Business-Level Strategies and Why You Need Them
Business-level strategies help organizations move from broader corporate strategies to highly focused functional strategies.
For a company to experience success, it cannot simply establish a vision. It also needs methods for translating these ideas into actionable steps that make achieving goals possible. In the business world, a strategy hierarchy exists that empowers organizations to accomplish objectives more effectively. In the middle of this hierarchy lies the business-level strategy. Learn more about these strategies, including how they differ from others in the hierarchy and what they look like.
What Is a Business-Level Strategy?
The general strategy hierarchy consists of three levels – corporate, business, and functional. The business level focuses on activities that power a company to realize the broad objectives stated at the corporate level. Typically, business-level strategies enable an organization to obtain a competitive advantage and generate more customer value within their market.
A simpler way to understand business-level strategies is that they push your company in the right direction towards making goals a reality. They set the stage for functional-level strategies, which include specific tasks and benchmarks that departments and individual personnel must perform to reach corporate-level strategies.
Business-Level Strategy vs. Corporate-Level Strategy – What's the Difference?
Since some organizations only have one focus area, they may merge business and corporate strategies into a single level. However, companies with more than one business operating in multiple markets should differentiate between the two.
A corporate-level strategy establishes the direction the entire organization should follow to attain objectives. They tend to be vague, complicated, and focused on long-term success – features that usually do not allow for creating actionable plans. Conversely, business-level strategies focus on steps a particular business within the larger organization may take to become more competitive in the market.
Key Components of a Business-Level Strategy
As each organization functions differently, no two business-level strategies will look identical. However, there are two aspects that your company should consider when formulating business-level strategies – core competencies and customers.
Core competencies distinguish organizations in their markets and what adds value for customers. A significant part of creating business-level strategies is assessing these central capabilities to determine how your company can use them to gain a competitive advantage in the real world.
Understanding the target audience is another vital aspect of the business-level strategy. This audience includes existing and prospective customers. To evaluate the customer base for developing business-level strategies, your organization may ask the following questions:
- Who are the target audiences?
- What products do these customers need or want?
- How does the business meet those demands?
Once an organization recognizes its core competencies and the needs of current and potential customers, it can contemplate business-level strategies that will produce value and promote competitive advantage.
How to Write an Effective Business-Level Strategy
After your business understands the critical pieces required for business-level strategies, you can start drafting a plan. The most successful business-level strategy will contain the following six parts:
- Vision: This statement conveys where your business wants to go.
- Values: These standards dictate your organization's approach to realizing the vision.
- Focus areas: These high-level factors are the main focal points that guide your efforts in achieving the vision.
- Strategic objectives: Aligning with focus areas, strategic objectives are typically high-level and time-sensitive.
- Key performance indicators (KPIs): These tools gauge your progress in meeting strategic objectives.
- Projects: These strategic initiatives enable your business to accomplish its goals. They are highly specific, containing clear directions for completing objectives and deadlines.
Examples of Business-Level Strategies
As with any other corporate methodology, looking at examples of business-level strategies is beneficial for understanding how they look in the real world. The three following items are strategies often implemented at the business level to attain competitive advantage:
A classic business-level strategy is lowering prices to make your products more appealing to customers than competitors' offerings. Specific goals that contribute to this strategy include reducing overhead expenses, augmenting inventory control, and making shipping more efficient.
The primary objective of differentiation is to provide customers with greater value. This strategy usually involves making your products or services from competing companies. Functional level strategies for differentiation include enhancing production to minimize the number of flawed items.
Integration fuses the preceding tactics into a single hybrid strategy. The purpose of integration is to offer customers more affordable prices while giving them better value.
Maximize the Benefits of a Business-Level Strategy
Business-level strategies empower your organization to experience more success in attaining overall goals, but it can be challenging to know the best approach for devising them. To ensure your company develops the most effective business-level strategies, turn to Spider Impact for help.
Spider Impact is the industry's leading performance management software. Our team of performance management enthusiasts, software developers, and support experts work collaboratively around a single vision – enabling customers to realize their strategic performance potential. Click for a free test drive or demo to learn how Spider Impact puts all these components together for organizations.
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