"Corporate strategy" and "business strategy" are often used interchangeably. Sometimes, it's appropriate, and other times it can confuse your team. It's vital to understand the distinctions between corporate and business strategy.
Business organization plans typically have three levels of strategy: corporate strategy, business strategy, and functional strategy.
Here's the gist:
- A business strategy is an action plan used to accomplish your business goals.
- A corporate strategy is broader and details your company's plan for competing in your markets.
Below, Poised covers corporate vs. business strategy in more detail. Keep reading to learn how to communicate and strategize effectively with your team!
What Is a Business Strategy?
A business strategy is an action plan that helps you achieve your business goals. It's a roadmap that outlines the steps you'll take to reach your desired destination. Your business strategy should be based on your company's strengths and weaknesses, as well as your opportunities and threats. It should also consider your mission, vision, and values.
There are different types of business strategies you can use, including:
- Ansoff Matrix
- BCG Matrix
- Boston Consulting Group (BCG) Growth-Share Matrix
- GE/McKinsey nine-block matrix
- Generic strategies
- Industry life cycle
- McKinsey 7S model
- Portfolio matrix
- Porter's five forces analysis
- Product life cycle
- SWOT analysis
The most important part of a business strategy is that it's achievable. You should have a clear plan for how you'll execute your strategy, reach your goals, and accomplish your mission statement. This business plan should be based on your company's unique strengths and weaknesses.
Making a Plan for Building a Customer Base
Building a customer base is essential for any business. It's the lifeblood of your company, and you need to take it seriously if you want to succeed. There are a few things you can do to make sure your customer base grows steadily and healthily:
- Plan ahead. Don't just dive into building a customer base without thinking it through. Take the time to devise a plan and figure out what you need to do to reach your goals.
- Research your target market. Who are you trying to attract? What do they want or need? Find out as much as you can about your target market so you can create a strategy that resonates with them (and potential future stakeholders).
- Offer something of value. If you want people to buy from you, you need to offer them something they can't get elsewhere. Determine what makes your business unique and focus on selling that to your target market.
- Be patient. Building a customer base takes time and effort, so don't get discouraged if things don't happen overnight. Keep at it and be consistent in your efforts, and you'll see results over time. Short-term gains are unlikely when creating a new business.
- Measure your progress. It's essential to track your progress so you can see how well your business model is working and make changes as needed. Use analytics tools to measure website traffic, conversion, email open rates, and more.
By carefully planning and executing a strategy, you can attract the right customers and keep them coming back.
Managing Customer Satisfaction
One of the main aspects of a successful business strategy is managing customer expectations and providing an exceptional experience. Research shows that roughly three of four customers consider customer experience a critical element in their buying decisions. Understand what your customers want and need from your company, and communicate this effectively to them.
One way to manage customer expectations is by setting clear and achievable goals for your company. This will help your customers know what to expect from you, and it will also help you stay focused on what is important.
Another way to manage customer expectations is by being transparent with your customers. This means being honest and open with them about what you can and cannot do. It also means communicating any changes or updates to them as soon as possible, including mergers or big news from the board of directors.
Finally, you need to regularly update your customers on the progress of your company. This can be done through newsletters, emails, or even face-to-face meetings. By doing this, you will keep them informed, and they'll be less likely to become frustrated with your company.
Making Your Business Scalable
Making your business scalable is vital because it will help you grow your company quickly and efficiently. There are many ways to make your business scalable, including:
- Finding new markets to sell to.
- Expanding your product or service offering (also called diversification).
- Increasing the number of employees you have.
- Outsourcing some tasks to external suppliers.
- Offering different pricing options.
These methods will help you increase your company's size without having to make significant changes to your operations. This can help you maintain control over your company and avoid any potential problems resulting from rapid growth.
To make your business scalable, you need to be able to adapt quickly and efficiently to changes in the market. You also need to be able to manage change within your company. This means ensuring that everyone within your organization is on board with the changes and is willing to work towards achieving the new goals. You also need to have a clear vision for your company's future so you can make the right strategic decisions when it comes time to scale up.
Managing and Increasing Profits
A big part of any business strategy is managing and increasing profit. Cutting costs, increasing sales, maximizing efficiency, and reducing expenses are some of the most tried-and-true methods of improving profits. Be careful not to cut too many corners when managing your profit, or you may end up damaging your company's reputation.
To maximize profits, you must identify and capitalize on opportunities as they arise. You also need to be able to make decisions quickly and efficiently. This means being able to make decisions based on data rather than emotions. Managing risk effectively is critical as well, as it will help you minimize any potential losses.
Perhaps most importantly, you’ll want to stay on the right side of the law. In some instances, vertical integration can violate antitrust laws, potentially causing millions of dollars in penalties.
What Is a Corporate Strategy?
A corporate strategy is a long-term plan that sets out the overall direction of a company. It sets out the goals the company wants to achieve and how it plans to achieve them. A corporate strategy should be aligned with the company's mission and values.
The corporate strategy of a company is usually set at the top level by the company's executives. It is then cascaded down through the organization so that everyone knows the company's goals and how they fit into the overall plan.
