Many different firms are interested in reaching a very important goal. They want to earn the highest possible profit and create a good return for their shareholders. Corporations become owners of many different businesses in various industries. Thanks to this solution, they can achieve this goal. We can find some information about business-level strategy and corporate-level strategy. The first one helps with obtaining customers and selling products to gain profit. The second one is used to decide what business units can be sold or purchased. It also focuses on the integration of operations and finding synergies existing between them.
Business-Level strategy – basic information
Business-Level strategy is very important for many companies because this type of strategy focuses on methods of attaining and satisfying customers and on offering goods or services that meet all the needs of clients. We can say that the Business-Level strategy aims in increasing operating profits. It is possible to achieve this by preparing a good strategy that can compete against other companies on the market. It is also good to observe the current market trends and changes in technology.
We can find two elements of this strategy. The first one is called cost leadership and this tactic focuses on getting customers by providing attractive prices. In this case, the high efficiency of work is important to achieve the best possible profits. The second element is called differentiation. It focuses on adding unique features, products or services, so the overall price will be higher. This method is typical for companies that offer luxurious goods or not very typical products like electric cars.
Corporate-Level strategy – what should we know about it?
A Corporate-Level strategy is much different and it focuses on examining the success of different businesses. In the case of this kind of strategy, a corporation aims in getting a combination of business units that assure an overall success for the whole company.
In the case of this strategy, it is not only important to mix different business units, but it is also crucial to improve their efficiency by developing relationships, so these units will be able to share resources and they will also avoid doing the same job (duplication of efforts).
Companies that use a Corporate-Level strategy can offer a diversified portfolio of businesses owned by the corporation. Large corporations are interested in business units that work in different industries that supplement each other. They also buy units with complimentary cash flow. In other words, a corporation can include a company that earns only during the season (tax companies earn the biggest money in tax season). It is good for this corporation to have other businesses with good revenue earned during the whole year, so they will provide support to other units in their slow times.
As you can see, Business-Level and Corporate-Level strategies are very important for companies and corporations that represent different industries. It is good to get and know the information and differences between these strategies.