Business Level Strategy Examples & Types for Corporate Strategy Success

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Digital Strategy

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In business, the right business strategy can make or break success. Business-level strategy is crucial in defining how a company positions itself within its industry and competes in the market.

Nowadays, successful businesses blend this strategy with digital transformation and innovation strategies. At Digital Leadership, our Innovation Consulting and Digital Transformation Consulting services, we foster creativity and ensure seamless alignment of technology adoption with business goals. Our approach involves integrating Jobs to be Done into your right business-level strategy, focusing on understanding customers’ fundamental needs and motivations to establish meaningful and lasting connections.

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In this comprehensive guide, we will delve into the definition, examples, types, importance, steps of implementation, and comparison with corporate level strategy of business level strategies. We will also explore successful companies and their effective business-level strategies, providing insights and inspiration for entrepreneurs aiming to achieve sustainable growth.

What is Business Level Strategy Definition

A business level strategy involves the stratgeic planning and actions taken to set the direction for a particular business unit. It’s about how a company aims to excel and gain an edge in a specific market area or industry. This strategy outlines how the business plans to distinguish itself from rivals, deliver value to customers, and reach its business goals within its chosen market.

Benefits of business level strategy encompass heightened revenue generation, enhanced forecasting of future requirements, swifter responses compared to rivals, and a fortified brand capable of navigating changes with resilience. Two prevalent strategies often employed are cost leadership and differentiation.

The Business Model Canvas plays a pivotal role in business level strategy in aligning different elements to ensure that they collectively support the overarching strategic goals. By focusing on customer-centric components and resource allocation, the canvas aids in decision-making crucial to gaining a competitive advantage. Its adaptability allows businesses to innovate and respond to market changes, a vital aspect in executing effective business-level strategies.

Business Model Canvas Template
The UNITE Business Model Canvas
Designed by: Digital Leadership AG – Building on the work of Alexander Osterwalder

Levels of Strategy: Corporate, Business And Functional Level Strategies

  • Corporate Level Strategy: This level of strategy includes decisions related to the overall direction and scope of the organization. It encompasses decisions such as diversification, acquisitions, and strategic alliances to maximize overall corporate performance.
  • Business Level Strategy: It focuses on how a business unit or division positions itself within a specific industry or market segment to gain a competitive advantage.
  • Functional Level Strategy: Functional level strategy deals with the formulation and implementation of strategies specific to various functional areas within the organization, such as marketing, finance, operations, and human resources.

Business level strategies are narrower than corporate level strategies yet not as narrowly focused as functional level strategies. For instance, if your corporate level strategy aimed to enhance market share, your business level strategy could be: Expand market reach.

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Business Level Strategy Examples of Successful Companies

Let’s explore examples of successful companies and their business-level strategies:

1) Apple Business Level Strategy

Apple’s successful business-level strategy is based on product differentiation and innovation. By consistently delivering high-quality, innovative products with sleek designs and user-friendly interfaces, Apple has positioned itself as a premium brand in the technology industry.

2) Starbucks Business Level Strategy

Starbucks employs a differentiation strategy by offering a unique and immersive customer experience. Through its cozy atmosphere, personalized service, and premium coffee offerings, Starbucks has built a loyal customer base and differentiated itself from competitors in the coffeehouse industry.

3) Walmart Business Level Strategy

Walmart follows a cost leadership strategy by offering a wide range of products at low prices. By leveraging economies of scale, efficient supply chain management, and strategic partnerships, Walmart, a cost leader in the retail industry, attracts price-conscious consumers.

Five Types of Business Level Strategy

Cost leadership, differentiation, focused low-cost, focused differentiation, integrated, and customer intimacy are successful business-level strategies used to achieve a competitive edge. Business-level strategies can be classified into five main types:

1. The Cost Leadership Strategy

The strategy of cost leadership entails striving to become the most economical producer within an industry. Businesses employing this approach seek to gain a competitive edge by providing products or services at lower prices compared to rivals, all while upholding acceptable quality standards. This tactic enables companies to attract price-sensitive customers and secure a significant share of the market. Through a concerted emphasis on cost efficiency and operational optimization, organizations can achieve cost leadership, establishing themselves as formidable contenders in their respective sectors.

