Difference Between Business Strategy and Corporate Strategy

Business Level Strategy

Business level strategy concentrates on developing a firm specific model that will allow the firm to gain competitive advantage over its rivals in the industry such as in which it operates. Business strategy would focus on improving its competitive position of a company’s or business unit’s products within the specific industry or market segment that the company and/ or its business units serve. The question explored in business level strategy is: How a company can best be competed in the industry that they are in?

For an example Honda motors, Japan has a domestic market for its products and also it operates internationally. Thus business strategy should be crafted focusing on the ways of how it out beat the domestic competitors who operates both in the domestic market and as well as the in the international market like Mazda, Mitsubishi, Suzuki, Toyota and Nissan and competitors in the international market like General motors, Chrysler, Ford Motors etc. In formulating business level strategies, firm should consider how best it can compete in each of the industries it operates in. Thus business level strategies require crafting the strategy and positioning the firm in each of its business. For an example Honda should formulate a separate business strategy for its motor cycle production section that attempts to add build competitive advantage over rival, motorcycle manufacturers. And there should be another business level strategy for its auto mobile manufacturing division that addresses the ways and means of competing against rival automobile manufacturers and a separate strategy for power products (engines, portable generators, lawnmowers, outbound motors) manufacturing division that attempts to build competitive advantage over power product manufacturers in the industry.

Corporate Level Strategy

Corporate strategy is to a firm’s survival and success and it is largely about the choice of the direction for the firm as a whole. I.e. Corporate level strategy describes company’s overall direction in terms of its general attitude towards growth and the management of its various business and product lines. Corporate strategy is concerned with two key questions,

  1. What business should the company be in to maximize the long term profitability of the organisation?
  2. What strategies should it use to enter into and exist from the business area?

This is true whether the firm is a small, one product company or a large multi national corporation. Corporate strategy in a multinational company is all about managing various product lines and business units for maximum value. In this instance, corporate head quarters must play the role of the organisational ‘Parent’ in that it must deal with various products and business unit ‘Children’. Even though each product line or business unit has its own competitive or corporative strategy that it uses to obtain its competitive advantage in the market place, the corporation must coordinate these different business strategies in order to be succeeded.

For an example Honda Motors, even though there are various competitive or corporative business strategies at various business unit levels, it is the top management that decides the overall direction and goals for the entire organisation. i.e. even though there are several business segments as motor cycle manufacturing, auto mobile manufacturing and power product manufacturing and different competitive or corporative strategies adopted by each of these segments at business level, corporate level strategy for each of these segments all the same.

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