Business strategy is concerned with the strategic decisions concerning the choice of product, competitive advantage, customer satisfaction, etc. On the contrary, corporate strategy is concerned with the overall objective and scope of business to fulfil stakeholder’s expectations.
The strategy can be defined as the integrated plan or a trick used to get success in a particular affair. In business terms, the strategy is viewed as a means to reach the goal of the company. In a large firm, there are multiple divisions, units or departments, that is engaged in a number of businesses. In such an organization, there are three primary levels of management, i.e. corporate, business and functional level.
At different management levels, different types of strategies are formulated by the relevant authority. People commonly juxtapose business strategy and corporate strategy, so here we are presenting you the differences between the two terms.
Content: Business Strategy Vs Corporate Strategy
|Basis for Comparison||Business Strategy||Corporate Strategy|
|Meaning||Business Strategy is the strategy framed by the business managers to strengthen the overall performance of the enterprise.||Corporate Strategy is stated in the mission statement, which explains the business type and ultimate goal of the firm.|
|Created by||Middle level management||Top level management|
|Nature||Executive and Governing||Decisive and Legislative|
|Relates to||Selection of plan to fulfill the objectives of organization.||Business selection in which the company should compete.|
|Deals with||Particular business unit or division||Entire business organization|
|Term||Short term strategy||Long term strategy|
|Focus||Competing successfully in the marketplace.||Maximizing profitability and business growth.|
|Major strategies||Cost Leadership, Focus and Differentiation||Expansion, Stability and Retrenchment.|
Definition of Business Strategy
By the term business strategy we mean the plan of action, crafted to reach a particular goal or set of goals of the organization. It is formulated in reference to the corporate strategy of the concern, which reflects the plans of the entire business. It helps in informing and attracting the investors, about the new venture, to convince them to invest in the business. Moreover, it is used as a tool to assure creditors about the credibility of the enterprise.
Business Strategy highlights the market opportunities that the business wants to explore, steps for performing it and the resources required to put it into practice. It is formulated by the middle-level management, which focuses on what’s more important for the company to achieve the desired end.
Definition of Corporate Strategy
Corporate Strategy can be explained as the management plan formulated by the highest level of organization echelon, to direct and operate the entire business organization. It alludes to the master plan that leads the firm towards the success. So the more the aptness in the degree of the corporate level strategy, the higher will be the chances of firm’s success in the market.
Corporate Strategy is the essence of strategic planning process. It determines the growth objective of the company, i.e. direction, timing, extent and pace of the firm’s growth. It highlights the pattern of business moves and goals concerning strategic interest, in different business units, product lines, customer groups, etc. It defines how the firm will remain sustainable in the long run.
Key Differences Between Business Strategy and Corporate Strategy
The fundamental differences between corporate and business strategy are explained in the points hereunder:
- Business Strategy can be viewed as the strategy designed by the business managers to improvise the overall performance of the firm. On the other hand, Corporate Strategy is the one expressed in the mission statement of the company, which describes the business type and ultimate goal of the organization.
- Business Strategy is framed by middle-level management which comprises of division, unit or departmental managers. Conversely, corporate strategy is formulated by top level managers, i.e. board of directors, CEO, and managing director.
- The nature of business strategy is executive and governing, whereas the corporate strategy is deterministic and legislative.
- While the business strategy is a short term strategy, corporate strategy is a long term one.
- The business strategies aim at selecting the business plan to fulfil the objectives of the organization. As against, the corporate strategy focuses on the business selection in which the company wants to compete in the marketplace.
- Business strategy is concerned with a particular unit or division. Unlike corporate strategy which focuses on the entire organization, comprising of various business units or divisions.
- The business strategy focuses on competing successfully in the market place with other firms. On the contrary, corporate strategy stresses on increasing profitability and business growth.
- Business Strategy has an introverted approach, i.e. it is concerned with the internal working of the organization. In contrast, Corporate Strategy uses extroverted approach, which links the business with its environment.
- At the business level, strategies which are employed by the organization includes, Cost Leadership, Focus and Differentiation. On the other hand, at the corporate level, the strategies used are Expansion, Stability and Retrenchment.
The strategy is the management’s plan for improving the performance of the firm and gaining a competitive advantage. At the business level, the strategies are more about developing and sustaining competitive advantage for the products offered by the enterprise. It is concerned with positioning the business against competitors, in the marketplace.
Conversely, at the corporate level, the strategy is all about formulating strategies to maximizing profitability and exploring new business opportunities.