Business Strategy As Distinct From Corporate Strategy Is – Strategic alternatives are developed to determine the directions in which the human and material resources of the business will be applied to achieve the greatest possibility of achieving the chosen goals. Strategy is a comprehensive concept, and therefore it is often used in many different ways.
But this distinction creates a big problem when some authors focus on the endpoints (missions, goals, objectives) and the means to achieve them (policies and programs). However, others emphasize only the means rather than the ends in the strategic process.
Business Strategy As Distinct From Corporate Strategy Is
Strategy refers to the determination of an enterprise’s purpose or mission and major long-term goals and the allocation of resources and courses of action necessary to achieve those goals.
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Policies are general statements that guide managers’ thinking when making decisions. They provide a broad framework within which decisions must be made.
However, it refers to the direction in which human and material resources will be used to increase the likelihood of achieving the chosen goals.
The main function of strategies and policies is to coordinate and guide programs. But if any one of them is left alone, it is unlikely to ensure that the organization will achieve its goal.
Strategic planning seems like a simple exercise. It analyzes the current and expected future situation, determines the direction of the company and develops means to achieve the goal.
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In fact, strategic planning is a very complex process that requires a systematic approach to identify and analyze the organization’s external factors and align them with the company’s capabilities.
Strategy includes the ways an organization can achieve performance goals, disrupt competitors, gain competitive advantage, and ensure the organization’s long-term survival.
In a diversified company that has different lines of business under one umbrella, strategy starts at four levels.
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Corporate strategy is developed at a high level by the top management of a diversified company (a diversified company in our country is known as a group of companies such as Alphabet Inc.). Such a strategy describes the overall direction of the company in relation to its various businesses and product lines.
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A corporate strategy, for example, might be for P&G to acquire the major Canadian tissue paper companies to become the undisputed market leader.
Corporate-level strategy is a set of strategic alternatives that an organization chooses from as it manages its operations in multiple industries and multiple markets simultaneously.
It is a business unit level strategy developed by senior unit managers. This strategy emphasizes strengthening the company’s competitive position in the product or service sector.
Business strategy includes all means and methods of competing against competitors and ways of solving various strategic management problems.
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According to Heath and Jones, business strategy consists of the plans of action that strategic managers adopt to gain a competitive advantage over their competitors in the market by using the firm’s resources and specific competencies.
Business strategy is usually formulated in line with corporate strategy. The main focus of business strategy is product development, innovation, integration (vertical, horizontal), market development, diversification, etc.
And competitive advantage comes from strategies that lead to some uniqueness in the market. A winning competitive strategy is based on sustainable competitive advantage.
Business strategy refers to the actions managers take to improve the company’s market position by satisfying customers. Improving market position means taking action against industry competitors.
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Thus, the concept of competitive strategy (as opposed to cooperative strategy) has a competitive orientation. The goal of competitive strategy is to win the hearts of customers by satisfying their needs and ultimately to compete with competitors (or rival companies) and gain competitive advantage.
The success of a competitive strategy depends on the company’s capabilities, strengths, and the capabilities, strengths, and weaknesses of its competitors.
Companies face many strategic issues when doing business. In order to survive in the market, the management must effectively solve all these problems. Business strategy deals with these issues in addition to how to compete.
A business-level strategy is a set of strategic alternatives that an organization chooses while doing business in a particular industry or market.
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So there can be production strategy, marketing strategy, advertising strategy, sales strategy, human resource strategy, inventory strategy, financial strategy, training strategy, etc.
A functional strategy refers to a strategy that emphasizes a particular functional area of an organization. It is designed to achieve certain objectives of a business unit by maximizing the productivity of resources.
For example, the production department of a manufacturing company develops a production strategy as a departmental strategy, or the training department develops a training strategy to provide training to employees.
Proactive strategy refers to the development of specific capabilities that can provide a business unit with a competitive advantage.
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Each business unit or company has its own set of departments, and each department has a functional strategy. A functional strategy is adopted to support the competitive strategy.
For example, a company pursuing a low-cost competitive strategy needs a manufacturing strategy that emphasizes reducing operations costs and a human resources strategy that focuses on highly skilled employees. Keep the number as low as possible.
Other functional strategies such as marketing strategies, advertising strategies, and financial strategies should also be properly developed to support the business-level competitive strategy.
The operational strategy is developed in the operating units of the organization. A company may develop operational strategies for smaller segments within its plant, sales area, or division.
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In general, operational managers/field level managers develop operational strategies to achieve immediate goals. Operations managers in large organizations typically seek help from middle managers to develop operational strategies.
In some companies, managers “develop an operational strategy for each set of annual goals for departments or divisions.
Therefore, when they develop a business-level strategy for each industry or market, they also develop an overall strategy that helps determine the mix of industries and markets that are of interest to the company. August 29, 2020 April 14, 2021 Lars De Bruyne Business Strategy, Corporate Strategy, Functional Strategy, Strategy Hierarchy, Strategy Levels, Strategy Management, Strategy, Strategy Pyramid
Strategy is the foundation of every decision that must be made within an organization. If the strategy is poorly chosen and formulated by top management, it has a great impact on the effectiveness of employees in every department of the organization. ‘What is the strategy?’ But in our previous article we have already tried to define and explain what business strategy means and what is not considered part of strategy. In this article, we’ll break strategy down into three different components, or “strategy levels.” These are three levels: corporate level strategy, business level strategy and functional level strategy. Together, these three levels of strategy can be represented in the so-called “strategy pyramid” (Figure 1). Corporate strategy is different from business strategy and functional strategy. Although corporate-level strategy is at the top of the pyramid, we begin this article by first defining business-level strategy.
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Business-level strategy is what most people are familiar with and is about the question “How do we compete?”, “How do we gain a (sustainable) competitive advantage over our competitors?” Answering these questions first requires a good understanding of the business and its external environment. At this level, we can use internal analysis frameworks such as value chain analysis and the VRIO model and external analysis frameworks such as Porter’s Five Forces and PESTEL Analysis. Once a good strategic analysis is done, top management can move on to strategy formulation using frameworks such as Values Discipline, Blue Ocean Strategy, and Porter’s Generic Strategy. Finally, a business-level strategy aims to achieve competitive advantage by being a unique and hard-to-imitate player in the competitive landscape while offering real value to customers.
Functional-level strategy addresses the question, “How do we support business-level strategy across functional departments such as marketing, HR, manufacturing, and R&D?” These strategies often aim to improve the efficiency of company operations within departments. In these departments, employees often refer to their “marketing strategy,” “human resources strategy,” or “HR strategy.” The goal is to align these strategies with the business strategy as much as possible. For example, if the business strategy aims to offer products to students and young people, the marketing department should target these people as precisely as possible by choosing the right (social) media channels for their marketing campaigns. It must be targeted correctly. Technically, these decisions are very proactive in nature and therefore not part of a strategy. As a result, they are better called strategies than strategies.
However, with corporate-level strategy, management must consider not only how to achieve competitive advantage in each of the businesses in which the company operates, but also which business they should be in first. It’s about choosing the optimal set of businesses and deciding how they should be integrated into a corporate whole, the portfolio. Generally, major investment and distribution decisions are made by top management at this level. Mergers and acquisitions (M&A) are also an important part of corporate strategy. This level of strategy is only necessary when the company is operating.