How Do Companies Craft Strategic Business Unit Level Strategies Based On Customer Needs?

1. How do companies craft strategic business unit level strategies based on customer needs?
Companies craft strategic business unit level strategies based on customer needs by gaining a
competitive advantage through exploiting the core competencies in specific individual
product/service markets in order to create value to customers. In the same manner, customers
considered to be the basis for crafting a business unit level strategies mainly because their needs
and expectations determine the product configuration. With this, product configuration
determines the competencies that a firm should possess to deliver the product expected by the
customers, specifically the price, place and time of delivery. It is important for a company to
possess these competencies for the success of the implementation of the strategies.
2. What is low-cost strategy? How does value chain analysis help to achieve a low-cost
strategy?
Low-cost strategy is a type of strategy where gaining a competitive advantage requires a lower
overall cost than the competitors. This approach marked a significant impact in markets where
most of the customers are price sensitive. This will also help the firm initially to gain the market
share from the competitors and later to maximize the profits. Achieving a low-cost strategy, it is
important to understand first on how activities within the organization create value for
customers. One way to do this is to conduct a value chain analysis. It is a comprehensive
technique for analyzing an organization's source of competitive advantage as it definitely help to
achieve this strategy through value creation where firms intending to craft cost leadership
strategy should create value to the product through various measures of cost saving.
3. What are the advantages and risks of low-cost strategy?

As mentioned in the textbook, low-cost strategy has its own advantages and risks. For its
advantage, it includes the following:
a. This strategy has a strong position to compete with the rival competitors.
b. This strategy has a partial profit margin protection from powerful customers.
c. This strategy is more insulated than competitors from powerful suppliers.
d. This strategy can prevent the entrance of potential competitors into the market through price-
cuts.
e. This strategy is better positioned than high-cost rivals against the substitute products.
On the other hand, possible risks may occur and these are as follows:
a. Competitors' technological developments may result in cost reductions for them, multiplying
their advantage. The low-cost producer's previous investments and hard-won gains will be lost.
b. Rival firms may initiate the low-cost methods adopted by the low-cost producer, thus, making
any advantage short lived.
c. It would be very hard to the low-cost producer, to introduce changes in product design,
production process, etc., in order to incorporate the buyers' preferences.
d. The declining buyer is sensitive to price due to increase in buyer's income which leaves the
low-cost producer behind.
4. Discuss the significant production and operation strategies.

Production and operation strategies are indeed beneficial in an organization's everyday routine
and these are used to plan, analyze and implement a cost-effective processes for creating and
distributing the products and services. These include various strategies such as the strategy of
making decisions merely for operations where a firm before starting the
manufacturing/operations makes specific decisions with regard to cost, quality, dependability
and flexibility. Product Design Strategy where it include market driven product design strategies,
technology driven product design strategies, and inter-functional driven product design
strategies. Process Strategies where it includes line process, intermittent process and project
process. Technology strategy, Plant Location Strategy, Facilities Strategy, Chase Strategy and
Level Strategy in Aggregate Planning, Inventory Strategies and Quality Strategy also takes a
significant part in production and operation strategies.
5. What are the marketing strategies? How do they influence business unit level strategies?
A marketing strategy is a consistent, appropriate and feasible set of principles through which a
particular firm hopes to attain its long-run customer and profit objectives in a particular
competitive market. Basically, marketing strategies are the tools for achieving the goals of the
enterprise. It consist of (1) product strategy (2) price strategy (3) promotion strategy (4)
distribution strategy. These strategies influence business unit level strategies in a sense that these
two strategies shows a significant relationship with each other given that marketing strategies are
primarily based on business unit level strategies like production strategies. For instance, a
manager is participating in corporate and business unit level strategy and formulating and
developing marketing strategies that follow business unit strategies.
6. Discuss the human resource management strategies. Why do these strategies influence
the organizational strategies?
Human resource management strategies are used specifically to the practice of human resources
that addresses business challenges and makes a direct contribution to long-term objectives. The
primary principle of this strategy is to improve business performance and uphold a culture that
inspires innovation and works unremittingly to gain a competitive advantage. It has a wider
reach throughout the organization. These strategies influence the organizational strategies
because human resource management strategies penetrate other functional strategies, bringing
them all together to form corporate and business unit strategies.
7. Discuss the significance of superior customer service.

