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.

Related: How To Define a Business Strategy

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.

Related: What Is a Corporate-Level Strategy?

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.

Related: Ultimate Guide to Strategic Planning

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

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