Business Level and Corporate Level Strategies

Business Level and Corporate Level Strategies

BUS 499- Business Administration Capstone

Introduction

In this assignment, the Business and Corporate Level Strategies of the public corporation that was chosen in assignment one will be analyzed to identify the most important strategy of each category for long-term success. Fiat – Chrysler, or FCA, is the public corporation that was selected. In addition to the Strategies being analyzed, the competitive environment will also be scrutinized. To make a suitable and comprehensive strategy on either the business or corporate level, managers cannot depend on just instinct and good guesses. Therefore, corporations will implement a business level, corporate level or both strategies to succeed in business. Business strategy is concerned with the strategic decisions concerning the selection of product, competitive advantage, customer gratification, etc. However, corporate strategy is concerned with the total objective and scope of business to satisfy stakeholder’s expectations (2).

Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice

A Business Level Strategy is an combined and corresponding set of obligations and activities a firm practices to gain a competitive advantage by manipulating core competencies in specific product markets (3). There are five business level strategies that companies will chose from. They include: Cost Leadership, Differentiation, Focused-Cost Leadership, Focused-Differentiation and Integrated Cost Leadership/Differentiation (3). Cost Leadership entails creating a competitive gain by having the lowermost cost of operation in the industry. Cost leadership is commonly driven by company aptitude, size, scale, scope and collective knowledge. The Differentiation business strategy is a method that a business takes to develop a unique products and/or services that customers will find better than or in another way distinctive from products or services offered by competitors. Differentiation strategy is a way for a business to distinguish itself from the competition (1).

A focused differentiation strategy involves presenting exclusive features that accomplish the demands of a narrow market. Businesses using a focused differentiation strategy focus their efforts on a specific sales channel, such as selling over the Internet only (1). Integrated Cost Leadership/Differentiation is a business level strategy where differentiated products are offered in market at low cost. Differentiated product signifies the unique characteristics the customer values and cost leadership signifies that the product is offered at the lower-cost, i.e., at a margin just above average costs involves in engaging in primary value chain activities and support functions that allow a firm to simultaneously pursue low cost and differentiation(1).

After analyzing the different business strategies, the one most important one to implement for long-term success would be the Integrated Cost Leadership/Differentiation strategy. This strategy maximizes FCA’s strengths. FCA obtains strengths such as global mindset, brand diversity, research and development, capital stakeholders, distribution and manufacturing as well as highly skilled engineers, managers and employees. Their weakness will also be addressed and improved when using this strategy (3).

Analyze the corporate-level strategies for the corporation you chose to determine the corporate-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice.

A Corporate Level Strategy specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets. The primary reason a firm uses a corporate level strategy is to become more diversified is to create additional value. provides to customers for the purpose of creating value for them (3) Corporate level strategies are: Related Linked Diversification, Related Constrained and Diversification and Unrelated Diversification (3).

Related linked diversification and related constrained diversification both create value. These two strategies with create value thru operational relatedness by sharing activities within the internal functions and via corporate relatedness by transferring core competencies which are intangible resources (3). The related diversification corporate level strategy helps businesses build upon or extend its resources and capabilities to build a competitive advantage by caring value for customers. Companies do not turn to either corporate relatedness or operational relatedness when enforcing the unrelated diversification corporate strategy. Unrelated diversification strategy can make value in two different financial economies which are efficient internal capital market allocation and restructuring of assets.

The corporate level strategy best for FCA to utilize for long-term success is the related linked diversification corporate strategy. This strategy will help with FCA overall success by creating value in at least two ways. One is the fact that the expense of developing core competence has already occurred in one of the firm’s businesses and thus eliminates the need to allocate resources for development. Also, FCA intangible resources are hard for competitors to understand or imitate.

Analyze the competitive environment to determine the corporation’s most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term

Most significant competitor to FCA is the Ford Motor Company. Since 1903, Ford Motor Company has put the world on wheels. From the moving assembly line and the $5 workday, to soy foam seats and aluminum truck bodies, Ford has a long heritage of progress. Learn more about the automobiles, innovations and manufacturing that have made the blue oval known around the world (5). Comparing strategies, it seems that FCA and Ford utilizes the same strategy approach. However, FCA is more likely to be successful in the long term because FCA has more strategic alliances, strong intangible assets and greater global presence.

Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets.

The choice of FCA being the corporation that is successful in the long-term would not differ in slow-cycle and/or fast-cycle market. In slow-cycle markets, businesses will use strategic alliances to enter restricted markets or to establish franchises in new markets. In these slow-cycle markets, the firm’s competitive advantage is shielded from imitation for long periods of time, where imitation is costly. Fast-cycle markets, the organization’s capabilities that contribute to competitive advantages are not shielded from imitation and imitation is often rapid and inexpensive. Fast-cycle markets are un-stable, complex, and hyper-competitive. The conditions in a fast-cycle market preclude establishing long-lasting competitive advantage forcing companies to always seek sources of new competitive advantage while creating value by using current ones. FCA has the capacity to thrive within the slow and fast-cycle markets due to their competitive advantage.

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