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Different Types of Business Strategy
Every company will need to adopt a certain type of business strategy to successfully compete in the market and scale.
There are generally four types of business strategies that companies can deploy: corporate strategy, competitive strategy, functional strategy, and operating strategy.
A corporate strategy is a type of strategy that targets the organization itself, such as a company’s mission statement and vision.
A competitive strategy is a type of strategy used to compete against other companies in the same industry or sector.
A functional strategy refers to how a specific business division or unit will achieve its desired objectives.
Finally, the operating strategy is a strategy concerned with the effective delivery of goods and services based on the company’s strategies.
Keep reading as I will further break down the different types of business strategies and tell you how they work.
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A corporate strategy is a type of strategy that companies deploy targeting their own organization.
Sometimes, corporate strategy is also called organizational strategy.
The main objective of corporate strategy is to focus on a company’s mission and purpose.
Company executives and the board will generally define the company’s corporate strategy by clearly defining the company’s core values, objectives, vision, mission, and overall purpose.
A company may adopt a corporate strategy to grow, remain stable, or adopt a retrenchment strategy (or a combination of these strategies).
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A competitive strategy is a type of business strategy where the company focuses on how it should compete against its competitors.
The idea here is to find ways to be more competitive in the market, better attract customers, and find competitive advantages.
In some cases, companies will adopt a competitive strategy to become cost leaders, find ways to differentiate themselves in the market or identify a particular niche to tap into.
The more a company is successful with its competitive strategy, the more it can outperform its competitors.
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A functional strategy is a type of business strategy aimed at defining how a business unit or division will achieve its objectives.
In other words, the company will need to assess the needs of a particular business unit to ensure they have what they need to create value.
For instance, a business unit will need skilled resources, marketing support, a budget, technology, and so on.
Typically, business units will define their needs for the short-term, medium-term, and long-term.
Functional strategies can include product design, logistics, product branding, product lifecycle and so on.
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An operating strategy is a type of business strategy where a company assesses how well the company is delivering on its overall strategy.
Organizations can adopt different business strategies such as corporate strategies, competitive strategies, and functional strategies.
To ensure that these strategies are properly executed, organizations will define an operating strategy allowing them to determine their overall operating needs to help satisfy the company’s objectives.
Operating strategies can include human resources needs, implementation of processes, review of technological needs, delivery capabilities, and so on.
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Types of Business Strategy FAQ
What are the four types of business strategy?
The four types of business strategies are corporate, competitive, functional, and operating strategies.
Note that organizational strategy is also known as corporate strategy and competitive strategy is known as a business strategy.
Now, depending on a company’s nature of business, it will need to carefully adopt its different types of business strategies to succeed in the market.
Why should companies adopt different types of business strategies?
Companies focus on implementing different types of business strategies so they can ensure they remain competitive in the market and can sustainably grow over time.
Knowing its people, operations, technology, and objectives will help companies better focus on what matters to them and gain a competitive advantage.
The better the company executives adopt different business strategies, the more the company will be efficient, focused, and deliver what their customers need.
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So there you have it folks!
What are the different types of business strategy?
In a nutshell, there are different types of strategies companies can use to better position themselves in the market, encourage their internal stakeholders to perform, and operate more efficiently.
There are four strategies that a company can adopt to achieve this goal: corporate-level strategy, competitive strategy (or business-level strategy), functional strategy, and operating strategy.
The corporate-level strategy allows a company to focus on its core values, mission, vision, and overall purpose.
The competitive strategy aims to help the company better compete against others in the market by looking at its growth strategy, product differentiation, pricing strategy, and so on.
The functional strategy allows a company to better identify the needs of a business unit giving them all they need to be efficient and reach their target.
The operating strategy allows a company to implement operational processes and methods to have the business better deliver across all units.
Now that you know the different types of business strategies, good luck with your research!
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