30 Mar Business Strategy vs. Organizational Strategy
So you know your business needs a robust and unifying strategy to cement your long-term success. But you – like many decision-makers across industries – aren’t sure which route to pursue: a bold business strategy or an innovative organizational strategy?
Never fear! We’re here to break down everything you need to know to make the optimal decision for your company. We’ll discuss the basics of organizational and business strategies, the three levels of strategic planning every business should understand, and the critical differences between business-level and corporate-level strategy.
If you know your organization is ready for a new path forward but aren’t sure where to start, or you want to sharpen your strategy toolkit, this is the blog for you! Let’s dive in.
What Is Organizational Strategy?
Organizational strategy describes strategies that provide an outline, roadmap, or guide for companies pursuing long-term goals, visions, and growth.
This essential business tool provides a systemic approach to ensuring your company’s efforts, resources, and decision-making consistently aligns with your highest-priority goals and initiatives.
The framework created by implementing an organizational strategy also provides an efficient and reliable springboard for responding to unexpected market conditions and tackling tough decisions like pursuing growth opportunities, allocating investments, and deploying business units.
The importance of organizational strategy can’t be understated. Much of that value lies in its ability to provide a clear, communicable, and common direction shared by every level of your business. This shared understanding of where your company is headed – and, more importantly, how each piece of the organization will play a role in getting there – can reap massive efficiency, productivity, and performance benefits from your C-suite down to your customer-facing teammates.
That’s not, however, to say organizational strategy is without potential pitfalls.
Leaders that hastily implement organizational strategies that are poorly fit for their company culture, competitive market, or performance capabilities often divert vital resources, and attention away from tasks that are more closely aligned with their long-term goals. That’s why the first step in creating any organizational strategy must be gaining an in-depth, comprehensive understanding of your company’s:
- Short, medium, and long-term goals
With this 360° understanding of their organization, business leaders will be armed with everything they need to identify, implement, and iterate the optimal organizational strategy to drive steady, structured growth that advances your company toward three, five, and even ten-year goals.
Levels of Strategic Planning?
There are three levels of strategic planning: corporate, business, and functional.
Each level plays different yet equally vital roles in generating growth, success, and progress toward your organization’s long-term vision. Successfully leveraging these levels of strategy can propel organizations to new heights – but only if each level aligns with the others.
With that in mind, let’s break down these levels of strategic planning so you can take advantage of this powerful tactical trifecta.
Corporate-level strategies are high-level conceptual plans that dictate the overall direction of a business.
Corporate-level strategies outline overarching objectives, establish initiatives to pursue said objectives, and create timelines and metrics for tracking progress. Corporate-level strategies are typically handed down from the C-suite to upper and mid-management for development into our next level of strategy…
As we will discuss later in greater detail (spoiler alert!), business-level strategy is a more focused and action-oriented stage compared to corporate strategies.
Business-level strategy revolves around identifying competitive strengths, weaknesses, opportunities, and threats to outline how an organization will implement an organizational or corporate-level strategy.
Functional strategy outlines how each aspect of an organization can contribute to achieving the goals, vision, and tactical decisions established at higher levels of the strategy pyramid. It serves as a roadmap for the organization’s various departments to follow.
Functional strategy can take the form of:
- New marketing initiatives
- Customer satisfaction initiatives
- Enhanced hiring and recruitment efforts
- New product research, development, and production
- Adjustments to sales scripts and target demographics
Now that we’ve covered the basics of the three levels of strategy, let’s dial in and explore the concept and benefits of business-level strategy further.
What Is a Business Strategy?
Business strategies should be viewed as a subset of organizational strategy.
Rather than being concerned with the overarching, “big picture” direction of a company, business strategy focuses on identifying, optimizing, and leveraging competitive advantages to position your organization to:
- Capture a larger market share
- Grow your customer base
- Boost profitability
- Streamline operations and expenses
- Generate a range of similarly advantageous business outcomes
While business strategy doesn’t typically encompass the day-to-day minutia of operations under new organizational strategies (those are operating-level strategies), they do provide invaluable direction for decision-makers and department heads.
