Business Level Strategy and Value Chain Activities

Business Level Strategy and Value Chain Activities

Business-level strategy refers to a company’s actions to create a competitive advantage in its particular industry or market. On the other hand, value chain activities refer to a company’s internal processes to design, produce, and deliver its products or services. Nonetheless, a company’s business-level strategy should align with its value chain activities to create and deliver customer value.

Disruptive business models can alter a value chain by introducing new ways of creating and delivering value to customers (Hitt, Ireland, & Hoskisson, 2019). For example, a company that uses a disruptive business model may use digital technology to lower costs and increase efficiency in its value chain activities, or it may use a new distribution model to reach customers differently. This can lead to a rethinking and reorganizing of the value chain, as well as a change in the industry’s competitive dynamics. A disruptive business model’s implications for the business can include increased competitiveness, market share, and profitability (Hitt, Ireland, & Hoskisson, 2019). The company may also experience a significant increase in customer demand as the new business model addresses a previously unmet need or solves a problem in a new and innovative way.

For the company’s competitors, the implications can be significant as well. Disruptive business models can shake up the industry and create new market opportunities for companies that can adapt and respond quickly (Bogers et al., 2019). On the other hand, established players may need help to compete with the new, more efficient, and cost-effective business model and may be forced to re-evaluate their strategies (Bogers et al., 2019). Some companies may need help adapting and risk losing market share or even going out of business. Finally, introducing a disruptive business model can also lead to new entry barriers for new competitors, as the new business model can create economies of scale and network effects that are hard to replicate.

References

Bogers, M., Chesbrough, H., Heaton, S., & Teece, D. J. (2019). Strategic management of open innovation: A dynamic capabilities perspective. California Management Review, 62(1), 77–94.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2019). Strategic Management: Concepts and Cases: Competitiveness and Globalization. Cengage Learning.

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Business Level Strategy and Value Chain Activities

Describe the relationship between business-level strategy and value chain activities. How do disruptive business models alter a value chain? What are the implications for the business and for its competitors?