Corporate Level Strategy: What It Is Plus 9 Examples
Success in business is not a random occurrence. It’s the result of planning, p...
If you’re looking for a way to bridge the gap between your more general corporate strategy and your hyper-specific functional strategy, create a business level strategy between the two.
What exactly is business level strategy? And how can you use it to achieve the success you’re looking for? The answer to those questions can be found by examining the three types of business strategy side-by-side.
In This Article, We Talk About:
Think of your business as a car or truck. The engine provides the power. The wheels and tires move the vehicle. But if you tried to connect the two systems directly, the car wouldn’t go. To make it all work, you need a third system.
Business strategy is very similar. Here’s how it all fits together.
Corporate level strategy is like the engine in your car. It provides the power — the drive — to get your business where you want it to go.
Leaving the car analogy for a moment, most corporate level strategy is focused on one of three outcomes:
Because there are many ways to reach these general goals, corporate level strategy is, by nature, complex and uncertain, and it’s geared toward the long-term. Unfortunately, that type of strategy doesn’t translate well into specific, actionable items. For that, we need the next stage.
To help you understand business level strategy, let’s pick up the car analogy again.
The engine creates power. But it does so in only one direction. If you were standing by the rear bumper of your car (and you could see through to all the moving parts underneath), you would see a spinning shaft coming out of the engine (we’ll skip the transmission for simplicity’s sake). That shaft would be turning in a clockwise or counterclockwise direction.
But we don’t want to travel left or right, which is where we would go if we hooked the wheels directly to the driveshaft. We want to go forward. For that, we need a differential.
The differential takes the clockwise rotation of the driveshaft and transforms it into forward and backward rotation. That rotation, then, makes the wheels turn in the direction you want.
Business level strategy is like that differential. It translates the drive produced by the corporate level strategy into action (functional level strategy) that moves your business in the right direction.
Business level strategies are more focused than corporate level strategies, but not nearly as focused as functional level strategies. If, for example, your corporate level strategy was to increase market share, your business level strategy might be:
Once you’ve established your business level strategy, you’re ready to start moving toward your goals.
Functional level strategy is where the rubber meets the road, so to speak (like the tires in our car analogy). Functional level strategies are the specific actions and benchmarks assigned to departments (and individuals) that move your business toward the goals created by the corporate level strategy.
So if you set one of your business level strategies to improve the quality of your product (in response to the corporate level strategy of increasing market share), then a specific functional level strategy might be for your R&D department to redesign the product to make it cheaper to produce.
That strategy would then be broken down into smaller jobs and assigned to individuals who would do the actual work.
Business level strategies are put in place to ensure that all departments within your business are working toward the same corporate level strategy. Without this intermediary, it’s very easy for one department to get off track and begin moving in a slightly different direction than the rest of your organization.
Success is all about teamwork at every level of your business — between individuals, teams, departments, managers, and owners. Business level strategies are there to coordinate all these disparate elements and get them working toward the same goal.
When you establish your corporate level strategy, you don’t want your marketing department doing the job of your production department. They likely don’t have the skills necessary to do the job right.
Business level strategies provide direction to each department (and by extension, to each individual). Business level strategies, in large part, determine the specific capabilities and skills that each department will use to achieve its goals.
Let’s say you’ve set your corporate level goal to increase market share. These examples of business level strategy tell you how your business is going to achieve that goal.
In this strategy, your company is trying to beat its competitor’s prices. That translates into:
Once you know your business level strategy (cut costs), you can start looking at your organization with an eye toward decreasing spending.
When you set differentiation as your business level strategy, you’re not concerned with price. Instead, you’re focused on setting your product or service apart from your competitors.
To that end, you may position your company as one with higher standards of quality. That translates to specific goals like improving production and reducing faulty products.
An integrated business level strategy combines the ideas of low cost and differentiation into one common goal. This strategy allows flexibility in both price and added value.
So, for example, you aim for the middle-of-the-road in terms of price but include an added component (higher quality, novel feature) that justifies the higher price.
When you understand business level strategy (and, indeed, all three levels of strategy) you will be able to:
In addition, incorporating business level strategies will give the managers in your business a better understanding of how their work (and the work of their teams) impacts your organization’s goals. And when everyone is pulling together in the same direction, it will be much easier for your business to succeed.
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