For example, if a new organizational strategy called for pivoting to a product innovation angle, the following business strategy would lay out the framework for creating systems, processes, and policies to begin the “boots on the ground” changes needed to occur to satisfy the organizational strategy. Or, if your new corporate-level strategy calls for pursuing a revenue and sales advantage, your business strategy could encompass plans to achieve cost leadership within your market.
Every business strategy has four key aspects: the objective, the vision, resource allocation, and evaluation.
- The Objective – The objective outlines the overarching goal of your business strategy. Your objective may be business strategy specific, or it may involve implementing the direction provided by your organizational strategy.
- The Competitive Analysis – You can start your competitive analysis after clearly defining your objective. This phase aims to discover strengths, weaknesses, opportunities, or threats that can be capitalized on to bring your organization closer to its long-term objectives.
- Resource Allocation – After you’ve identified a prime opportunity to implement your business strategy, you’ll need to outline how you’ll deploy business units and allocate resources to bring the plan created in the previous stage to fruition.
- Evaluation – Finally, you’ll need to create a framework for testing and evaluating your business strategy. These metrics will provide insight into the impact of your business strategy’s implementation while also providing a system for adapting your strategy as market conditions and consumer behaviors shift.
It’s important not to confuse business strategy with corporate strategy. While there is a relationship between corporate, business, and operational strategies, they each play a different role in an organization’s long-term growth and success.
Let’s shed some light on the main differences between business and corporate strategies.
What Is the Difference Between Business Strategy and Corporate Strategy?
As we mentioned above, corporate strategy is at the top of the proverbial strategy pyramid. Corporate strategies provide a bird’s eye view of an organization’s primary goals, values, vision, and direction.
Business-level strategy operates a level below corporate strategy. These strategies aim to identify opportunities to gain competitive advantages that set the stage for fulfilling the corporate strategy’s direction and goals.
Corporate and business strategy also differs when it comes to timelines, use cases, and primary benefits.
For example, corporate strategy tends to operate on medium to long-term timelines between three and five years. Business-level strategy, however, moves at a quicker, more responsive pace. Suppose a prime opportunity for promoting the overall corporate strategy emerges. In that case, business-level strategies must be flexible and adaptable enough to evolve with the shifting conditions to continue generating optimal results.
Additionally, corporate-level strategies are most useful to high-level leadership responsible for ideating and spearheading company-wide initiatives. These individuals (typically your C-suite) possess the company, product, and market knowledge necessary to handle decisions like resource allocation, pursuing growth opportunities, management priorities, KPIs, and more.
Business-level strategy, on the other hand, is more useful for upper management and departmental heads tasked with identifying opportunities to pursue the priorities and KPIs passed down with the resource allocation provided.
Finally, the benefits of corporate-level strategy involve advantages like organizational alignment, long-term direction, and profit, loss, and risk management. Business-level strategy provides benefits like enhanced products and services, improved customer experiences, and laser-focused recruitment and retention practices. These high-level benefits offer firm roots to an organization’s long-term growth.
As you can see, both corporate and business-level strategies play vital roles and provide valuable benefits to companies that implement them successfully.
How Medallion Partners Can Help You Plan
Are you nervous about making the wrong strategic decisions? Medallion Partners can help!
Business and organizational strategy — can be daunting in theory, but they don’t have to be in practice with experts like Medallion Partners.
For years, our organizational strategy consultants have been leveraging expertise and passion to help organizations build strategies and develop plans to power their growth and empower long-term success. At Medallion Partners, we work with you to design a custom plan to help equip your organization to make the best decisions for long-term organizational health.
So why wait? Let us help you achieve success! Contact us today to get started and experience the Medallion Partners difference.