RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY

MBA
SEMESTER: 3

SUBJECT
STRATEGIC MANAGEMENT

MODULE NO : 4
COMPETITIVE & BUSINESS LEVEL STRATEGY
- Jayanti R Pande
DGICM College, Nagpur
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q1 Explain about Business Level Strategy and it’s types.

BUSINESS LEVEL STRATEGY: Aims to stand out in the market, create value for customers, and achieve better financial
results. Involves key decisions on how to compete effectively. There are four types of Business Level Strategies:

Business Cost Integrated Low-

Differentiation Focus
Level Leadership Cost/Differentiation
Strategy Strategy
Strategies Strategy Strategy

1 Cost Leadership Strategy: The primary aim is to establish the company as the lowest-cost producer or provider in the
industry while maintaining acceptable quality standards. It relies on leveraging economies of scale, efficient production
processes, and innovative cost-saving measures.

2 Differentiation Strategy: This strategy emphasizes creating unique and distinctive products or services that stand out in
the market and are perceived as superior by customers. It requires significant investment in research, development,
innovation, and effective marketing.

3 Focus Strategy: The focus strategy concentrates on serving a specific market segment or narrow target audience
exceptionally well. Companies can choose either a cost focus or a differentiation focus approach.

4 Integrated Low-Cost/Differentiation Strategy: This approach aims to offer products or services with better attributes at
relatively lower prices compared to competitors. It seeks to provide a unique value proposition that combines quality and
affordability to attract a broad range of customers.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q2 Write in detail about Porter’s competitive strategies.

PORTER'S COMPETITIVE STRATEGIES, developed by Michael E. Porter, are business approaches that help companies
gain a competitive advantage in their industries. They focus on differentiating products or achieving cost leadership as
the lowest-cost producer. The three primary strategies are
1. Cost Leadership: Aims to be the lowest-cost producer while maintaining acceptable quality. Companies offer
products at lower prices, attracting price-sensitive customers. Improving operational efficiency, lean production,
and optimizing the supply chain are key elements.
2. Differentiation: Focuses on creating unique products or services that stand out in the market. Companies charge
premium prices by offering something perceived as superior. R&D, innovation, marketing, and branding are
essential to highlight the unique value©proposition.
Copyright 2023 Jayanti Rajdevendra Pande. All
3. Focus Strategy: Canters on serving
rights a specific market segment exceptionally well. Two approaches: a. Cost Focus:
reserved.
Targets being the lowest-cost provider within a specific niche, attracting price-sensitive customers.
b.Differentiation Focus: Offers specialized products to a specific customer group, building strong customer loyalty.
Competitive
Advantage
Lower Cost Differentiation

Broad
Cost Leadership Differentiation
Competitive Target
Scope Narrow
Cost Focus Differentiation Focus
Target

Copyright © 2023 Jayanti Rajdevendra Pande. All rights

Q3 What is the significance & limitations of business level strategy?

SIGNIFICANCE OF BUSINESS-LEVEL STRATEGY:

• Competitive Advantage: Business-level strategies help companies gain a competitive edge by focusing on either
offering lower costs or unique products/services.
• Customer Satisfaction: These strategies emphasize understanding customer needs, leading to better products that
satisfy customer preferences.
• Resource Optimization: Companies can allocate resources more efficiently by focusing on specific markets or product
lines.
• Brand Differentiation: Effective strategies create a distinct brand identity, making it easier for customers to recognize
and choose a company's products.
• Long-Term Success: Sustainable strategies provide companies with a roadmap for long-term success in their
industries.

LIMITATIONS OF BUSINESS-LEVEL STRATEGY:

• Environmental Changes: Rapid changes in the market or technology can make strategies obsolete.
• Imitation by Competitors: Successful strategies may be copied by competitors, reducing the advantage.
• Resource Constraints: Some strategies may require significant investments that smaller companies cannot afford.
• Market Saturation: Similar strategies used by multiple companies can lead to a crowded market, making it difficult to
stand out.
• Internal Limitations: Strategies may overlook internal factors like company culture and employee capabilities,
impacting execution.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q4 What are the conditions for using Focus Strategy?

