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Chapter 3
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Components of a firm engaged in multiple
industries or businesses
Independently decide objectives, markets, and
competitive strategies to be pursued
• Should be consistent with the firm’s:
• Mission
• Objectives
• The allocation of resources
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Homogeneous set of markets with limited
number of related technologies
Unique set of product-markets
Control over factors necessary for successful
performance
Responsibility for their own profitability
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Technical compatibility
Similarity in the customer needs
Similarity in the personal characteristics of
customers in the target markets
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Derived from the corporate objective and vary
according to:
• Attractiveness of the industries
• Strength of the competitive positions within those
industries
• Resource allocation decisions by corporate
management
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Firms use:
• Similar economic value
• Value-based planning
• Portfolio analysis tools
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Michael Porter distinguishes three strategies
• Overall cost leadership
• Differentiation
• Focus
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Robert Miles and Charles Snow classify business
units into four strategic types
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Prospectors
Defenders
Analyzers
Reactors
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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Single-business firms
• Distinction between business-level competitive
strategy and marketing strategy tends to blur
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Two strategies blend into one
Entrepreneurial start-ups
• Do not have an established market position to
defend
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Service: Any activity or benefit that is
essentially intangible and that does not result in
the ownership of anything
• Its production may or may not be tied to a physical
product
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Almost all businesses are engaged in service to
some extent
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Changed the way firms compete
Is primarily a communications channel
Makes it easier for firms to:
• Customize their offerings and personalize their
relationships with their
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
External
Factors
Prospector
Analyzer
Industry and
Market
• Industry in
early growth
stage
• Potential
customer
segments
unidentified
• Industry in
late
growth
• Some
potential
segments
may be
undeveloped
Differentiated
Defender
• Industry in
decline stage
• Sales primarily
due to repeat
purchases
Low-Cost
Defender
• Industry in
decline stage
• Sales primary
due to repeat
purchase
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
External
Factors
Prospector
Analyzer
Differentiated
Defender
Technology • Newly
• Basic technology • Basic
emerging
well
technology fully
technology
developed but
developed and
• Applications
still evolving
stable
undeveloped • Product
• Major
modifications
modifications
and
improvements
Low-Cost
Defender
• Basic
technology
fully
developed
and stable
• Major
modifications
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
External
Factors
Competition
Prospector
• Few
established
competitors
• Industry
structure still
emerging
• Single
competitor
holds
commanding
share
Analyzer
Differentiated
Defender
• Large
• Small to
number of
moderate
competitors
number of well• Industry
established
structure still
competitors
evolving
• Industry
• One or more
structure stable
competitors • Maturity of
hold large
markets
shares in
major
segments
Low-Cost
Defender
• Small to
moderate
number of
wellestablished
competitors
• Industry
structure
stable
• Maturity of
markets
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This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
External
Factors
Prospector
Analyzer
Differentiated
Defender
Low-Cost
Defender
Business’s
relative
strengths
• SBU has
strong R&D,
product
engineering
and
marketing
research and
marketing
capabilities
• SBU has good
R&D, product
engineering, and
marketing
research
capabilities
• Low-cost position
or strong sales,
marketing,
distribution
• SBU has no
• SBU has
outstanding
superior
strengths in
sources of
R&D or product
supply
engineering
and/or
• Costs are higher
process
• SBU’s
engineering
outstanding
and
strengths are in
production
process
capabilities
engineering and
quality control
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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Effective implementation of different business
strategies requires different:
• Functional competencies and resources
• Organizational structures
• Decision-making and coordination processes
• Reward systems
• Personnel
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.