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Definition: Five Business Level Strategies
The Business strategy is a detailed plan outlined on how to deliver value to customer at the same time positioning itself as having a competitive advantage over the competitor. The five types of business level strategies are as follows.
• Cost leadership: This type of strategy is totally based on the price as a competing factor. In case of commodity products many producers try to minimize their cost structure and transfer the value to the customer in terms of low price. It is based on having internal efficiency to have above average margins to be sustainable. It can only be achieved by building state of art facility, having very low operational, R&D cost, overhead expenses etc. Example: Walmart is known for its lowest prices.
• Differentiation: the main aim is to position as a provider with unique features of the product or service being offered over the cost aspect. High quality product, high customer service, rapid innovation etc are a few key points of differentiation. Example: apple has differentiated itself as high quality product provider
• Focused Low Cost: this kind of strategy provides its offerings only to a small segment of consumers at a low cost. Example a low cost provider supplying goods only to one country thereby serving to the needs of a very small segment.
• Focused Differentiation: by doing so companies compete on differentiating their offering but to a small much targeted segment of consumers. But they are able to serve this base of customers in a more efficient manner than their customers. However there are risks that the segment may become out of interest or other competitors may find the segment attractive.
• Integrated Low Cost Differentiation Strategy: with the advent of globalization many companies adopt this strategy of adapting to the environmental changes by learning new technology and leveraging on core competencies to provide differentiated products at low cost.
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