Corporate Strategy vs Business Strategy
Difference between corporate strategy and business strategy is that the corporate strategy is concerned with the overall purpose of the organization while business strategy is concerned about a particular business unit and the way it should be planned to be more competitive in the market. These are the levels of strategy in a business organization. This article presents you a brief analysis of the two concepts, corporate strategy and business strategy and highlights the difference between corporate strategy and business strategy.
What is Corporate Strategy?
Corporate strategy provides the guidelines for the businesses to achieve their long term objectives. When developing a corporate strategy, it is essential to determine the purpose and the scope of the organizational activities. Then about the nature of its business by considering the environment in which it operates, its marketplace position and the level of competition it faces.
Corporate strategy is created based on the vision of the organization. This is the most important level of strategy since it is heavily influenced by the investors in the business activities and acts to guide strategic decision-making throughout the business. Corporate strategy is verbally expressed in the company mission statement. Usually, in every organization the top management is responsible for establishing the corporate strategy.
What is Business Strategy?
A strategic business unit can consist of a product line, division, or other profit centers that can be planned separately from the other business units of the company. At this level, there are less strategic issues relating to the coordination of operating units and about developing and achieving a sustainable competitive advantage for the manufactured goods and services.
The strategy formulation phase at the business level deals with:
• Positioning of the business against rivals.
• Strategy need to be changed according to the expected changes in the demand.
• Influence the nature of competition through vertical integration and political actions such as lobbying.
According to Michael Porter, there are three generic strategies; they are cost leadership, differentiation, and focus that can be implemented at the business unit level in order to create a competitive advantage for the company.
Business-level strategies are extremely useful for solving practical problems. These strategies are used by line managers to find solutions to problems that arise in day to day operations such as reduction in sales revenue or reduction in production efficiency.
What is the difference between Corporate Strategy and Business Strategy?
• Business-level strategies deal with a particular business unit while corporate strategies deal with the entire company, which may consist of several business units.
• Business-level strategies deal with specific issues, such as determining the price of the products, increasing sales or introducing a new product.
• Corporate strategies tend to be very broad and are focused on gaining a competitive advantage in the industry.
• In most cases, corporate and business-level strategies tend to operate independent of each other
• Corporate strategies will often affect business-level strategies. This is mainly done by allocating specific resources to particular business units.
• Business-level strategies are very useful for solving practical problems while corporate strategies are useful for developing long-term solutions for problems.
Further Reading:
1. Difference Between Action Plan and Strategy
2. Difference Between Strategic and Operational Planning
3. Difference Between Strategic and Financial Planning