Focus Strategy is a business approach that involves concentrating efforts on serving a specific market segment
exceptionally well. It requires identifying a niche with unique customer needs and preferences and delivering tailored
products or services to gain a competitive advantage. Companies adopting this strategy can differentiate themselves
and build strong customer loyalty within their chosen market segment.

CONDITIONS FOR USING FOCUS STRATEGY

1. Clear and Unique Market Segment: To adopt a Focus Strategy, companies must identify a specific and well-defined
market segment with distinct needs and characteristics.
2. Limited Competition: The chosen niche market should have minimal competition, allowing the company to stand
out and gain an advantage.
3. Unique Value Proposition: A Focus Strategy demands a unique value proposition that addresses the specific needs
of the targeted customers in the selected segment.
4. Resource Capability: Companies must possess the necessary resources and capabilities to serve the chosen market
segment efficiently.
5. Long-Term Commitment: Successful Focus Strategy implementation requires a dedicated, long-term commitment
to serving the identified market segment effectively.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q5 Explain the risk of lower cost leadership, differentiation strategy & focus strategy.

Lower Cost Leadership: Lower cost leadership aims to be the lowest-cost producer while maintaining acceptable quality,
attracting price-sensitive customers.
a. Compromised Quality: Reducing costs may impact product or service quality, affecting customer satisfaction and brand
reputation.
b. Limited Innovation: Excessive focus on cost reduction may hinder investments in research and development, limiting
adaptation to market changes.
c. Diminished Differentiation: If competitors imitate cost-cutting measures, the company's cost advantage may lessen,
making differentiation challenging.

Differentiation Strategy: Focuses on creating unique products or services to stand out in the market, allowing premium
pricing and building brand loyalty.
a. High R&D Costs: Investing in unique offerings can impact profitability if customers do not value the differentiation.
b. Customer Rejection: Misaligned features risk rejection, reducing the strategy's effectiveness.
c. Imitation by Competitors: Competitors may copy unique features, eroding the company's competitive advantage.

Focus Strategy: Concentrates on serving a specific market segment exceptionally well, meeting unique needs effectively.
a. Market Segment Dependence: Over-reliance on a narrow market risks decline or economic instability in the segment.
b. Market Segment Decline: Changes in preferences or market conditions may lead to a decline in the targeted segment,
affecting the company's performance.
c. Limited Scalability: Relying solely on a narrow market segment may limit growth potential and diversification
opportunities.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q6 Mention the features of porter’s generic competitive strategies.

FEATURES OF PORTER’S GENERIC COMPETITIVE STRATEGIES.

 Cost Leadership: Focuses on being the lowest-cost producer in the industry while maintaining acceptable
quality, attracting price-sensitive customers.

 Differentiation: Concentrates on creating unique products or services that stand out in the market, allowing
premium pricing and building brand loyalty.

 Focus Strategy: Involves serving a specific market segment exceptionally well, meeting unique needs and
preferences effectively.

 Cost Focus: Aims to become the lowest-cost provider within a specific market niche, catering to price-sensitive
customers.

 Differentiation Focus: Concentrates on offering specialized and differentiated products or services to a specific
customer group, building strong customer loyalty and charging premium prices.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q7 Explain resource based theory and it’s Types.

RESOURCE-BASED THEORY (RBT) emphasizes a company's internal resources and capabilities as crucial factors for
achieving a competitive advantage. It focuses on identifying and leveraging unique and valuable resources that are
difficult for competitors to imitate. By strategically utilizing tangible and intangible resources, companies can
differentiate themselves, create sustainable advantages, and drive long-term success in the market.

