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Confused about business strategy vs corporate strategy, and do you need to use both?
Strategy truly is everyone’s job.
That’s been a recurring theme in our discussions of what it takes for a corporate (or organizational) strategic plan to come to fruition—especially the need to get the buy-in and help of everyone in your organization to make big things happen.
A key component of that support comes from your department managers, each of whom should (among other things) come up with a tactical plan for their own business area that will enable the realization of the larger strategy. This plan is referred to as a business strategy (vs. the higher-level corporate strategy).
So what are the main differences between corporate- and business-level strategy, and what’s the best way to develop and execute them in concert? We’ll answer those questions here.
Business Strategy Vs. Corporate Strategy
Here’s how we define corporate vs. business strategy:
Corporate Strategy:
Corporate strategy is an organization’s high-level plan of action, defining its intended direction and long-term goals for the next three to five years. A corporate strategy factors in the organization’s primary goals and growth objectives, how business units can add more value and contribute, and the timing/pace of growth.
Business Strategy (or Business Work Plans):
A business strategy, sometimes called a work plan or department business plan, is a yearlong plan of action for a specific department or business unit, outlining a specific subset of goals and activities in support of broader, high-level organizational goals. A business strategy is formed around the corporate strategy; when departments have a good idea where the organization is headed, they can determine their own objectives and related course of action.
Similarities And Differences Between Corporate And Business-level Strategy
Done right, corporate and business strategies are strongly related and interdependent. While they are similar in terms of their general format, reporting requirements, and vital importance to strategic success, they differ with regard to their level of applicability, creator, timeframe, focus, and audience.
Think of it this way: Business strategies spring from and are informed by corporate strategy. Corporate strategy informs business strategies. Ultimately, however, the success of the organization as a whole depends on the success of those business plans. If your business strategies are successful—and they are linked to your corporate strategy—then your corporate strategy will be successful, too.
Two Examples Of Corporate And Business Strategy
Example #1: A For-Profit Organization
Many for-profit organizations strive to increase profitability as part of their overall corporate strategy. To support this objective, they may allocate resources and engage in projects that will help increase sales and decrease costs. Concurrently, they may review related metrics such as total revenue and fixed and variable costs. All this is tracked and monitored at the highest level of the organization.
When it’s time for the company’s marketing department to develop its business strategy, its department head must know the company’s overall strategic plan and determine actions the team can take that will drive its achievement.
Generating more high-quality leads, for example, is an activity within the department’s purview that would contribute to meeting the higher-level objective. The marketing department’s business plan may therefore include a goal to convert X% of website visitors into quality leads. To reach that goal, the department plans to:
- Track metrics like landing page conversion rates, Tier A demo requests, and the number of marketing-qualified leads that convert to sales-qualified leads.
- Complete department projects that will impact the corporate goals, such as doing a design audit and revamping of the company’s website and landing pages, and implementing SEO optimization strategies.
If the marketing department succeeds in generating more high-quality leads for the sales team, that would likely translate to more sales and greater profitability for the company.
Example #2: A Local Government
As part of creating a desirable community, many local governments incorporate a public safety objective—such as providing safe neighborhoods and public gathering spaces—into their overall strategic plan. In that interest, they may create metrics associated with improving citizen satisfaction and street lighting coverage, as well as projects to increase community involvement through new safety programs.
Again, all this is tracked and monitored at the highest level of the organization.
The police department plays a key role in public safety initiatives, and should be well aware of the government’s high-level objective to create safe neighborhoods. To support that objective, the department’s business strategy could include goals to increase community safety and reduce crime. To reach those goals, it might, among other things:
- Develop an initiative to create (or expand) a Neighborhood Officer Program.
- Develop an initiative to expand the number of hired officers.
- Measure the number and types of calls for help over time.
It’s important to note that not every departmental project will have a direct impact on corporate strategy, but every element of a business strategy should benefit the organization in some clear way.
Tips For Developing Effective Corporate And Business Strategies
1. Think about what is important for your organization or department
At the corporate level, consider your organization’s mission and vision. This will help clarify where the company is headed so you can begin to envision a path forward. As part of that exercise, consider the answers to some of these weighty questions: Why does our organization exist? What problem are we working to solve? Where are we headed in the future? Where should resources be allocated to position us for success?
At the business (departmental) level, review the overall corporate strategic plan and be sure you understand how progress will be tracked and measured. Then, consider your department’s capabilities relative to the overall strategic objectives. In what ways can your team best contribute in those areas?
2. Conduct research and perform analyses
To solidify your strategy ideas, take a hard look at your company and the current external environment with SWOT and PEST analyses. Take the results into consideration as you plot your strategy.
3. Define your metrics and initiatives
Once you’ve clarified your goals, you’ll also need to define measurements to track progress and consider key projects that will lead to success in those goals.
4. Involve the right parties when forming the strategy
At the corporate level, high-level executives should be involved from the beginning. Without their buy-in, your strategic plan has no chance of succeeding. If you’re a department head, you are responsible for creating your business strategy, however you may need to consult team members with regard to certain aspects of the plan (for example, timing or metrics). Additionally, be sure to review the proposed strategy with higher-ups to make sure everyone is in sync.
