Business level strategy vs Corporate level strategy: Key differences

In the complex world of business management, strategy plays a crucial role in determining a company’s direction and success. Two fundamental types of strategies that often confuse many are business level strategy and corporate level strategy. Each serves a distinct purpose and operates at different levels of the organization.

This article delves into the nuances between business level strategy vs corporate level strategy, providing clarity on their roles, objectives, and impacts on a company’s overall performance.

Introduction to strategic management

Strategic management involves the formulation and implementation of major goals and initiatives, taken by a company’s top management on behalf of owners. This process is based on consideration of resources and an assessment of the internal and external environments in which the organization competes. Within this broad field, business level strategy and corporate level strategy play specific and vital roles.

What is corporate level strategy?

Corporate level strategy is concerned with the overall scope of an organization and how value will be added to the different parts (business units) of the organization. This type of strategy is typically decided upon by top-level executives and board members.

Objectives of corporate level strategy

The main objective of corporate level strategy is to define the business areas in which a company will operate and how it will manage these operations. It involves decisions related to acquisitions, mergers, divestitures, and new market entries. This level of strategy helps in managing the portfolio of businesses ensuring that the entire enterprise is more than the sum of its parts.

Examples of corporate level strategy

1. Diversification: Entering new markets with new products.
2. Acquisitions: Purchasing other companies to enhance capabilities or gain market share.
3. Divestitures: Selling off parts of the company that no longer align with the overall strategic vision.

What is business level strategy?

Business level strategy focuses on how to compete successfully in particular markets. It involves strategic decisions about product development, customer service, product pricing, and market segmentation. Managers at the business unit level are typically responsible for developing and implementing this type of strategy.

Objectives of business level strategy

The primary aim of business level strategy is to enable a business to achieve competitive advantage in its market. This could be through offering the lowest prices, differentiating the product in the market, or focusing on a specific market niche.

Examples of business level strategy

1. Cost leadership: Aiming to become the lowest cost producer in the industry.
2. Differentiation: Offering unique features that distinguish products from competitors.
3. Focus strategy: Concentrating on a specific regional market or buyer group.

Key differences between business level strategy and corporate level strategy

While both strategies aim to enhance business performance, they differ in scope and implementation:

• Scope of operations: Corporate level strategy addresses the entire organization, making high-level decisions that affect all business units. Business level strategy, however, is concerned with individual business units and specific market competitions.
• Decision-makers: Corporate level strategy is crafted by top executives and board members, while business level strategy is often developed by managers and leaders within specific business units.
• Goal orientation: The goals of corporate level strategy are often related to the organization’s overall scope and resources, aiming at long-term growth and sustainability. Business level strategy targets achieving a competitive position in the market.

Integration of business and corporate level strategies

Successful organizations know that integration between business level and corporate level strategies is key to overall success. Corporate strategy sets the direction for the company and allocates resources accordingly, while business strategies use these resources to compete effectively in marketplaces.

Alignment between these strategies ensures that the organization moves cohesively towards its long-term goals.

Conclusion: Business level strategy vs corporate level strategy

Understanding the differences between business level strategy and corporate level strategy is crucial for any organization aiming to thrive in competitive environments. While each has its distinct focus and implementation, the synergy between them drives the company’s overall success.

Effective strategic management incorporates both perspectives, ensuring that decisions are not only visionary at the corporate level but also practically competitive at the business level.

As markets continue to evolve, so too must the strategies that govern business movements and growth, blending overarching goals with ground-level tactics for a comprehensive approach to success.