Strategic Planning Kit For Dummies®, 2nd Edition

Business Unit Level Strategies: Choosing Your Leading Strategic Focus

It's time to take out your big strategy guns and kick it up a notch. 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. I explain each strategy in greater detail in the next section.

These strategies are often called generic because they're not firm or industry dependent. I call them 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.

Figure 11-3 shows the flow of the business unit level strategy process. In the following sections, I provide an overview of the three business unit level strategies and guide you through the steps to picking one ...