Business involves various strategies to fulfil their long-term and short-term goals successfully. Corporate, Business and Functional are the three types of business strategies. Corporate strategy is the overall plan that guides the other two strategies. Business strategy is related to the particular market, product or resources whereas functional strategy is specific to various departmental actions. If you want to understand these business strategies in detail then scroll your screen down and read this articles till end.
Strategies are like smart plans that guide businesses toward success. There are various types of strategies that work together. We have three major business strategies in business, i.e., Corporate, Business and Functional. Corporate strategy is the big plan for the whole company, deciding what industries to be in. Business strategy focuses on specific areas like products or markets. Functional strategy is about detailed actions of different departments, like marketing or production. Each strategy plays a role in achieving goals. Just like a puzzle, they fit together to make a company successful. Let’s understand the types of strategy involved in business with the help of interesting examples.
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Table of Content
- Examples of Three Types of Strategies
- Difference Between Corporate Strategy, Business Strategy and Functional Strategy
Types of Strategy
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Corporate strategy refers to the overall plan and direction a company decides to follow to achieve its long-term goals and objectives. It’s like a roadmap that guides the company’s actions, decisions, and resource allocation to ensure it moves in the right direction to be successful.
In simpler terms, think of a corporate strategy as a big-picture plan that helps a company decide what it wants to achieve and how it will get there. Just like how you might plan your steps to reach a destination, a company uses corporate strategy to plan its steps to reach its business goals. This strategy involves deciding which products or services to offer, what should be the target market, how to compete with other companies, and how to use its resources wisely.
So, corporate strategy is all about making smart choices to help a company succeed in the long run. It’s like a game plan that keeps the company focused and on track towards its ultimate goals.
Example of Corporate Strategy (Big Picture Plan)
Apple’s corporate strategy centres on creating innovative and high-quality technology products that seamlessly integrate hardware, software, and services. They aim to provide a unique user experience that sets them apart in the tech industry.
Next, type of strategy is business strategy. A company creates a well-thought-out plan to achieve its important goals and succeed. It’s like a game plan that helps the company make smart choices about what products or services to offer. Also, how to stand out from competitors and use its resources wisely.
Business strategy is a roadmap that guides a company to make the right decisions. Also, to take the right actions to reach its desired destination. Like how you plan your steps to win a game, a company uses a business strategy to win the business world. This strategy involves figuring out the best way to attract customers, how to make products that people want, and how to grow over time.
So, business strategy is about making clever moves to help a company succeed and achieve its long-term goals. It’s like having a solid plan to ensure the company goes in the right direction and does well.
Example of Business Strategy (Specific Focus)
Within Apple’s business strategy, they might concentrate on the smartphone market. Their business strategy here could involve producing premium iPhones with advanced features. It includes stylish design and a strong ecosystem of apps and services.
Functional strategy refers to the specific plans and actions of a company’s different parts or functions. Like departments or teams, develop to support the business’s overall goals. It’s like a detailed game plan for each part of the company to do its best work and contribute to its success.
In simpler terms, think of a functional strategy as a set of instructions for each team or department within a company. Different parts of a company have their own strategies to ensure they’re doing their jobs well. Just like players in a sports team have different roles and strategies on the field. Similarly, these strategies help each part of the company work efficiently and effectively to achieve its bigger goals.
So, functional strategy is all about determining the best way for different company parts. It is done to work together and do their tasks in a way that supports the business’s larger goals. It’s like having a well-organized playbook for each team within the company.
Example of Functional Strategy (Team-Level Plan)
In Apple’s product development teams for iPhones, their functional strategy could involve rigorous quality control and regular software updates to ensure a smooth user experience. The design team might focus on aesthetics that align with Apple’s minimalist brand. The marketing team could create campaigns highlighting hardware and software integration for a seamless user experience.
Examples of Three Types of Strategies
Let’s use the example of ITC to understand the types of strategy. It’s a diversified conglomerate based in India. To explain the corporate strategy, business strategy, and functional strategy:
1. Corporate Strategy
Corporate strategy is like the big plan that ITC decides to follow as a whole company. It’s about making important decisions that affect the entire company. ITC’s corporate strategy might involve where to invest money. It includes industries to participate in and how to manage different parts of the business. For example, ITC’s corporate strategy could diversify its business. It can be done across sectors like tobacco, hotels, agri-business, and information technology to reduce risk and create a balanced portfolio.
2. Business Strategy
Business strategy is more specific. It’s about how ITC wants to succeed in each of the different industries it’s involved in. For instance, within its agri-business division, ITC might have a business strategy focused on producing and selling high-quality agricultural products while supporting local farmers. The strategy might involve providing luxury experiences and expanding into new markets in its hotel division. Each of these strategies helps ITC compete effectively in its various businesses.
3. Functional Strategy
Functional strategies are like detailed plans for each part of ITC’s business. They involve specific actions and decisions made by different departments or functions within the company. For instance, in its agri-business, the functional strategy could involve sustainable farming methods. It is applied to ensure the quality of its products. The strategy might focus on developing innovative software solutions in its information technology division. It is done to meet the needs of its clients. Each functional strategy contributes to the success of the larger business strategies.
Difference Between Corporate Strategy, Business Strategy and Functional Strategy
|Entire company and its diverse businesses
|Specific market segment or business unit
|Individual departments or functions
|Overall company success and direction
|Success within a particular market or segment
|Departmental contributions to company success
|Broad and covers multiple industries or sectors
|Narrower, focused on specific business activities
|Detailed plans within each department or area
|Portfolio diversification, resource allocation
|Product development, target market, competition
|Department-specific actions and responsibilities
|Example: GE’s corporate strategy to be a leader in energy, aviation, healthcare, and more.
|Example: Apple’s business strategy for iPhones, focusing on innovation and user experience.
|Example: Marketing department’s functional strategy could involve online campaigns and social media engagement.
|Medium to long-term
|Short to medium-term
|Short-term execution and alignment
What is Business Strategy?
Business strategy is a detailed plan that outlines how a company will achieve success within a specific market or business segment. It involves decisions about products, target customers, and competitive advantage.
What is Competitive Advantage in Business Strategy?
Competitive advantage is the unique factor that sets a company apart from its competitors. It can be achieved through factors like lower costs, unique products, or exceptional customer service.
How does Business Strategy impact a company's growth?
A well-defined business strategy helps a company grow by allowing it to focus its resources and efforts on areas where it can excel and outperform competitors.
What is Functional Strategy?
Functional strategy involves specific plans and actions developed by individual departments or functions within a company, such as marketing, operations, and finance, to support overall business goals.
How does Functional Strategy differ from Business Strategy?
Functional strategy focuses on the operations and activities within a specific department, while business strategy looks at the broader picture of how the company will succeed in a particular market.
Why is Functional Strategy important?
Functional strategies ensure that each department works effectively to contribute to the company's overall success. They align the day-to-day activities with the company's larger goals.