In this lesson you learned about the three generic strategies that every business employs. You learned that a low-cost strategy competes on price whilst a differentiation strategy competes on uniqueness and focus strategy aims at servicing a market niche.

1. Strategy and
Strategic
Management: An
overview
Global Business Consultants &
Partners Training Courses
Copyright 2020 Global Business Consultants

2. Chapter 3. Aligning Strategy
to the Company’s External
and Internal Situation
Lesson 2: Strategic Choices

3. Strategic
choices
 Bases of competitive advantage at business level.
 Scope of activities at corporate level:
 Portfolio (of Strategic Business Units)
 Market spread: E.g. international, domestic, state
 Directions and methods of development:
 Directions: Product/Market
 Methods: Internal/organic, M&A, strategic alliances

4. Strategic
choices
Bases of competitive advantage at business
level.
 To survive, to be more profitable, and to increase its
market share, company’s must create strategies.
 The three generic strategies that every company
employs include one of the following:
 Low-cost strategy.
 Differentiation strategy.
 Focus strategy.

5. Strategic
choices
Bases of competitive advantage at business level.
 A low-cost provider’s basis for competitive advantage is
lower overall costs than its competitors.
 A low-cost advantage over competitors can translate into
better profitability than a company’s competitor’s cost.
 There are two major avenues for achieving low-cost
advantage.
 A company can perform value chain activities more cost-effective than
its competitors.
 A company can revamp its overall value chain to eliminate or bypass
some cost-producing activities.

6. Strategic
choices
Bases of competitive advantage at business level.
 A differentiation provider’s basis for competitive advantage is to
offer unique product attributes that a wide range of buyers find
appealing and worth paying for.
 A company can achieve differentiation based on tangible or
intangible attributes.
 Intangible attributes could include superior customer services.
 Tangible attributes could include better quality or more features.
 Successful differentiation allows a company to do one or more of
the following:
 Command a premium price for its products.
 Increase unit sales because additional buyers are won over by the differentiating
features.
 Gain buyer loyalty to its brand because some buyers are strongly attracted to the
differentiating features and develops a relation with the company and its products.

7. Strategic
choices
Bases of competitive advantage at business level.
 A focus provider’s basis for competitive advantage is to offer its products
to a narrow piece of the total market.
 The target market or niche can be defined by geographic uniqueness, by
specialised requirements in using the product, or by special product attributes
that appeal to only to niche members.
 A company can base it competitive advantage by offering its products to a
niche market on the basis of low-cost or differentiation.
 A focused low-cost strategy aims at securing a competitive advantage by
servicing buyers in the target market niche at a lower-cost than it competitors.
 A focused differentiation strategy aims at offering products designed to appeal
to the unique preferences and needs of narrow, well-defined group of buyers.

8. Strategic
choices
Scope of activities at corporate level.
 Corporate level strategy takes a portfolio approach to strategic
decision making. Essentially, its choices.
 At corporate level, strategy looks across all of a company’s
business units to determine how to create the most value.
 There are several important components of corporate strategy
that leaders of organizations focus on. The main tasks of
corporate strategy are:
 Allocation of resources.
 Organizational design.
 Portfolio management.
 Strategic tradeoffs.

9. Strategic
choices
Directions and methods of development.
 The means of entering new business can take any of three forms:
 Acquisitions
 Joint Ventures with other companies
 Internal startup
 Acquisition is a popular means of diversifying into another industry.
Not only is it quicker than trying to launch a startup but it is also
more effective than trying to scale barriers to entry.
 For example. Acquiring technical know-how knowledge.
 Entering a new business via a joint venture can be useful in at least
three type of situations:
 Pursing an opportunity that is too complex, uneconomical or too complex.
 When new opportunities require a broader range of competencies and
know-how.
 When new opportunities require having operations in a foreign country.

10. Strategic
choices
Directions and methods of development.
 Internal development of new business is an increasingly
important means for companies to diversify and is often
referred to as corporate venturing or new venture
development.
 Corporate venturing or new venture development is the
process of developing new businesses as an outgrowth of a
company’s established business operations.

11. “Most strategies are a
combination of intended and
emergent processes.”
Karen | GBC

12. Congratulations! You’ve completed lesson .
Recap: In this lesson you learned about the three generic
strategies that every business employs. You learned that a low-
cost strategy competes on price whilst a differentiation strategy
competes on uniqueness and focus strategy aims at servicing a
market niche.
Awesome work!
Now click Complete and then Next for Lesson 3.