TYPES OF RESOURCE-BASED THEORY

TANGIBLE RESOURCES:
These are physical assets that a company owns and controls, such as machinery, equipment, land, buildings, and financial
resources. Tangible resources can provide a competitive advantage if they are rare, difficult to obtain, or utilized
effectively to create value in the market. For example, modern manufacturing equipment can lead to cost leadership
through improved efficiency and lower production costs.

INTANGIBLE RESOURCES:
These are non-physical assets, including intellectual property, patents, trademarks, brand reputation, organizational
culture, managerial expertise, and customer relationships. Intangible resources are difficult to replicate, making them
valuable for creating sustainable competitive advantages. A strong brand reputation, for instance, can foster customer
loyalty and higher willingness to pay premium prices.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q8 Explain VRIO framework . Mention different classes in which markets are categorised.

VRIO FRAMEWORK [ V= Valuable, R= Rare, I=costly to Imitate, O=Organised]

It is a strategic management tool used to assess a company's internal resources and capabilities to determine their potential for
competitive advantage. The framework evaluates resources based on four key attributes: Value, Rarity, Imitability, and Organization.

Value: The first criterion in the VRIO framework assesses whether a company's resource or capability adds value and enables it to exploit
opportunities or mitigate threats in the market. Resources that create value contribute positively to a company's competitive advantage.
Rarity: Rarity evaluates the uniqueness of a resource or capability within the industry. If a resource is rare and not commonly possessed
by competitors, it becomes a potential source of sustained competitive advantage.
Imitability: The imitability criterion examines how easy or difficult it is for competitors to replicate or imitate a company's resource. If a
resource is hard to duplicate, it provides a sustainable competitive advantage.
Organization: The final criterion considers how effectively a company organizes and utilizes its resources and capabilities. Proper
organization and efficient use of resources can enhance a company's competitive position in the market.

Valuable Rare Imitability Organization

SUSTAINED
V Yes Yes Yes Yes
R I O COMPETITIVE
VRIO ADVANTAGE
FRAMEWORK No No No No

TEMPERORY UNUSED
COMPETITIVE COMPETITIVE
COMPETITIVE COMPETITIVE
DISADVANTAGE PARITY
ADVANTAGE ADVANTAGE

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

DIFFERENT CLASSES IN WHICH MARKETS ARE CATEGORIZED:

 Perfect Competition: In a perfect competition market, there are numerous buyers and sellers, homogeneous
products, perfect information, and free entry and exit. Companies in this market have little to no control over prices
and must accept the prevailing market price.

 Monopoly: A monopoly market is characterized by a single seller or producer controlling the entire market. As the
sole provider of the product or service, the company has significant control over prices and can set them at their
discretion.

 Monopolistic Competition: Monopolistic competition features a large number of sellers offering differentiated
products. Each company can exercise some control over its pricing and marketing strategy due to product
differentiation.

 Oligopoly: In an oligopoly market, a small number of large firms dominate the industry, leading to interdependence
among competitors. The actions of one company significantly impact others, and pricing decisions are influenced by
mutual reactions.

 Duopoly: Duopoly is a specific form of oligopoly where only two companies control the market. The competitive
behavior and strategies of these two firms significantly impact the industry's dynamics.

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q9 What do you understand by competitive for tomorrow’s market?

1. Competitive advantage for tomorrows market is about strategic positioning and capabilities to outperform competitors.

2. It involves anticipating and adapting to evolving trends, technological advancements, and changing customer
preferences.

3. Fostering innovation and investing in research and development are essential for staying ahead.

4. Leveraging disruptive technologies like AI, automation, and data analytics can provide a competitive edge.

5. Embracing digitalization and agile practices allows for quick adaptation to changing circumstances.

6. Sustainable and socially responsible practices are valued by customers and stakeholders.

7. Companies committed to sustainability gain a positive reputation and customer loyalty.

8. Flexibility and adaptability enable companies to seize new opportunities and navigate uncertainty.

9. Proactive preparation for future challenges and opportunities is crucial for success.

10. Tomorrow's market requires a forward-looking approach and a willingness to embrace change.
Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
Q10. Give difference between Business unit and corporate competencies.

