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Five Types of Business Level Strategy

To make a successful business you could follow some steps and use the definite business strategy that should be matching to your business activity. So you may want to know types of business strategy and the mechanism of each type. Here, we will discuss five types of them.

Types of Business Level Strategy

Cost Leadership

It depends on offering the best price for products. putting a significant factor price for the product is a global trend this allows keeping costs lower than most. The cost leadership strategy considers the cost to make the goods, transport and deliver them to customers. it can include:

  • Building state of efficient facilities.
  • Maintain control over production and costs.
  • Minimize the cost of sales and service.

There are many advantages of cost leadership :

  • It provides better profits for the team and organization.
  • It can increase a team’s market share.
  • It improves the sustainability of the business.
  • It creates more capital that can be used for growth.
  •  It reduces competition from the marketplace.

And then we will discuss the disadvantages of cost leadership:

  • It can cause financial cuts in critical areas that harm the business.
  • It reduces product innovation.
  • It reduces the importance of consumer feedback.
  • It is a technique that is quickly followed by others.
  • It encourages a lower quality product to be offered to the market. 

Differentiation

Companies want to brand themselves and make a unique feature to their products. Identify the features and benefits of the product or service that make it worth more money. the product will have a value to reach to the customer with a lower price. it can create value by:

  • Lowering Buyers’ Costs.
  • Raising Buyers’ Performance.
  • Sustainability.

There are many advantages of differentiation:

  • Creates Value.
  • Non-Price Competition.
  • Brand Loyalty.
  • No Perceived Substitute.

And then we will discuss the disadvantages of  differentiation:

  • Too Different or Too Bold.
  • Excludes Some Buyers.

Focused Low Cost

One of the types of business strategy, It is similar to cost leadership. it focused on the price and aim to produce lower price to the market. it is efficient in governmental organizations whish aim to the least cost. it selects a small segment of the market to provide goods and services to. 

There are many advantages of focused low cost:

  • it can potentially leverage to enhance their success.
  • it firms often develop tremendous expertise about the goods and services that they offer.

And then we will discuss the disadvantages of focused low cost:

  • the limited demand available within a niche can cause problems. 
  • damaging attacks may come not only from larger firms but also from smaller ones that adopt an even narrower focus.

Focused Differentiation

Organizations select a small segment of the market to provide goods and services. this means targeting a small group of customers with differentiated products. It finds the added value of the products and services and then targets a small market niche. 

There are many advantages of focused differentiation:

  • it serves the smaller segment better than competitors who have a large number of customers.

And then we will discuss the disadvantages of focused differentiation:

  • Maybe out focused by competitors.
  • The segment may become of interest to the broad market firms.

Integrated Low-Cost/Differentiation Strategy

It combines between low cost and high quality. large companies use this strategy in producing products then executing this strategy requires finding the sweet spot of price and value.

There are many advantages of focused differentiation:

  • Adaptability to environmental changes.
  • Learn new skills and technologies.
  • More effectively leverage core competencies across the business.
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