Business strategy deals with products, competition, pricing, customer satisfaction, etc. to gain a foothold in a market, while corporate strategy involves orchestrating the whole business to compete advantageously in the market. A business strategy involves managers and workers, while corporate strategy involves board members or anyone at the highest rank in an organization.
What is a strategy?
A strategy is an execution plan made to achieve goals. In the context of business, a strategy defines the goals of the business and how to achieve those goals. A business operates at three levels – functional, business, and corporate. This strategy is divided at a business and corporate level. A business strategy lays out the plan for building business processes required to achieve goals, while corporate strategy takes market share into account and how to capture it.
Some companies may hire external business strategy professionals to help them with their business strategy, others delegate the task to in-house employees.
Business strategy
Business Strategy incorporates defining business
processes and how to execute them. For instance, a new product launch will
require market opportunities and explore steps to enter the market and
resources required to materialize the effort. A business strategy is formulated
by middle-level management or a business
strategist among the C-suite executives.
Using online advertising and hiring people to execute advertising operations to
drive customer acquisition is a business strategy. This strategy requires
setting up a robust process to acquire customers. Across individual business
functions – marketing, operations, finance it takes several forms.
Corporate strategy
Corporate strategy, on the other hand, involves deciding areas in which a business can enter. Further, it contemplates how the business can benefit subsidiaries. Finally, how being in one business will help with other businesses. A corporate strategy addresses these questions.
Mergers& acquisitions are a formidable corporate strategy for growth. J P Morgan & Chases has acquired several banks in the areas that it didn’t serve to accelerate its growth. Google harbors the will to surpass Amazon in the cloud platform. As part of the corporate strategy, mergers and acquisitions is good to approach. Google has acquired several start-ups in this space over the last few years.
The key differences
1. Business strategy defines short term goals of the company undertaken to improve overall performance of the company. Corporate strategy undertakes the mission of the company and takes it forward.
2. A business strategy focuses on one unit or function of the business, while corporate strategy focuses on the entire business.
2. A business strategy is formulated by business strategists who are often business managers at the middle-level in the organizational hierarchy.
3. A business strategy is executive and governing, while corporate strategy is deterministic and legislative in nature.
4. A business strategy selects a business plan to achieve the objectives of the business, while corporate strategy requires a company to choose a business to compete in.
5. A business strategy is centered around competing in the market place, while corporate strategy focuses on increasing the profitability of the business.
6. The business strategy follows an introverted approach, meaning it relies on internal stakeholders. The corporate strategy follows an extroverted approach and its effectiveness depends on external stakeholders.
7. Business strategies focus on cost and differentiation of business. On a corporate level, the strategy tries to achieve expansion, stability, and retrenchment.
Bottom line
All in all, business strategies are aimed at increasing performance of companies and stay competitive in the marketplace. A corporate strategy, however, aims to increase the profitability of the organization and expanding into new markets.