Business Unit Competencies Corporate Competencies

1. Specific to a particular business unit 1. Applicable across the entire organization
2. Developed to address unit-specific needs 2. Developed to support overall company goals
3. May vary between different units 3. Consistent across all business units
4. Focus on creating synergies and enhancing overall
4. Focus on competitive advantage in a segment
performance

5. Tied to the unique market environment of the unit 5. Geared towards leveraging company-wide resources

6. May not be transferable to other units 6. Transferable and scalable across various divisions

7. Often designed to meet local customer demands 7. Aimed at achieving global competitiveness

8. Primarily serve the individual unit's interests 8. Serve the strategic interests of the entire corporation

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 Q11 Give difference between Speed & Perseverance

Speed (Aggressiveness) Perseverance (Tenacity)

1. Emphasizes quick decision-making and swift execution of 1. Focuses on long-term commitment to achieving strategic
strategies. goals.
2. Aims to gain a first-mover advantage in the market. 2. Prioritizes steady progress and continuous improvement.
3. Seeks to respond rapidly to market changes and exploit 3. Embraces challenges and overcomes obstacles through
opportunities. persistence.
4. Accepts setbacks and failures as part of the learning
4. May involve higher risk-taking for potential high rewards.
process.
5. Appropriate for industries with slower-changing
5. Well-suited for dynamic and rapidly changing industries.
environments.
6. Often used when speed is a critical success factor for 6. Suitable for achieving sustainable competitive advantage
competitive advantage. over time.
7. Requires agility and adaptability to capitalize on emerging
7. Involves resilience to maintain efforts despite difficulties.
trends.
8. Enables a company to seize opportunities quickly and 8. Builds reputation and trust through consistent effort and
disrupt the market. delivery.
9. May prioritize short-term gains over long-term stability. 9. Focuses on steady growth and stability over the long haul.
10. May lead to a higher rate of innovation and 10. Encourages learning from experiences and refining
experimentation. strategies.
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 Q12 Give difference between Structured & Unstructured arenas

Structured Arenas Unstructured Arenas

1. Well-defined and predictable environments 1. Lack clear rules and predictable outcomes

2. Follow established rules and procedures 2. Require flexible approaches and adaptability

3. Typically regulated and controlled 3. Often subject to ambiguity and uncertainty

4. Have formalized processes and guidelines 4. Lack formal structures and standardized methods

5. Decision-making guided by set protocols 5. Decision-making requires judgment and intuition

6. Examples include manufacturing processes 6. Examples include new product development

7. Easier to plan and allocate resources 7. Resource allocation can be more challenging

8. May involve repetitive tasks 8. Tend to involve novel and unique challenges

9. Efficiency and optimization are emphasized 9. Innovation and creativity are crucial

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Q13 Give difference between Single stage & Multistage competition

Single Stage Competition Multistage Competition

1. Involves a single strategic move or initiative 1. Comprises multiple strategic moves or initiatives

2. Typically focused on short-term goals 2. Emphasizes a series of interconnected actions

3. Decisions and actions have immediate impact 3. Requires a coordinated approach for long-term impact

4. Suited for simple and straightforward challenges 4. Suited for complex challenges with multiple facets

5. Limited scope for adjusting strategies mid-way 5. Allows for adjustments and adaptations between stages

6. Less resource-intensive 6. Requires effective resource allocation for each stage

7. Outcome may have immediate consequences 7. Outcome unfolds gradually over multiple stages
8. Faster execution and implementation 8. Execution may take longer due to multiple stages
9. Less need for continuous monitoring and evaluation 9. Requires ongoing evaluation and adjustments
10. Common in long-term strategic planning and
10. Typically seen in short-term projects and initiatives
execution

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.

Copyright © 2023 Jayanti Rajdevendra Pande.

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