A corporate strategy typically covers a period of three to five years. It should be reviewed and updated regularly to remain relevant and achievable.
Finding Your Target Market
Identifying your target market is one of the most crucial aspects of meeting your established corporate goals. A target market is the group of people or organizations you hope to sell your products or services to.
To find your target market, you must understand your audience, including their needs and wants, demographics, and buying habits. Once you know this, you can proceed to the strategy formulation step.
It's also essential to understand your competitors (and their customers) when developing your corporate strategy, as it will help you position your company in the market and ensure that you're offering something unique.
Increasing Your Value in Your Target Market
Making your company valuable in the eyes of your target market is an integral part of corporate strategy. You need to identify what makes your company unique and how you can use this to your advantage.
Here are a few practical tips for boosting your value in your target market:
- Invest in research and development. This will help you stay ahead of the competition and ensure that you're offering something new and innovative.
- Focus on quality assurance. Doing so will help you build a reputation for producing high-quality products or services.
- Build a strong brand. A unique and robust brand will make it easier for you to stand out from the competition and attract new customers. It will also help you maintain customer loyalty over time.
Develop a good relationship with your customers. This means providing excellent customer service and ensuring they're always satisfied with their purchase. You also want to keep them up-to-date on your company's latest news and developments.
Finding New Markets To Enter
To expand their reach and grow their business, many companies will turn to corporate strategy for help. A major component of corporate strategy is finding new markets to enter and expand into them. You can do this in many ways, including through acquisitions, partnerships, and organic growth.
While there are many different factors to consider when expanding into a new market, the most important is ensuring the new market is a good fit for your company. You'll also want to ensure you have the resources to support your expansion efforts. Otherwise, you could end up jeopardizing your position in your existing markets.
Optimizing Your Company for Growth
Corporate strategy is also about ensuring your company is structured and operated in a way that optimizes growth. This can include anything from organizational changes to process improvements. Often, a corporate strategy will be used to make changes at the top of an organization to better align the company for growth.
Some proven ways to set a business up for sustainable growth include:
- Diversifying your products and services.
- Developing a solid corporate culture.
- Investing in research and development.
- Focusing on customer retention.
- Creating a lean and efficient organization.
We can’t forget the importance of maintaining effective communication among your team when establishing your growth initiatives. The Poised communication coach can help you and your team members communicate more clearly, confidently, and impactfully during your virtual meetings.
What Are the Key Differences Between Business and Corporate Strategy?
Corporate strategy is a company's overall direction to grow its business and compete in its chosen markets. It involves decisions about which businesses or product lines to pursue, how to enter new markets, how to allocate resources across the organization, and how much risk to take on.
On the other hand, a business strategy is the specific game plan that a business unit or product line uses to achieve its corporate objectives. It answers the question of how the company will compete in a particular market or segment.
There are several key differences between corporate and business strategy:
- Corporate strategy is about overall direction, while a business strategy details specific actions.
- Corporate strategy is about growth and resource allocation, while a business strategy is about competition and winning in the market.
- Corporate strategy is top-down, while a business strategy is bottom-up.
- Corporate strategy pursues long-term goals, while a business strategy concentrates on shorter-term initiatives.
- Corporate strategy focuses on the entire organization, while a business strategy focuses on a specific business unit or product line.
Let's take a closer look at corporate vs. business strategy:
Different Goals
Leaders use a corporate strategy to set the overall direction of the company and decide how to grow their business. The goal is to create shareholder value by expanding the company's reach, entering new markets, and developing new products or services.
The primary goal of a business strategy is to win the marketplace. It's focused on creating a competitive advantage and generating growth in a specific market or segment.
Different Timeframe
A corporate strategy is a long-term plan considering the company's overall goals and resources. It sets the stage for decisions about which businesses to pursue and how to allocate resources across the organization.
A business strategy is shorter-term, usually covering a period of one to three years. It's more flexible than a corporate strategy and can be adapted quickly to changing market conditions.
Different Benefits
A corporate strategy can help a company achieve sustainable growth, enter new markets, and develop new products or services. It can also improve decision-making by providing a clear overall direction.
A business strategy can help a company win in the marketplace, build market share, and generate revenue and profits. When implemented effectively, it can also improve operational efficiency and effectiveness.
Let Poised Help You Run Your Company
Regarding corporate strategy vs. business strategy, there are critical differences in terms of goals, timeframe, and benefits. Understanding the distinctions will equip you to implement both types of strategic planning more effectively.
Poised can help you become a better communicator and leader so that you can put your best foot forward when making decisions about your company's future. Connect with our experts to learn how our software can empower you to grow in verbal communication, non-verbal communication, confidence, and more.
Sources:
How to Write a Business Plan | Business News Daily
36 Astonishing Customer Experience Statistics for 2022 | TechJury
What Is a Target Market? | Investopedia
Business growth through diversification | nibusinessinfo
What are the legal barriers to vertical integration? | Investopedia
Tips for Successful Strategy Formulation | HBS Online
Short-Term, Medium-Term & Long-Term Planning in Business | Small Business Chron
