Strategic Management

CHAPTER 6

Formulating Business Unit Strategy

Introduction

Business unit strategy involves creating a profitable competitive position for a business within a specific industry or market segment. Sometimes called competitive strategy, its principal focus is on how a firm (or profit center) should compete in a given competitive setting. In contrast, an overarching corporate strategy is concerned with the identification of market arenas where a corporation can compete successfully and how, as a parent company, it can add value to its strategic business units (SBUs).

Deciding how to compete in a specific market is a complex issue for a business. Optimal strategies depend on many factors, including the nature of the industry; the company’s mission, ...