There are generally 3 (sometimes broken into 4) Types of Business Strategies:
- Organizational (Corporate) Strategy
- Business (Competitive) Strategy
- Functional Strategy
- Operating Strategy
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A corporate-level strategy, often referred to an an organizational-level strategy, focuses on vision, mission, values, or purpose of the organization.
It often relates to the company’s core value proposition and objectives that it hopes to achieve in doing so.
It may also regard what the company stands for and how it will be perceived by stakeholders and third parties.
Organizational Strategies are generally broken down into:
A competitive strategy, often referred to as a business-level strategy, focuses on how a business unit will compete against competitors within the market.
Implementing a business unit’s competitive strategy should further the organization-level strategy.
The primary understanding of competitive strategies comes from Michael Porter’s Generic Strategies, which include:
- Cost-Based Strategy,
- Differentiation Strategy, and
- Focus (Niche) Strategy.
The objective of competitive strategy is to create a sustainable competitive advantage.
Another influential source on competitive advantage is the Resource-Base View (RBV) of the firm, which focuses on the effective use of firm resources to create competitive advantage.
Porter’s Value Chain, and the concept of a value chain in general, which quantifies activities along the value delivery process. This provides and understanding or where competitive strategies can be effectuated.
A functional strategy concerns how a functional division of a company will achieve its objectives. Carrying out a functional strategy is in support of a business unit’s competitive strategy through maximizing resource productivity. It focuses on developing competence in pursuit of a competitive advantage. Major functional areas include marketing, accounting, finance, operations), Research and Development, and Human Resources.
Three factors characterize the formulation of functional-level strategies:
- Short-term nature of the objectives,
- How specific are the objectives, and
- Extent of involvement of managers.
The functional strategy will revolve around key individuals in the functional area and focus on key operational aspects in the value chain, such as productivity, pricing, logistics, cost-effectiveness, efficiency, product design, product branding and image, product-life cycle, etc.
While often included within a functional strategy, an operating strategy is concerned with how the component parts (operating divisions) of an organization deliver effectively the corporate, business and functional -level strategies in terms of resources, processes and people. They are at departmental level and set periodic short-term targets for accomplishment.
Related Topics
FAQs
Business Level Strategy: Competing in Defined Territories
Three common archetypes of business level strategy include Cost Leadership (striving to become the lowest-cost producer), Differentiation (offering unique or high-quality products/services), and Focus (narrowing the scope to target a specific niche market).
What are the types of strategies explain it in brief? ›
Corporate strategy is the big plan for the whole company, deciding what industries to be in. Business strategy focuses on specific areas like products or markets. Functional strategy is about detailed actions of different departments, like marketing or production. Each strategy plays a role in achieving goals.
What are the 5 categories of business strategies? ›
Summary : There are only five business strategies: cost, quality, distribution, technology, and intellectual property (IP). All business strategies break down into these five, or some combination of them. As a general principle, focusing your organization on one is the easiest to execute.
What are the basic business strategies? ›
SWOT (strengths, weaknesses, opportunities and threats)
For any business, understanding its strengths, weaknesses, opportunities and threats is critical. This is a core part of any business strategy, and ensures that humility, and self-awareness are present.
What are the four key business strategies? ›
Four generic business-level strategies emerge from these decisions: (1) cost leadership, (2) differentiation, (3) focused cost leadership, and (4) focused differentiation. In rare cases, firms are able to offer both low prices and unique features that customers find desirable.
What are the three levels of strategy what business are we in? ›
The three levels of strategy are:
- Corporate level strategy: This level answers the foundational question of what you want to achieve. ...
- Business unit level strategy: This level focuses on how you're going to compete. ...
- Market level strategy: This strategy level focuses on how you're going to grow.
Corporate strategy focuses on the organization as a whole, while business unit strategy focuses on an individual business unit or market. Finally, team strategy identifies how a team will help the organization to meet its overall goals and objectives.
What are the three key strategies? ›
Within the domain of well-defined strategy, there are three uniquely different and crucial strategy types:
- Business strategy.
- Operational strategy.
- Transformational strategy.
4 key strategy types
- Business strategy. A business strategy typically defines how a company intends to compete in the market. ...
- Operational strategy. Operational strategies focus on a company's employees and management team. ...
- Transformational strategy. ...
- Functional strategy.
The four Ps — product, price, place, and promotion — are key elements of marketing a product or service. These elements are considered part of a “marketing mix,” a combination of factors a company controls when creating a marketing strategy.
They include:
- Vision and business objectives. A business strategy is intended to help you reach your business objectives. ...
- Core values. ...
- SWOT analysis. ...
- Tactics. ...
- Resource allocation plan. ...
- Measurement.
The five types of strategic management enumerated from most simplistic to most complex are linear, adaptive, interpretive, expressive, and transcendent. These five types of strategic management represent a continuum of organizational focus and action.
What is the best business strategy of all? ›
“A satisfied customer is the best business strategy of all.” -Michael LeBoeuf. It should come as no surprise when I tell you that without satisfied, loyal customers you will never have a successful business.
How to select a business strategy? ›
Developing a business strategy in 10 steps
- Develop a true vision. ...
- Define competitive advantage. ...
- Define your targets. ...
- Focus on systematic growth. ...
- Make fact-based decisions. ...
- Long-term strategic business plan. ...
- Flexible strategy development. ...
- Be strategically inclusive.
These five elements of strategy include Arenas, Differentiators, Vehicles, Staging, and Economic Logic. This model was developed by strategy researchers Donald Hambrick and James Fredrickson. To achieve key objectives, every business must assemble a series of strategies.
What are business level business strategies? ›
Business level strategy is a sum of the strategic planning and implementation activities that set and steer the direction of an individual business unit. These activities will generally include how to gain a competitive advantage and create customer value in the specific market the business unit operates in.
What is a level business strategy? ›
"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".
What is a Level 2 business level strategy? ›
Strategy Level 2: The Business Unit Level
Having a strategy at the business unit level allows you to weigh the costs and benefits of each business unit and to decide where you should spend your resources.
What is a business level strategy quizlet? ›
A business level strategy ... is an integrated and coordinated set of commitments and actions designed to provide value to customers, and gain a competitive advantage by exploiting core competencies in specific, individual product markets.
