Business Vs. Corporate Strategies
The issue of business-level strategy versus corporate strategy is not an issue of choosing the superior strategy over the inferior. It is rather the case that both types of strategy are extremely valuable and important to a business and many businesses will employ both. Managers should, however, understand the differences between the two types of strategy so that they know which to use in a particular situation.
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Differences
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Business-level strategies deal with a specific business unit; corporate strategies, in contrast, deal with the entire corporation, which may include several business units. Business-level strategies deal with specific issues, such as determining the price of products, increasing sales or introducing a new product. Corporate strategies, on the other hand, tend to be very broad and deal with issues such as creating a competitive advantage in the marketplace and developing unique firm competencies.
Advantages
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Business-level strategies are extremely useful for solving practical problems. They tend to be used by line managers to find solutions to everyday problems, such as poor sales or reduced efficiency. The solutions tend to be very short-term and, consequently, the results tend to be very quick. Corporate strategies are better for developing long-term solutions for problems, and while they may take more time to yield results, they will tend to yield much more impressive results.
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Disadvantages
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Both business-level and corporate strategies have specific disadvantages. The disadvantage of business-level strategies is that their short-term focus may lead to long-term problems. For instance, increasing prices to gain profits may work in the short term, but in the long term, it may adversely affect reputation. Corporate strategies have a distinct disadvantage because they tend to be costly to develop and implement.
Relationship
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Corporate and business-level strategies tend to operate independent of each other, for the most part, however they are still closely related. Corporate strategies will often affect business-level strategies by allocating specific resources to particular business units. In some cases, a business-level strategy that proves to be extremely successful may be labeled as a best practice, which can become a part of the overall firm strategy.
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