Business Level Strategy Examples, Types, Definitions & Importance
Published: 14 February, 2023
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The secret to nearly every business’s success is in the way it offers a unique value proposition that addresses the needs—and often sparks the imagination—of its customers. At the core of this success is the organization’s Business Level Strategy. Here, business goals and business strategy meet in order for a company to compete effectively in a particular market.
In this article, we unpack the importance of a clearly-defined Business Level Strategy and how it can support an overall business model that encourages growth and innovation.
Because a company’s Business Level Strategy will influence its decisions related to marketing, operations, and other areas of the business, it is important for a company to regularly review and update its approach to ensure it remains relevant and effective in a constantly changing market.
What is a Business Level Strategy?
Business Level Strategy is the strategic planning a business unit undergoes to develop a system for creating value for its customers that will distinguish itself from its competitors. The ultimate goal of Business Level Strategy is to achieve a sustainable competitive advantage and succeed in the marketplace through the implementation of that plan.
Business Level Strategy vs Corporate Level Strategy
Business Level Strategy and Corporate Level Strategy are two distinct but related strategies that companies use to achieve their goals. The main difference between the two is the scope and focus of the strategies.
Business Level Strategy is focused on creating value and competitive advantage for a single business unit within a company. It outlines the actions a company takes to compete effectively in a particular market and serves as the foundation for the company’s overall strategy.
On the other hand, Corporate Level Strategy focuses on the entire organization and outlines how the company will allocate its resources and manage its portfolio of businesses. Corporate level strategy deals with questions such as which businesses to enter, which to exit, and how to allocate resources among different business units. This isn’t to say that one strategy is more important than the other. Rather, Business Level Strategy and Corporate Level Strategy work in conjunction to promote the organization’s overall business goals and priorities.
At Digital Leadership, we understand that many businesses struggle to bridge the gap between strategy and implementation, which can ultimately lead to failure. We believe that strategy is the driving force behind business success, and that our strategy execution framework model can help you successfully execute your strategy. If you have the right strategy but are struggling to efficiently execute it, our experts can provide the necessary tools and guidance to help your organization flourish in the marketplace. Get in touch with us today through our Contact Us page to learn more about how we can help you achieve your goals.
The Importance of Business Level Strategy in Organizations
As a piece of your Organizational Strategy, your Business Level Strategy articulates many of the operations that you’ll implement in order to achieve your broader business goals. There are several reasons why Business Level Strategy is an important piece of every thriving organization’s overall approach to the work they do.
- Facilitates differentiation from competitors
- Guides decision-making
- Enhances focus and defines target market
- Supports long-term planning
- Facilitates growth and development
(1) Facilitates differentiation from competitors
A strong Business Level Strategy enables an organization to gain a competitive advantage over its rivals.
(2) Guides decision-making
A clear Business Level Strategy helps managers coordinate their efforts and allocate resources effectively. With clear strategic planning, a business is less-likely to undertake wasteful investments.
(3) Enhances focus and defines target market
Having a well-defined Business Level Strategy enables organizations to focus their efforts on the most critical aspects of their business, including a well-defined target market.
(4) Supports long-term planning
Effective Business Level Strategy provides a foundation for long-term planning and helps organizations set goals and objectives.
(5) Facilitates growth and development
The right Business Level Strategy can help organizations grow and develop by providing a roadmap for expanding into new markets, launching new products, and diversifying their operations.
Business Level Strategy is crucial for organizations to succeed in today’s rapidly changing business environment. It helps organizations stay focused, make informed decisions, and achieve their long-term goals.
Types of Business Level Strategy
As with everything when we discuss strategic planning, your Business Level Strategy will be shaped by your business goals. Each type of Business Level Strategy has its own advantages and disadvantages, and organizations must choose the strategy that is best suited to their specific circumstances and competitive environment.
Let’s unpack some specific types of Business Level Strategies.
- Cost Leadership Strategy
- Differentiation Strategy
- Focus/Niche Strategy
- Customer Intimacy Strategy
(1) Cost Leadership Strategy
Businesses position themselves as a low-cost producer in the industry, offering products at lower prices compared to competitors. The focus is on reducing costs through efficiency and economies of scale.
(2) Differentiation Strategy
Companies execute this strategy by offering unique and superior products or services compared to competitors. The focus is on creating a distinct value proposition for customers through product innovation, high-quality customer service, or other exclusive features.
(3) Focus/Niche Strategy
This strategy involves focusing on a narrow customer segment of the market and serving it exceptionally well. The focus is on serving a specific customer group with specialized products or services that meet their particular needs.
(4) Customer Intimacy Strategy
Close and long-lasting relationships with customers are the core of this strategy. The focus is on understanding and anticipating customer needs and providing customized products or services.
Developing a Business Level Strategy
Developing a Business Level Strategy is an ongoing process that requires continual adaptation to changing markets and customer needs; as such, it’s impossible to propose a step-by-step version of directions for writing a strategic plan.
We advocate for several elements of strategy development, however, that should be part of your overall business strategy planning.
(1) Conduct a SWOT Analysis
Evaluate the organization’s strengths and weaknesses and the external opportunities and threats that could impact your business.
(2) Identify Key Success Factors
Decide what success looks like. Your KPIs should be clear, achievable, and well-communicated. Make sure everyone knows who is keeping score, and how.
(3) Formulate the Strategy
With your SWOT analysis and goals in place, choose the Business Level Strategy that best matches your situation and market conditions.
(4) Implementation & Execution
Strategy execution is where companies often fail. Be clear about responsibilities and the priorities of tasks. Define the specific actions and key resources needed to meet your strategic goals, including determining budget needs, resource allocation, and timeline for implementation.
(5) Monitor & Evaluate
Regularly measure your success based on KPIs and projections. Make adjustments as necessary, but also be confident in your plan and stick to it unless there is compelling reason to change.
Business Level Strategy plays a crucial role in supporting an organization motivated by innovation by providing direction, focus, and resources for growth efforts. By adopting an appropriate strategy for its operations, an organization can create a competitive advantage and achieve its overall goals.
Your Business Level Strategy is just one of many components that will ultimately determine your success. We invite you to have a look at how Digital Leadership can help position your business for stability and growth in the years to come.
Frequently Asked Questions
How does the industry structure affect a Business Level Strategy?
The structure of an industry can have a significant impact on a Business Level Strategy. It determines competition, market size, customer segments, and the barriers to entry for new (potentially competitive) businesses. The structure of an industry should be an important consideration when developing your Business Level Strategy.
Can a Business Level Strategy change over time, and if so, why?
Of course! A Business Level Strategy can change over time due to various reasons, including changes in the competitive environment, market conditions, customer needs, and the organization’s internal capabilities.
Businesses should always monitor their KPIs and their goals and change according to success, failure, and the realities of the business environment.
How can organizations ensure effective communication and implementation of their business-level strategy?
Effective communication and implementation of a Business Level Strategy includes involving key stakeholders, aligning organizational structures and systems, fostering a culture of execution, and continuously monitoring and evaluating performance. Only when everyone has a common understanding of an organization and the goals it aims to achieve can a business hope to have success.