INDEPENDENT UNIVERSITY BANGLADESH
Assignment On
‘Summary of the chapter 8(Business Strategy)
Course Title:
Strategic Management
Course Code: MBA – 550
Submitted to:
Dr. Md. Motaher Hossain
Assistant Professor
School of Business
Independent University Bangladesh
Submitted by:
Md. Rubaiat Hossain
ID: 2111401
Section: 01
Date of Submission: 13/04/2022
Summary of chapter 8
Business strategy
For business purpose Company should make strategy according to their resource. Every business
would like to choose a low cost, differentiation, or speed-based strategy. A firm can pursue both
lost cost and differentiation strategy by following some techniques. There are also some different
stages of industry revolution. To succeed in each stages industry should identify some
requirements. Industry also should consider when they should diversify their business.
Evaluating and Choosing business strategies:
To gain competitive advantages over its rivals the company should have the ability to
differentiate the business from their competitors and maintain a cost structure as well. Those
industries which have different sectors in business have a chance to operate their business at a
lower cost and outperformed over their rivals.
How cost leadership can achieve and its pros and cons:
Cost leadership is an effective business-level strategy to the extent that a firm offers low prices,
provides satisfactory quality. Many cost leaders rely on economies of scale to achieve efficiency.
For example, Walmart follows cost leadership strategy. Company Should require some skills and
resources to establish cost leadership. For example, sustained capital investment, engineering
skills, low-cost distribution system etc. Organization also needs to control their cost tightly,
structured responsibilities and set benchmark is necessary. Technology department, Human
resources department general administration and procurement department of a farm can take
some initiatives to achieve competitive advantage via cost leadership strategies. The pros of low-
cost strategies are- Low-cost strategies can reduce buyers pricing pressure. it can also push a
rival in different sectors, it can demolish substitute product and cost leader may enjoy increased
market share as well. There are some disadvantages of implementing low-cost strategies. Those
are – cost saving activities are easy to imitate, competitive advantage may reduce too and over
the time cost differences may decline.
How Differentiation can achieve
A differentiation strategy is an approach business develop by providing customers with
something unique, different, and distinct from items their competitors may offer in the
marketplace. 5 forces model can be used to achieve differentiation. There should require some
skills to achieve differentiation like cost leadership. Strong marketing abilities, creative talents,
strong cooperation’s are needed. industry will achieve differentiation through developing
technology, different activities of human resource management, general administration, and
procurement. Logistics support, marketing coordination can help a company to reach profit
margin by differentiation.
How Speed Based strategy can achieve
Another way to achieve competitive advantage is developing speed-based strategy. Any time a
business can do something faster than the competition, they're going to experience some level of
success. High level of automation, process engineering skills, strong downstream partner are
needed to fasten speed-based strategy. Some organizational skills are also need for example
coordination among R&D, highly skilled labor etc. Speed can be created by some way for
example by improving the products or service, rapid delivery system, responsiveness of
customers and sharing the information and technology. There are some disadvantages of having
speed-based strategy for example mature company may not offer introducing some forms of
rapid responses. Considerable training also needed to stablish speed-based strategy and
sometimes customer don’t like speedy changes.
How market-focus strategy can achieve
A market focus strategy enables business to dominate a niche by concentrating on a limited part
of a market according to Small Business. The disadvantages of market focus is it can attract
major competitors and company also require resources, capabilities and value chain activities to
implement it.
Stages of Industry Evolution and Business Strategy Choices
Industry segments are different, so requirements are changing over the time. There are different
types of industries such as emerging industries, growing industries, growth industries, mature
industries, and declining industries.
Emerging Industries:
An emerging industry is a group of companies in a line of business formed around a new product
or idea that is in the early stages of development. The entry barriers are low for emerging
industries, initial costs are high to develop the industry, they have the inability to obtain raw
materials and the company needs high risk capital because of uncertainty. To be successful
emerging industries need to implement some strategy for example industry should be in a good
shape, require the ability to rapidly improve quality of product, maintain good relationship with
suppliers, advantage technology and require ability to forecast the competitors.
Growing industries:
growth industry emphasized on brand recognition, product differentiation etc. Strong brand
recognition, ability to meet the increasing demand, ability to differentiate the product from
competitor, R&D skills, strong sales, and marketing skills are required to succeed as a growth
industry.
Mature Industries:
A mature industry is one that has passed both the emerging and growth phases of industry
growth. In this stage they have got some experienced repeat buyers. Those buyers expect similar
price. to be succeed those companies should implement product line pricing, should give
attention to reduce price, they should go for horizontal integration, and they should go for market
expansion where competition is low.
Declining Industries:
A declining industry is an industry where growth is either negative or is not growing at the
broader rate of economic growth. Those industries should focus on higher growth, innovation of
product and speed up efficiency of production and distribution.
Fragmented industry:
A fragmented industry is an industry with many small and medium-sized companies with no
significant market share or influence on the industry. They should focus on specialization, value
addition, decentralization to gain competitive advantage.
Global Industry:
Global industries operate their business in major geographical regions. They can license foreign
farms to sell their product. They should also maintain domestic production base and establish
foreign based plants to compete directly in the market. The four generic global competitive
strategies are broad line global competition, global focus strategy, national focus strategy and
protected niche strategy.
Grand Strategy selection Matrix:
The company can maximize strength or reduce weakness by internally or externally. To
maximize strength Externally the company can go for horizontal integration, concentric
diversification, or joint venture. To overcome weakness externally the company can go for
vertical integration or conglomerate diversification. To maximize strength internally the
company can go for concentrated growth, market development or product development. To
overcome weakness internally the company can go for turnaround or divestiture liquidation.
Model for grand strategy clusters
When the market is growing rapidly, and they are in weak competitive position they can go for
Horizontal integration, divestiture, and liquidation. When the company’s growth is slow, and
they are in weak competitive position they can go for turnaround, concentric diversification,
divestiture, or liquidation. When the company’s growth is rapid, and they are in strong
competitive position they can go for concentrated growth, vertical integration, or concentric
diversification. When the company’s growth is slow, and they stay is strong competitive position
they can go for concentric diversification, conglomerate, or joint venture.
Those are the useful tools for dominant product manager so that they can evaluate and narrow
their choices among alternative grand strategies.