establishing investment priorities and steering corporate resources into
the most attractive business units
initiating actions to improve the combined performance of those
business units with which the corporation first became involved
finding ways to improve the synergy between related business units in
order to increase performance
making decisions dealing with diversification.
Business level strategy
Business-level strategy deals with decisions and actions pertaining to each
business unit, the main objective of a business-level strategy being to make
the unit more competitive in its marketplace. This level of strategy addresses
the question, 'How do we compete'?' Although business-level strategy is
guided by 'upstream', corporate-level strategy, business unit management
must craft a strategy that is appropriate for its own operating situation. In the
1980s, Porter (1980, 1985)^22 made a significant contribution to our
understanding of business strategy by formulating a framework that described
three competitive strategies: cost leadership, differentiation and focus.
The low- cost strategy attempts to increase the organization's market share by
having the lowest unit cost and price compared with competitors. The simple
alternative to cost leadership is differentiation strategy. This assumes that
managers distinguish their services and products from those of their
competitors in the same industry by providing distinctive levels of service,
product or high quality such that the customer is prepared to pay a premium
price. With the focus strategy, managers focus on a specific buyer group or
regional market. A market strategy can be narrow or broad, as in the notion of
niche markets being very narrow or focused. This allows the firm to choose
from four generic business-level strategies - low-cost leadership,
differentiation, focused differentiation and focused low-cost leadership in order