Everyone needs a strategy to take action to do well in a particular field. When we talk about an organization or a firm, there are three main kinds of management levels: corporate, functional, and business.
- The business strategy focuses on a specific business unit or product and how to achieve its goals.
- Corporate strategy focuses on the overall goals and direction of the entire company.
- Business strategy is more focused and tactical, while corporate strategy is more broad and strategic.
Business Strategy vs Corporate Strategy
Business strategy involves developing and implementing plans and actions aimed at achieving specific goals and objectives within a particular business unit or product line. Corporate strategy pertains to the overall direction, business related decisions and scope of an organization.
In business, a strategy is quite crucial when it comes to achieving an objective. It is looked like a blueprint that you have to follow in order to achieve a particular goal.
The business strategy is formed by medium-level management, whereas the corporate strategy is formed by top-level management. Usually, many people treat business and corporate strategies as a single term.
However, it is quite essential to know that they are not.
|Parameter of Comparison||Business Strategy||Corporate Strategy|
|Meaning||This strategy is concerned with ameliorating the overall performance of the organization by helping it to achieve specific goals.||A corporate strategy helps a business to operate the whole organization. This strategy focuses on stakeholders meeting their requirements.|
|Formed by||Middle-level management||Top-level management|
|Copes with||Business strategy copes with a particular unit or division of a business.||Corporate strategy deals with the operations of the whole business organization.|
|Duration||It is a short-term strategy.||It’s a long-term strategy with an ultimate goal for the business.|
|Aim||It is focused on competing with the other products in the market.||It is responsible for elevating profits and making the company grow faster.|
What is Business Strategy?
A business strategy is nothing but a master plan that is designed to help a company reach specific goals. Having a solid business strategy informs and allures investors.
This also ensures that they invest in your firm due to a sense of security.
The firm’s credibility also gets assured to the creditors by having a business strategy. Business strategy acts as a blueprint for the company to achieve their goals.
There could be no chance of error in a business strategy as it might harm your company in this competitive market.
Everyone, who is new to the business, should set their goals upfront. After setting up the goals, it is crucial to make a strategy accordingly and execute on it.
You must understand that business is not a gamble where you approach things without a strategy.
While planning a roadmap to your goals, you get to know the various flaws that were deteriorating the functioning of the business process.
Targeting such anomalies one by one lets your business grow by taking your firm a step closer to your desired goal.
What is Corporate Strategy?
Corporate strategy tends to focus on all the units or departments of a firm. It is responsible for the overall growth of the company.
The two primary goals of a corporate strategy are – Diversification and Vertical Integration. Diversification is vital for a business to expand into new sectors.
Many times what several corporate strategies assumed to be a failure turn out to be highly beneficial for the business later on.
To develop a corporate strategy for your business, you need to analyze the weaknesses in the functioning of your business. You have to consider things like where you want your business to take and what steps you are taking for it, etc.
Also, remember that not every strategy you make will work out for your business. Cost leadership is one of the strategies that most companies use.
In cost leadership, a company provides its product or services at the minimal rate possible. This allows them to create a spike in their sales.
This also helps them to make their name in this competitive market. McDonald’s is the best example of cost leadership in the restaurant industry.
Main Differences Between Business Strategy and Corporate Strategy
- The business strategy focuses on how the company performs overall so it can take steps to improvise the workflow.
However, corporate strategy concerns the type of business and its ultimate goal.
- Middle-level management, which includes managers of various divisions or units, is responsible for forming a business strategy.
However, corporate strategy is formed by top-level management, which includes boards of directors, CEO, etc.
- Business strategy is considered to be a short-term strategy. At the same time, corporate strategy is a long one.
- In the business strategy, the primary focus is to make a business plan to help the organisation achieve its desired goals.
The corporate strategy’s primary focus is to fulfil stakeholders’ expectations.
- Business strategy is meant to compete with other available products in the market. However, corporate strategy is meant to grow the profits of an organization.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.