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Chapter 3

BUSI 4220U Chapter 3: BUSI4220U - Chapter 3

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BUSI 4220U
Salma Karray

Strategic challenges addressed in chapter 3 All three levels of strategy within the company have usually been characterized by good internal and external consistency, or strategic fit Strategic decisions at the businessunit level The components of a firm engaged in multiple industries or businesses are typically called strategic business units (SBUs) The managers in each SBU must then make recommendations about o The units objectives o The scope of its target customers and offerings o Which broad competitive strategy to pursue to build a competitive advantage in its productmarkets o How resources should be allocated across its productmarket entries and functional departments How should strategic business units be designed? o A homogeneous set of markets to serve with a limited number of related technologies o A unique set of productmarkets, in the sense that no other SBU within the firm competes for the same customers with similar products o Control over those factors necessary for successful performance, such as production, RD and engineering, marketing, and distribution o Responsibility for their own profitability o The three dimensions that define the scope and mission of the entire corporation also define individual SBUs Technical compatibility, particularly with respect to product technologies and operational requirements, such as the use of similar production facilities and engineering skills Similarity in the customer needs or the product benefits sought by customers in the target markets Similarity in the personal characteristics or behavior patterns of customers in the target markets o When designing SBUs, the choice is often between technicaloperational compatibility and customer homogeneity Businessunit objectives Allocating resources within the business unit How do businesses compete? Generic businesslevel competitive strategies
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