Superior customer service provides customer's current and prospective needs, design and develop
products based on such needs. Understanding that a company must go above and beyond
customers expectations during each interaction and it helps the company particularly during
recession by enhancing customer retention. In addition, superior customer service and
customization diverts the customer's mind from low price requirement, infrequent purchases,
postponement of purchase, shift to low priced products to the product of the company that
renders superior customer service during the boom and recessionary periods.
8. Discuss the framework for evaluating strategic alternatives.

The framework for evaluating strategic alternatives shows some steps involving the process of
strategic evaluation. The first step is a strategic analysis in order to gain a clear understanding of
the circumstances affecting the organization's strategic situation. The second step is to produce a
range of strategic options. The third step is to develop a basis of comparison. This may be
available from the strategic analysis or may need to be specially developed. Next, It is helpful to
establish the underlying rationale for each strategy by explaining why the strategy might
succeed. At this stage, the large number of strategic alternatives may be narrowed down, before a
more detailed analysis is undertaken. Strategic alternatives may be ranked, based on their relative
merits and demerits. Suitability of each alternative should be tested. There are a number of
techniques for testing. The specific choice of technique will depend upon the circumstances. The
next stage is assessing the feasibility and acceptability of strategies which appear reasonably
suitable based on the analysis. The choice of the technique should be based on the circumstances
of the company. And finally, the company itself will need some system for selecting future
strategies as a result of these evaluations.
9. What type of criteria do you adopt to evaluate strategic alternatives?

Personally, I would like to adopt the Criteria of Suitability to evaluate strategic alternatives. In
order to assess the suitability of a strategy, such questions serves as a guide: "Does the strategy
use the company's strength effectively?", "Does the strategy overcome the difficulties which
were identified in the analysis?" and "Does the strategy fall in line with the goals the business
wants to achieve?" These criteria attempt to measure the extent to which the proposed strategies
fit the situation identified in the strategic analysis. The situation should indicate the list of the
important opportunities and the threats that the firm faces and the particular strengths and
weaknesses of the firm. The evaluation of suitability is also called the criteria of consistency.
Generally, I believe that using this criteria would be a great help to have a thorough evaluation as
it measure the extent to which the proposed strategies it the situation identified in the strategic
analysis.
10. What is external evaluation matrix?

Give its significance. External Factor Evaluation matrix summarizes an organization's
opportunities provided and threats posed by the external environmental factors which include
economic, political, technological, social, cultural, governmental, competitors and international.
This technique plays a pivotal role as it answers four important questions, (1) What are the
company's environmental opportunities and threats? (2) What is the relative significance of each
opportunity and threat to the company's overall performance? (3) Does each factor represent a
major threat, a minor threat, a minor opportunity or a major opportunity? The weightages to the
factors may be assigned as follows: (a) Major Threat -2 (b) Minor Threat -1 (c) Minor
opportunity +1 (d) Major opportunity +2. And (4) What is the company's total weighted score
resulting from the External Factor Evaluation Matrix? Is the score above or below the average of
+0.10? If it is above average, it means that company has a strong external strategic position.

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1. How do companies craft strategic business unit level strategies based on customer needs?

3. What are the advantages and risks of low-cost strategy?

4. Discuss the significant production and operation strategies.

7. Discuss the significance of superior customer service.

8. Discuss the framework for evaluating strategic alternatives.

9. What type of criteria do you adopt to evaluate strategic alternatives?

10. What is external evaluation matrix?

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