1. Developing Business-Level Strategy Options
Lecture 6

2. Learning outcomes
After working through this chapter, you should be able to:
Undertake a SWOT analysis
Generate options on the environment-based view of the organisation
Explore generic strategy options and evaluate their potential
Outline the market options matrix and its contributions to developing industry-based options
Generate options on the RBV view of the organisation
Use the value chain in the development of resource- based options
Develop options based on the distinctive capabilities and core competences of the organisation

3. Introduction SWOT analysis Key elements of organisation’s purpose
Environmental options:
Generic strategies
Market options
Expansion methods
Resource-based options:
Value chain
RBV view
Cost reduction
Identify major options
Choose between options: perspective
Perhaps keep options open: emergent
Lynch, 2006

4. Purpose and the SWOT analysis
INTERNAL
Strengths
Market dominance
Cost strength
Economies of scale
Los-cost reduction
Leadership and management skills
Weaknesses
Share weaknesses
Few core strengths and low on key skills
Old plant with higher costs that competition
Weak finances and poor cash flow
EXTERNAL
Opportunities
New markets and segments
New products
Diversification opportunities
Market growth
Competitor weaknesses
Threats
New market entrants
Increased competition
Increased pressure from customers and suppliers
Substitutes
Lynch, 2006

5. Diagnosing Strategic Capabilities
Internal factors
Strengths (S)
Weaknesses (W)
External factors
Opportunities (O)
SO Strategic Options
Generate options here that use strengths to take advantage of opportunities
WO Strategic Options
Generate options here that take advantage of opportunities by overcoming weaknesses
Threats (T)
ST Strategic Options
Generate options here that use strengths to avoid threats
WT Strategic Options
Generate options here that minimise weaknesses and avoid threats
Johnson, Whittington and Scholes (2006) Exploring strategy, 9th edition, Prentice Hall

6. Environment-based options: generic strategies
Competitive Advantage
Low Cost
Differentiation
Cost leadership
Differentiation
Broad Target
Competitive Scope
Focus
Narrow Target
Lynch, 2006

7. Low-cost leadership
Lynch, 2006

8. Differentiation
Lynch, 2006

9. Focus/niche strategy
Definition: A focus strategy occurs when the organisation focuses on a specific niche in the market place and develops its competitive advantage by offering products especially developed for that niche.

10. The market options matrix
Lynch, 2006

11. The expansion method matrix
Company
Inside
Outside
Internal development
Merger
Acquisition
Joint venture
Alliances
Franchise
Exporting
Overseas office
Overseas manufacture
Multinational operation
Global operation
Turnkey
Licensing
Home country
Geographical location
International
Lynch, 2006

12. Resource-based strategic options: the value chain

13. Resource based strategic options: the RBV view
Lynch, 2006

14. Resource based strategic options: cost reduction