide2
Strategic Business Units (SBUs)Components of a firm engaged in multiple industries or businessesIndependently decide objectives, markets, and competitive strategies to be pursuedShould be consistent with the firm’s:
Mission ObjectivesThe allocation of resourcesSlide3
Characteristics of SBUs Homogeneous set of markets
with limited number of related technologiesUnique set of product-markets
Control over factors necessary for successful performanceResponsibility for their own profitabilitySlide4
Dimensions That Define Individual SBUsTechnical compatibility
Similarity in the customer needs Similarity in the personal characteristics of customers in the target marketsSlide5
Business-Unit
Objectives
Derived from the corporate objective and vary according to:Attractiveness of the
industries
Strength of
the
competitive positions within those industries
Resource allocation decisions by corporate managementSlide6
Allocating Resources within the Business UnitFirms use:Similar economic value Value-based planning
Portfolio analysis toolsSlide7
Generic Business-Level Competitive Strategies
Michael Porter distinguishes three strategies
Overall cost leadershipDifferentiationFocusRobert Miles and Charles Snow classify business units into four strategic typesProspectorsDefendersAnalyzersReactorsSlide8
Exhibit 3.1 - Definitions of Miles and Snow’s Four Business StrategiesSlide9
Exhibit 3.1 - Definitions of Miles and Snow’s Four Business StrategiesSlide10
Exhibit 3.2 - Combined Typology of Business-Unit Competitive StrategiesSlide11
Single-Business Firms and Start-ups
Single-business firms
Distinction between business-level competitive strategy and marketing strategy tends to blurTwo strategies blend into oneEntrepreneurial start-ups Do not have an established market position to defendSlide12
Service Businesses
Service: Any activity or benefit
that is essentially intangible and that does not result in the ownership of anythingIts production may or may not be tied to a physical productAlmost all businesses are engaged in service to some extentSlide13
The Impact of the Internet
Changed the
way firms competeIs primarily a communications channelMakes it easier for firms to:Customize their offerings and personalize their relationships with theirSlide14
Exhibit 3.4 - How Business Strategies Differ in Scope, Objectives, Resource Deployments, and SynergySlide15
Exhibit 3.4 - How Business Strategies Differ in Scope, Objectives, Resource Deployments, and SynergySlide16
Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
ProspectorAnalyzerDifferentiated
Defender
Low-Cost Defender
Industry and Market
Industry in early growth stage
Potential customer segments unidentified
Industry in late
growth
Some potential segments may be undeveloped
Industry in decline stage
Sales primarily due to repeat purchases
Industry in decline stage
Sales primary due to repeat purchaseSlide17
Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
ProspectorAnalyzerDifferentiated
Defender
Low-Cost Defender
Technology
Newly emerging technology
Applications
undeveloped
Basic
technology well
developed but still evolving
Product
modifications and
improvements
Basic technology
fully developed and stable
Major
modifications
Basic technology
fully developed and stable
Major
modificationsSlide18
Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
ProspectorAnalyzerDifferentiated
Defender
Low-Cost Defender
Competition
Few established competitors
Industry structure still emerging
Single competitor holds commanding share
Large number of competitors
Industry structure still evolving
One or more competitors hold large shares in major segments
Small to moderate number of well-established competitors
Industry structure stable
Maturity of markets
Small to moderate number of well-established competitors
Industry structure stable
Maturity of marketsSlide19
Exhibit 3.5 - Environmental Factors Favorable to Different Business Strategies
External Factors
ProspectorAnalyzerDifferentiated
Defender
Low-Cost Defender
Business’s relative
strengths
SBU has strong R&D, product engineering and marketing research and marketing capabilities
SBU has good R&D, product engineering, and marketing research capabilities
Low-cost position or strong sales, marketing, distribution
SBU has no outstanding strengths in R&D or product engineering
Costs are higher
SBU’s outstanding strengths are in process engineering and quality control
SBU has superior sources of supply and/or process engineering and production capabilitiesSlide20
Exhibit 3.7 - Differences in Marketing Policies and Program Components across Businesses Pursuing Different StrategiesSlide21
Exhibit 3.7 - Differences in Marketing Policies and Program Components across Businesses Pursuing Different StrategiesSlide22
Changing Business Strategies for a Changing Market
Effective implementation of different business strategies requires different:
Functional competencies and resourcesOrganizational structures
Decision-making and coordination processes
Reward systems
Personnel