Business-level strategy is concerned with a
company's position in an industry, relative to competitors and to the five
forces of competition described earlier.
Companies are challenged to select business-level strategies to position
themselves favourably (in terms of the five competitive forces) and to establish
a competitive advantage over industry rivals.
FIGURE: Four Generic Business Level
Strategies
Companies can choose one of four strategies
from the generic strategy matrix based on the source of competitive
advantage--uniqueness or cost--and breadth of competitive scope--broad or
narrow.
A company choosing to compete across a broad
market determines that it should compete in a number of customer segments.
Competitive advantage is achieved either by offering unique products--a
differentiation strategy--or by establishing a low-cost position and
providing standardised products at the lowest competitive price--a
cost leadership strategy.
Companies that choose to compete in narrow
customer segments select a focus
strategy, which may be either a focused
differentiation strategy (few segments, unique products) or a focused cost leadership strategy (narrow
segment, standardised products at the lowest competitive price).