2. The Differentiation Strategy

The differentiation strategy, a variant of business-level strategies, revolves around offering distinctive products or services perceived by consumers as superior in quality, value, or features. By setting themselves apart from competitors, companies can leverage their strategic initiatives to command premium prices and foster customer loyalty.

3. The Focused Leadership Strategy

The focused leadership strategy, commonly known as the niche strategy, entails directing efforts towards a specific market segment or niche with specialized offerings. By addressing the distinct needs and preferences of a narrow customer base, companies can attain a competitive advantage and bolster profitability.

4. The Focused Differentiation Strategy

A focused differentiation strategy blends elements of differentiation and focus strategies by delivering unique products or services tailored to a particular market segment. Firms embracing this strategy aim to carve out a niche market where they can demand premium prices and cultivate strong customer allegiance.

5. The Integrated Cost Leadership / Differentiation Strategy

The integrated cost leadership/differentiation strategy involves concurrently pursuing both cost leadership and differentiation strategies within a single business unit or division. By providing products or services that are both distinctive and cost-effective, companies can embrace a low-cost approach appealing to a broad customer base while sustaining competitive pricing.

Importance of Integrating Business Level Strategy

Integrating business-level strategy into business plan and decision-making processes is crucial for several reasons:

  • Alignment with Corporate Strategies: Business-level strategies align with corporate objectives and contribute to the overall success of the organization.
  • Creating Unique Value Proposition: It helps companies create unique value propositions that differentiate them from competitors and attract customers.
  • Competitive Advantage: Effective business-level strategies provide companies with a competitive advantage in the market, enabling them to outperform rivals.
  • Long-term Sustainability: It focuses on long-term sustainability and growth, ensuring the organization’s viability and relevance in the future.
  • Optimizing Resource Allocation: By aligning resources with strategic objectives, business level strategies help optimize resource allocation and maximize returns on investment.
  • Enhanced Coordination and Collaboration: It promotes coordination and collaboration across different functions and departments, fostering a unified approach towards achieving corporate goals.
  • Simplification of Decision Making: Clear and well-defined corporate and business level strategies simplify decision-making processes by demonstrating a roadmap for action and guiding resource allocation.
  • Streamlining Adaptation to Market Positioning: It enables organizations to adapt quickly to changes in market conditions and customer preferences, ensuring continued relevance and competitiveness.
  • Risk Management: Effective business-level strategies help organizations identify and mitigate risks associated with market dynamics, competitive pressures, and industry disruptions.
  • Customer Centricity: It prioritizes customer needs and preferences, driving customer-centric innovation and value creation.

The Value Proposition Canvas is crucial for integrating business-level strategy as it aids in crafting a unique value proposition. By aligning with corporate objectives, it helps businesses differentiate themselves, gain a competitive advantage, and ensure long-term sustainability. Moreover, it optimizes resource allocation, enhances coordination, simplifies decision-making, and streamlines adaptation to market changes. Additionally, it aids in risk management and promotes customer-centricity by focusing on meeting unmet customer needs effectively.

Value Proposition Canvas
Designed by: Digital Leadership AG – Based on the work of Peter Thomson which is based on the work of Steve Blank, Clayton Christensen, Seith Godin, Yves Pigneur and Alex Osterwalder and the original Value Proposition Canvas

Steps of Choosing and Implementing the Right Business-Level Strategy

Choosing and implementing the right business level strategy involves several key steps:

1) Assess the Current Situation Conduct a SWOT/TOWS Analysis:

Evaluate the organization’s strengths, weaknesses, opportunities, and threats SWOT/TOWS to gain insights into its internal capabilities and external environment. Identify strategic factors that can influence the selection and implementation of business level strategies.

The SWOT analysis is crucial in the process of choosing and implementing the right business-level strategy as it provides a comprehensive overview of the organization’s internal strengths and weaknesses, as well as external opportunities and threats. By evaluating these factors, decision-makers gain valuable insights into the organization’s capabilities, market dynamics, and competitive landscape.

SWOT Analaysis Template
The UNITE SWOT Framework
First Published in 1965 by 3x colleagues from the Stanford Research Institue. Designed by: Digital Leadership AG

2) Understand the Competitive Environment

Analyze competitors’ strengths, weaknesses, strategies, and market positions to identify competitive threats and opportunities. Identify gaps in the market where the organization can gain a competitive advantage.

3) Define Strategic Objectives:

Define clear and measurable objectives aligned with the organization’s mission, vision, and business model values. Set targets for revenue growth, market share, profitability, customer satisfaction, and other key performance indicators (KPIs).

