The difference between corporate strategy & business strategy

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Although it can be difficult to understand, there is, in fact, a difference between corporate strategy and business level strategy. It is important that managers and strategy makers understand the difference between these two types of strategy in order to avoid problems in communication and strategy implementation.

Corporate Strategy

Corporate strategy involves decisions that are made regarding the direction of an organisation as a whole. Corporate strategy is concerned with matters that affect the overall firm such as deciding the size and composition of its business portfolio.

Business Strategy

Business strategy is the way a business competes in a particular business sector. The strategic decisions made in business level strategy concern matters such as pricing, marketing and manufacturing efficiency. Business strategy is concerned primarily with gaining a competitive advantage in the market.

The Differences

The difference between corporate and business strategy is the scope of the strategy. Corporate strategy is broadly focused on issues that will affect the entire company. Business strategy is narrowly focused on a specific business unit and is concerned with tangible problems. Generally corporate strategy is developed at a senior level by the board of directors, while business strategy may be formed by individual line managers.

Which to Use

Corporate and business strategies are both important to a firm and should both be employed by any firm. They should, however, be used differently. A corporate strategy should be used when considering broad issues while business strategies should be used to address specific problems. In general, corporate strategies will be more stable and should not be changed frequently. Business strategies, however, can be changed regularly in order to respond to changes in the markets.