Business Strategy vs. Corporate Strategy: 5 Key Differences

Do you know the difference between a business strategy and a corporate strategy? Are you confused about when to use one or the other? The truth is, there are some critical differences between business strategy and corporate strategy that can make all the difference when it comes to planning for the future of your business. In this article, we’ll explain what a business strategy and a corporate strategy are, and then we’ll dive into the five key differences you need to know:

1. Strategy Duration
2. Objective of Strategy
3. Level – Decision Vs. Action
4. Creator of Strategy
5. Benefits

By the end, you’ll clearly understand the differences between business and corporate strategies.

Business Strategy vs Corporate Strategy: What’s a Business Strategy?

Business strategy refers to a firm’s long-term actions and decisions to achieve its objectives and gain a competitive advantage. It is a comprehensive plan that defines a company’s vision, strategic goals, and methods to achieve them.

Business strategy includes:

  • Identifying the company’s target market and the needs of its customers.
  • Analyze the company’s internal resources and capabilities to determine what differentiates it from its competitors.
  • Establishing goals and objectives that are achievable and measurable.
  • Identifying the most effective marketing strategies and tactics to reach the target audience.
  • Crafting organizational structure and policies that enable the company to achieve its objectives.

What’s a Corporate Strategy?

A corporate strategy is a plan of action developed by a company’s leadership team to ensure its long-term success and profitability. It outlines the strategic goals the company wants to achieve and the steps it will take to accomplish them. Corporate strategies are created based on market analysis and research, competitor analysis, and assessing the company’s strengths and weaknesses.

The main elements of a corporate strategy include:

  • Identifying the company’s vision and mission.
  • Establishing objectives and goals.
  • Developing strategies to meet objectives.
  • Allocating resources to pursue strategies.
  • Evaluating progress and making changes when necessary.
  • Setting long-term strategies.

Business Strategy vs Corporate Strategy: 5 Key Differences

The second key difference is in the stakeholders involved. In business strategy, the stakeholders are the employees and customers of the business unit. In corporate strategy, the stakeholders are the board of directors, shareholders, and other stakeholders of the entire organization.

Overall, business strategy and corporate strategy both have their own set of goals and strategies. Understanding the five key differences between the two approaches can help leaders make better-informed decisions about how to achieve their goals.

Strategy Duration

Business and corporate strategies are essential components of an organization’s overall operations. However, one of the main distinctions between the two is the duration of their respective strategies. The short-term business strategy focuses on specific goals and objectives within an individual business unit. Corporate strategy, on the other hand, is long-term and encompasses the entire organization.

The business strategy usually lasts for three to five years and focuses on achieving the goals and objectives of a single business unit. It often revolves around a specific product, outcome, or initiative. Business-level strategies are designed to meet specific goals and objectives within a shorter timeframe. For example, a business strategy could be to increase the number of customers a business unit serves by 20% over the next year.

In contrast, corporate strategy is long-term, typically lasting five years or more. It takes a bird’s-eye view of the organization, looking at the company from a macro perspective. It is focused on the overall direction and vision of the organization, such as its competitive position, markets, products, and services. Corporate strategy often addresses mergers and acquisitions, geographic expansion, and the development of new products and services. For example, a corporate strategy could be to become the leading provider of financial services in a particular region.

Objective of Strategy

The business strategy aims to create a competitive advantage and expand market share. Business strategy is a process that involves in-depth analysis, decision-making, and taking action that helps a company gain an advantage over its competition. The business strategy considers how to position a company best to take advantage of opportunities, best use its resources, and create a competitive advantage by differentiating the company from its competitors. A great example of a business strategy is Amazon’s decision to invest heavily in e-commerce technology, which has allowed the company to become the largest online retailer in the world.

The objective of corporate strategy is to create sustainable profitability and stability. Corporate strategy is concerned with the long-term goals and objectives of the company as a whole and how the company can best position itself to achieve those goals and objectives. The corporate strategy considers the company’s financial performance, competitive landscape, market trends, and industry conditions. It involves making strategic decisions that will benefit the company over time and ensuring those decisions align with its mission and vision.

