Business Level Strategy Vs Corporate Level Strategy Example: Understanding The Key Differences

Why Business Level Strategy Matters

Business level strategy refers to the actions and decisions a company takes to gain a competitive advantage in a specific market or industry. It focuses on how the organization can differentiate itself from its competitors and create value for its customers. A business level strategy is crucial as it determines the direction and scope of the company’s operations, helping it achieve sustainable growth and profitability.

Example of Business Level Strategy

Let’s take the example of a smartphone manufacturer. Their business level strategy might be to differentiate themselves by offering cutting-edge technology, sleek designs, and innovative features. By focusing on R&D and product development, they aim to attract tech-savvy customers who value the latest advancements in mobile technology. This business level strategy helps the company position itself as a leader in the smartphone market and gain a competitive edge over rivals.

Understanding Corporate Level Strategy

Corporate level strategy, on the other hand, deals with the overall direction and scope of the entire organization. It involves decisions related to diversification, mergers and acquisitions, and resource allocation across different business units or product lines. Corporate level strategy is crucial for the long-term success and growth of the company as it determines how the organization as a whole can create synergies and leverage its resources to gain a competitive advantage.

Example of Corporate Level Strategy

Let’s consider a multinational conglomerate that operates in various industries, including electronics, entertainment, and hospitality. Their corporate level strategy might involve diversification, where they invest in different business sectors to minimize risk and maximize profitability. By leveraging their brand reputation and financial resources, they can enter new markets and benefit from economies of scale. This corporate level strategy helps the conglomerate spread its risks and create a portfolio of businesses that complement each other.

The Key Differences

While business level strategy and corporate level strategy are interconnected, they serve different purposes and operate at different levels within an organization. Here are the key differences between the two:

Focus

Business level strategy focuses on a specific market or industry, whereas corporate level strategy looks at the entire organization and its various business units or divisions. Business level strategy deals with how the company competes in a particular market, while corporate level strategy addresses how the company as a whole can create value and achieve its overall objectives.

Scope

Business level strategy has a narrower scope and is more tactical in nature, focusing on day-to-day operations and competition within a specific market segment. In contrast, corporate level strategy has a broader scope and is more strategic, encompassing the overall direction and diversification of the entire organization.

Decision-Making Authority

Business level strategy decisions are typically made by the managers responsible for a specific business unit or product line. They have the authority and expertise to make decisions regarding pricing, marketing, and product development. Corporate level strategy decisions, on the other hand, are made by top-level executives and the board of directors, who have a holistic view of the organization and its various businesses.

Impact on Performance

Business level strategy directly impacts the performance of a specific business unit or product line. It determines how well the company can compete in a particular market and achieve its financial goals. Corporate level strategy, on the other hand, affects the overall performance and success of the entire organization. It determines how the company can create synergies between its different businesses and allocate resources effectively.

Risk and Reward

Business level strategy involves both risks and rewards that are specific to a particular market or industry. The success or failure of the strategy directly affects the performance and profitability of the business unit. Corporate level strategy, on the other hand, involves risks and rewards that are spread across the entire organization. Diversification and resource allocation decisions can help mitigate risks and maximize overall profitability.

Conclusion

In conclusion, business level strategy and corporate level strategy are both important for the success and growth of an organization. While business level strategy focuses on gaining a competitive advantage in a specific market, corporate level strategy deals with the overall direction and diversification of the entire organization. By understanding and implementing these strategies effectively, companies can position themselves for long-term success and stay ahead of the competition.