4) Identify Target Customer Segments

Segment the market based on demographic, psychographic, geographic, and behavioural factors to identify target customer segments. Understand the needs, preferences, and purchasing behaviour of target customers to tailor products or services accordingly.

5) Select the Right Business-Level Strategy

Evaluate different business level strategies based on their alignment with strategic objectives, competitive advantage potential, and resource requirements. Choose the successful strategy that best fits the organization’s capabilities, market position, and growth aspirations.

6) Develop Action Plans:

Develop detailed action plans outlining specific initiatives, tasks, timelines, and resource allocations required to implement the chosen business level strategy. Assign responsibilities to team members and define performance metrics for monitoring progress and success.

7) Build Organizational Support Culture

Foster a supportive organizational culture that encourages collaboration, innovation, and continuous improvement. Communicate the rationale behind the chosen business level strategy and engage employees at all levels in the implementation process.

Organizational culture Canvas provides a framework for understanding the values, norms, and behaviors that are desired within the company. By aligning the chosen business-level strategy with the prevailing organizational culture, leaders can ensure consistency and coherence in the implementation process. Leveraging an organizational culture model enhances the cohesion, effectiveness, and sustainability of the business-level strategy implementation process.

Organizational Culture Canvas
The UNITE Culture Canvas
Designed by: Susanne M.Zaninelli & Stefan F.Dieffenbacher

8) Implement and Monitor Key Performance Indicators (KPIs)

Implement the action plans and monitor key performance indicators (KPIs) to track progress and identify areas for improvement. Regularly review and analyze KPIs to ensure that the business level strategy is on track to achieve its objectives.

9) Evaluate the Effectiveness of the Strategy

Conduct regular reviews and evaluations to assess the effectiveness of the business level strategy in achieving strategic objectives. Identify lessons learned and make necessary adjustments for optimizing performance and driving sustainable growth through strategic planning.

Business Level Strategy vs Corporate Level Strategy

While business-level strategy focuses on how a business unit or division competes in a specific market segment, corporate-level strategy deals with the overall direction and scope of the organization as a whole. While business-level strategy determines how a company positions itself within its industry, corporate-level strategy defines the portfolio of businesses and the allocation of resources across them to maximize overall corporate performance.

AspectBusiness Level StrategyCorporate Level Strategy
FocusHow a business unit competes in a specific market segmentOverall direction and scope of the entire organization
ScopeSpecific business units or product linesEntire organization
Key ConcernsProduct differentiation, market positioning, pricingMission, vision, core competencies, portfolio management
ExamplesDifferentiating products, targeting customer segmentsEntering new markets, diversifying, acquisitions, strategic alliances
ImplementationWithin individual business units or divisionsAcross the entire organization
Risk and RewardRisks and rewards associated with market competitionRisks and rewards associated with portfolio management

In conclusion, business level strategy plays a crucial role in driving sustainable growth and competitive advantage for organizations. By understanding the definition, examples, types, importance, steps of implementation, and comparison of corporate and business-level strategies, entrepreneurs can develop and execute effective strategies that position their modern businesses for long-term success in dynamic and competitive markets.

Frequently Asked Questions

1) What is the advantage of setting business-level strategies?

Setting business-level strategies provides several advantages, including:

  • Competitive Advantage: It enables companies to gain a competitive advantage in the market by differentiating themselves from competitors and creating unique value propositions for customers.
  • Resource Allocation: It helps optimize resource allocation by aligning resources with strategic objectives and focusing investments on areas with the highest potential for growth and profitability.
  • Long-term Sustainability: Effective business-level strategies contribute to the long-term sustainability and success of the organization by ensuring continued relevance and competitiveness in the market.

2) How often should a business-level strategy be reassessed?

It should be reassessed regularly to ensure alignment with changing market dynamics, competitive pressures, and organizational capabilities. Depending on the pace of change in the industry and the organization’s strategic priorities, business-level strategies may need to be reviewed and adjusted annually, quarterly, or even more frequently.

3) Business-level strategy addresses which overarching question?

It addresses the overarching question of how a business unit or division positions itself within its industry or market segment to gain a competitive advantage and achieve its successful business goals. It focuses on defining the approach and tactics necessary to differentiate the organization from competitors and create value for customers in the chosen market.

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