Business Strategy vs. Corporate Strategy: What's the Difference?

By Indeed Editorial Team

Published June 1, 2021

All companies need strategies to achieve their goals and be competitive and successful in their markets. Two commonly used approaches are business strategies and corporate strategies. These strategies differ from each other yet work together to improve performance and make companies profitable. In this article, we define business strategy versus corporate strategy and explain the differences between the two.

What is a business strategy?

A business strategy is a plan for attracting customers, gaining their business and selling a product or service to make a profit. It's designed to help a company be competitive in its market. Organizations create business strategies to reach specific goals.

A business strategy might be in summary or outline form and include steps for:

Getting customers
Increasing customer satisfaction
Increasing profits
Choosing which product to offer

A business strategy should show a company or company unit where it has a competitive advantage and how to benefit from that. It lists the actions needed to reach desired goals, so managers can make smart hiring and resource decisions. Managers can adjust their business strategy depending on market demand.

What is a corporate strategy?

A corporate strategy is a plan that helps an organization decide what markets it wants to enter and how. Businesses often use corporate strategies when they are trying to diversify, or enter a new market. This strategy guides a company's growth. A corporate strategy typically includes:

What market the organization wants to compete in
How different business units can add more value to the organization
How entering a new market can make the company more competitive
The timing and pace of the company's growth

Business stakeholders and upper-level management use corporate strategies to decide what industries they should be involved with and how to acquire business units that can help it be successful.

Differences between business strategy vs. corporate strategy

Business and corporate-level strategies differ primarily in their objectives. A business strategy focuses on competing in the marketplace, while a corporate strategy focuses on business growth and profits. Corporate strategies function at a higher level than business strategies. Managers should develop business strategies, however, with the overall corporate strategy in mind because their decisions affect the entire business plan and reflect the organization's shared goals.

Here are the other key differences between a corporate versus a business strategy:

Objectives

Mid-level managers, such as department heads, use business strategies to achieve objectives and goals within their departments or divisions. This strategy is useful for a variety of company units. Upper-level managers, such as chief executive officers, use corporate strategies to help their companies grow according to their vision. This strategy applies to the entire organization.

Small businesses sometimes create corporate strategies to guide their growth and accomplish their goals until they are big enough to need business strategies. Large-scale companies need business strategies to help its various units and departments achieve their specific goals. This is because each department might have different objectives and, therefore, require a different strategy for its products or services.

Related: 10 Business Strategy Examples

Duration

Business strategies are generally short term, while corporate strategies are long term. Managers create business strategies to solve current or routine operations issues and reach measurable objectives, such as gaining a certain amount of new customers or revenue. These strategies are valuable for helping teams achieve temporary and continually changing goals that allow them to compete in a certain section of the market.

Company leaders design corporate strategies to reach long-term goals, such as profit maximization, and solve comprehensive issues affecting the entire organization, like growth and diversification. A corporate strategy is usually long-lasting and based on a permanent company vision. The CEO or stakeholders might measure this strategy's success over many years.

Focus

Business and corporate strategies have different objectives when achieving and measuring success. A business strategy focuses on:

Creating value for the consumer
Being competitive in the market by offering customers a product or service that's unique to their competitors' products
Cost leadership, or having the best prices in the industry

A corporate strategy focuses on:

Creating more value for the company
Growing the organization through diversification or expansion
Maximizing profits
Downsizing or reducing spending as needed

Basically, a business strategy focuses on how a company plans to compete in a market, while a corporate strategy focuses on the markets it wants to enter and the businesses it wants to compete with.

Uses

Managers can use business strategies to:

Create a clear business plan for employees and department leaders to follow
Assess their products, target audience and competition so they can identify their competitive advantage
Gain a better understanding of their current business model and its strengths, opportunities and areas for improvement
Determine the resources and steps required to be more competitive in the market
Solve common department-level problems
Motivate and inspire their employees through achievable goals
Attract new investors
Demonstrate their success and credibility through measurable results

Company leaders can use corporate strategies to:

Clearly define the space the company wants to occupy within an industry
Give managers guidance for reaching long-term goals
Establish and meet stakeholder and investor expectations
Improve efficiency by combining departments, sharing resources or buying or selling business units
Determine the direction, speed, timing and extent of the company's growth
Investigate new business opportunities
Decide what companies to compete with and how to enter and win markets

Benefits

While the main benefit of a business or corporate strategy is the same—success and profitability for the company—each approach has different advantages. The benefits of creating a business strategy include:

Having clear direction
Making better business decisions
Gaining a competitive advantage in the market
Improving a product or service's performance
Satisfying customers
Satisfying and retaining employees

The benefits of creating a corporate strategy include:

Ensuring efficient operations
Providing long-term sustainability
Ensuring the company follows its vision and mission statement
Maximizing profits
Minimizing risk
Improving management