3 Levels of Business Strategy: A Practical Example

As an entrepreneur, you’ve probably encountered the term “business strategy” numerous times. It’s a crucial concept for any business, regardless of its size or industry, as it can determine the difference between success and failure. But what does business strategy really mean, and how can it be implemented into your company’s operations? In this article, we’ll take a closer look at the three levels of business strategy and provide a practical example that can be applied to your own business.

Level 1: Corporate Strategy

Corporate strategy refers to the overarching direction and goals of the entire organization. It’s the highest level of strategy, as it determines the company’s mission, vision, and objectives. Corporate strategy is typically developed by top-level executives, such as the CEO and board of directors. It takes into account factors such as market trends, competition, and the company’s core competencies. Some common examples of corporate strategies include diversification, expansion, and mergers and acquisitions.

Practical Example: Let’s consider the example of a clothing company that specializes in producing athletic apparel. The company’s corporate strategy might be to expand its product lines to include other types of sportswear, such as yoga clothing and accessories. This would allow the company to tap into new markets and diversify its offerings, while still staying true to its core competency of athletic apparel.

Level 2: Business Unit Strategy

Business unit strategy focuses on the individual business units within the organization, such as departments or product lines. It’s a more specific level of strategy that takes into account market trends and competition within a particular industry. Business unit strategy is typically developed by mid-level managers and executives, who are responsible for executing the company’s corporate strategy. It includes factors such as pricing, marketing, and product development.

Practical Example: Continuing with the example of the athletic clothing company, one of its business units might be its women’s yoga clothing line. The business unit strategy for this product line might involve expanding its offerings to include more styles and colors, as well as marketing it to a wider audience through social media and influencer collaborations.

Level 3: Operational Strategy

Operational strategy is focused on the day-to-day operations of the company, and how it can improve its efficiency and effectiveness. It’s the lowest level of strategy, but it’s just as important as the other two levels in achieving the company’s overall goals. Operational strategy is typically developed by lower-level managers and employees, who are responsible for the company’s daily operations. It includes factors such as supply chain management, staffing, and cost reduction.

Practical Example: For the athletic clothing company, its operational strategy might involve improving its supply chain management by working closely with its suppliers to ensure timely delivery of materials, as well as implementing cost-saving measures such as using more sustainable materials and reducing packaging waste.

Conclusion

In summary, business strategy is a multi-level concept that requires careful consideration and planning. By understanding the three levels of business strategy – corporate, business unit, and operational – and applying them to your own business, you can develop a cohesive strategy that aligns with your company’s mission and goals. Remember, the key to successful strategy implementation is to remain agile and adaptable, continuously monitoring and adjusting your strategy as needed to stay ahead of the competition.