An example of corporate strategy is Apple’s decision to reduce its product line-up and focus on a few core products. This allowed them to focus their resources on delivering quality products, which has yielded sustained success in the market.

Level – Decision Vs. Action

The business strategy focuses on day-to-day actions, such as pricing, product innovation, marketing, customer service, etc. On the other hand, corporate strategy focuses on long-term decisions that guide and shape a company’s overall goals and direction.

The key difference between business strategy and corporate strategy lies in the level of decision-making and action. The business strategy focuses more on the day-to-day decisions and actions needed to achieve the desired goals. These decisions and actions are typically short-term and tactical in nature. An example of this might be deciding to launch a product in a new market or expanding an existing product line.

Corporate strategy, meanwhile, focuses on high-level, long-term decisions that shape the direction of the business. These decisions are typically strategic in nature and often involve making major investments, acquisitions, or partnerships. An example of this might be deciding to invest in new technology or equipment, entering into a strategic partnership with a key supplier, or acquiring another company.

Creator of Strategy

High-level individuals in the organization, such as CEOs and board members, along with strategic planners, create a corporate strategy. On the other hand, mid-tier individuals, such as managers, in collaboration with strategic planners, develop business strategies.

The CEO and board members of a large, multinational corporation will be most concerned with the organization’s big picture and long-term goals, which dictates corporate strategy development. This strategy is crafted to help the company achieve its end goals and will include strategic objectives and initiatives such as goals for market share, budgeting, organizational growth, and more.

On the other hand, business strategy is created by mid-tier individuals such as managers and lower-level executives. These individuals focus on achieving the broader objectives that corporate strategy sets out but must break these down into smaller, more actionable goals. Business strategy will be tailored to each business unit and often focus on short-term goals to keep the organization on track for larger objectives.

For example, a large retail company may have a corporate strategy to increase market share by 20% over the next five years. To help achieve this goal, the company’s retail managers will develop a business strategy focusing on increasing the store’s foot traffic, online sales, and marketing to new and existing customers.

Business Strategy vs Corporate Strategy – Benefits:

Business Strategy:

  • A company’s business strategies allow companies to focus more on individual needs and activities. For instance, a company might develop a strategy to increase customer loyalty and focus on expanding its customer base. This strategy could involve introducing new products and services, marketing campaigns, customer service initiatives, and other initiatives that help the company reach its goals.
  • The business strategies enable companies to monitor better and control their internal operations. Companies can increase efficiency and maximize profits by streamlining processes and reducing costs. For instance, a business strategy could involve setting up systems to track customer feedback and quickly process customer orders.
  • Business strategies can also help companies stay ahead of their competitors. Companies can develop innovative ways to reach customers using the latest technologies, creating an edge over their competitors. For example, a business strategy could involve investing in analytics and data-driven decision-making to better understand customer needs and preferences.

Corporate Strategy:

  • Corporate strategies allow companies to establish and manage long-term objectives and plans. For instance, a corporate strategy could involve setting revenue growth targets and reducing costs. This could include investing in new markets, products, and technologies, as well as developing new methods of operation.
  • Corporate strategies also enable companies to focus on their financial objectives and plan for the future. By setting financial targets and assessing the financial performance of their operations, companies can adjust their strategies to get maximum profits and minimize their risks.
  • Corporate strategies can also help companies approach their operations holistically. Companies can create a unified and effective strategy that reaches all of their goals by considering all aspects of their operations, from customer service to product development. For example, a corporate strategy could include investing in research and development, developing a customer-centric culture, and creating an incentive system that rewards employees for their contributions.

Business Strategy vs Corporate Strategy: Parting Words

Business strategy and corporate strategy have many key differences. They both play an essential role in an organization’s success and should be implemented together as part of a more significant overall strategy. The business strategy focuses on the actions and decisions of a single business or industry.

In contrast, corporate strategy focuses on the decisions and actions of a group of businesses within an organization. The duration, objectives, and creator of each strategy also differ.

Both strategies provide various benefits to an organization, such as improved decision-making, increased efficiency, and better coordination of activities. Ultimately, achieving a successful outcome requires an effective balance between business strategy and corporate strategy.