Business Unit Level Strategies: Choosing Your Leading Strategic Focus
One purpose of strategic planning is to increase your value to your customers or stakeholders. You need to create something better or different than your competitors. You do this by leveraging your existing strengths — or developing new ones — in the following three ways:
Using operational excellence to provide lowest total cost
Using continued innovation to provide product or service leadership
Providing complete customer intimacy by knowing their needs and wants
Strengths usually fall into two broad categories: cost advantage and differentiation. When you apply these strengths to a market that’s either large and varied or small and homogeneous in its needs, three basic strategies result, as indicated by italics in the preceding list.
These strategies are often called generic because they’re not firm or industry dependent. They’re also sometimes referred to as business unit level strategies because they’re applied at the business unit level. By consistently executing a business unit wide strategy, or a strategy that consistently guides how you create value, you can provide a product or service that’s better than your competition. The figure shows the flow of the business unit level strategy process.