This chapter examined how managers in businesses that have a single or dominant product or service evaluate and choose their company's strategy. Two critical areas deserve their attention: first, their business's value chain; second, the appropriateness of 12 different grand strategies based on matching environmental factors with internal capabilities.
Managers in single-product-line business units examine their business's value chain to identify existing or potential activities around which they can create sustainable competitive advantages. As managers scrutinize their value chain activities, they are looking for three sources of competitive advantage: low cost, differentiation, and rapid response capabilities. They also examine whether focusing on a narrow market niche provides a more effective, sustainable way to build or leverage these three sources of competitive advantage.
Managers in single or dominant product/service businesses face two interrelated issues. First, they must choose which grand strategies make best use of their competitive advantages. Second, they must ultimately decide whether to diversify their business activity. Twelve grand strategies were identified in this chapter along with three frameworks that aid managers in choosing which grand strategies should work best and when diversification or integration should be the best strategy for the business. The next chapter expands the coverage of diversification to look at how multibusiness companies evaluate continued diversification and how they construct corporate strategy.
