Chapter 4: Business-Level Strategy 111
the actions taken to achieve them. Information about a host of variables including mar-
kets, customers, technology, worldwide finance, and the changing world economy must
be collected and analyzed to properly form and use strategies. In the final analysis, sound
strategic choices that reduce uncertainty regarding outcomes are the foundation for
building successful strategies.^8
Business-level strategy, this chapter’s focus, indicates the choices the firm has made
about how it intends to compete in individual product markets. Business-level strategy
is an integrated and coordinated set of commitments and actions the firm uses to gain a
competitive advantage by exploiting core competencies in specific product markets.^9 The
choices are important because long-term performance is linked to a firm’s strategies.
Given the complexity of successfully competing in the global economy, the choices about
how the firm will compete can be difficult.^10 For example, King Digital Entertainment, a
video game developer, has done well recently through its “Candy Crush” franchise. The
simple concepts of this game series has made it popular among players not typically
drawn to traditional video games. It has focused on casual game players rather than on a
more dedicated base of gamers. Electronic Arts, Inc. (EA) has focused on the more ded-
icated game consumers and has developed franchises such as “Call of Duty” and “Madden
NFL” and not only has developed this digitally but also into mobile devices. However,
Zynga focused on the casual game market and has faced severe declines of its Facebook-
based games “FarmVille” and “CityVille.” These games also focused on the casual market,
and these consumers, as Zynga has discovered, can be fickle. As such, King Digital
Entertainment has been seeking to expand beyond the casual game segment for mobile
devices and create stronger franchises across many platforms. However, it may be difficult
to break into and maintain the loyalty of more dedicated customers as EA has done
through its ever more graphic and sophisticated game software.^11
Every firm must develop and implement a business-level strategy. However, some
firms may not use all the strategies—corporate-level, merger and acquisition, interna-
tional, and cooperative—we examine in Chapters 6 through 9. A firm competing in a
single-product market in a single geographic location does not need a corporate-level
strategy regarding product diversity or an international strategy to deal with geographic
diversity. In contrast, a diversified firm will use one of the corporate-level strategies as
well as a separate business-level strategy for each product market in which it competes.
Every firm—ranging from the local dry cleaner to the multinational corporation—must
develop and use at least one business-level strategy. Thus business-level strategy is the
core strategy—the strategy that the firm forms to describe how it intends to compete in
a product market.^12
We discuss several topics to examine business-level strategies. Because customers
are the foundation of successful business-level strategies and should never be taken for
granted,^13 we present information about customers that is relevant to business-level strat-
egies. In terms of customers, when selecting a business-level strategy the firm determines
- who will be served,
- what needs those target customers have that it will satisfy, and
- how those needs will be satisfied.
Selecting customers and deciding which of their needs the firm will try to satisfy,
as well as how it will do so, are challenging tasks. Global competition has created many
attractive options for customers, thus making it difficult to determine the strategy to
best serve them.^14 Effective global competitors have become adept at identifying the
needs of customers in different cultures and geographic regions as well as learning how
to quickly and successfully adapt the functionality of a firm’s good or service to meet
those needs.
A business-level
strategy is an integrated
and coordinated set of
commitments and actions
the firm uses to gain a
competitive advantage by
exploiting core competencies
in specific product markets.