5. Use strategy software like ClearPoint in place to track progress
Forming a strategy is great, but if you don’t track progress you’ll have no way to see where you’re succeeding and where you’re falling short. Strategy reporting software works for both corporate and business strategy, making it easier to evaluate how every element of your strategy is going and how performance is impacting other areas.
See ClearPoint Strategy in action! Click here to watch a quick DEMO on the software
Manage Your Corporate And Business Strategies With ClearPoint Strategy Software
There’s no shortage of strategy software available, but it’s helpful if you can use the same tool for both corporate and business strategy management. Using the same tool for both activities reduces the work involved because it uses a single data set for reporting and analysis; it also makes it easy for everyone to see the linkages between corporate and departmental goals, and to track progress on everything.
In ClearPoint you can:
- Connect elements of business strategy to corporate strategy goals. You’ll visualize the hierarchy from the corporate level down to each department’s work plan.
- Track corporate- and business-level strategy performance. Quickly view important metrics and track important projects.
- Visualize your performance. Create high-level snapshots that give an overview of your progress, or, get granular with performance details, like the individual milestones that exist within a single project on a business work plan.
- Customize your tracking and reporting. ClearPoint offers a customized approach to accommodate different departmental reporting styles, structures, and information.
- Effortlessly gather progress updates. Say goodbye to emailing Excel files; ClearPoint automatically pulls data from any and all of your relevant sources.
- Set the appropriate user permissions. Permissions may vary for business-level strategy vs. corporate-level strategy; you can set them however you like for viewing or editing in ClearPoint.
- Maintain your corporate strategy and business work plans in one secure, cloud-based system.
There’s a lot more ClearPoint can do to help you succeed in achieving your goals—we’d love to show you! Reach out today to set up a demo.
Book your FREE 1-on-1 DEMO with ClearPoint Strategy
FAQ:
What are the key differences between corporate and business strategy?
The key differences between corporate and business strategy are:
Scope:
- Corporate Strategy: Focuses on the overall scope and direction of the entire organization, including decisions about which industries or markets to compete in.
- Business Strategy: Concentrates on how to compete successfully in a particular market or industry.
Decision-Making:
- Corporate Strategy: Involves high-level decisions made by top executives regarding mergers, acquisitions, divestitures, and resource allocation across the organization.
- Business Strategy: Involves tactical decisions made by business unit managers on how to achieve competitive advantage within a specific market.
Goals:
- Corporate Strategy: Aims to create value for the entire organization through diversification, investment, and portfolio management.
- Business Strategy: Aims to achieve competitive advantage and improve market position in a specific industry or market.
How do you develop an effective corporate strategy?
To develop an effective corporate strategy:
- Assess Current Position: Conduct a thorough analysis of the organization’s strengths, weaknesses, opportunities, and threats (SWOT analysis).
- Define Vision and Mission: Clearly articulate the organization’s long-term vision and mission.
- Set Strategic Goals: Establish broad, overarching goals that align with the vision and mission.
- Evaluate Market Opportunities: Identify potential markets or industries for expansion or diversification.
- Allocate Resources: Decide how to allocate resources across different business units and projects.
- Monitor and Adjust: Continuously monitor performance and make necessary adjustments to the strategy based on changes in the market and internal performance.
How do you develop an effective business strategy?
To develop an effective business strategy:
- Conduct Market Analysis: Analyze the market environment, including competitors, customer needs, and industry trends.
- Define Competitive Advantage: Determine what sets the business apart from competitors.
- Set Objectives: Establish specific, measurable goals for the business unit.
- Develop Action Plans: Create detailed plans to achieve the objectives, including marketing, sales, operations, and financial strategies.
- Align with Corporate Strategy: Ensure the business strategy aligns with the overall corporate strategy and goals.
- Implement and Monitor: Execute the strategy and continuously monitor progress, making adjustments as needed.
What are the benefits of using strategy software?
The benefits of using strategy software include:
- Improved Alignment: Ensures alignment of goals and strategies across the organization.
- Enhanced Visibility: Provides a clear view of progress towards strategic objectives through dashboards and reports.
- Better Decision-Making: Facilitates data-driven decision-making with real-time insights and analytics.
- Increased Efficiency: Streamlines the process of strategy development, implementation, and monitoring.
- Collaboration: Promotes collaboration among teams and departments by providing a centralized platform for strategy management.
- Accountability: Helps track responsibilities and performance, holding individuals and teams accountable for their contributions.
What are the key features of ClearPoint Strategy?
The key features of ClearPoint Strategy include:
-Scorecard Management: Allows for the creation and management of balanced scorecards to track strategic performance.
-Automated Reporting: Simplifies the generation of performance reports and dashboards.
- Goal Setting and Tracking: Facilitates setting, tracking, and managing strategic goals and objectives.
- Data Integration: Integrates with various data sources to streamline data collection and analysis.
- Customizable Dashboards: Provides customizable dashboards for visualizing key performance indicators (KPIs) and metrics.
- Collaboration Tools: Includes tools for team collaboration, such as shared comments, tasks, and notifications.
- Strategic Alignment: Ensures alignment of projects and initiatives with organizational strategy.
- Performance Analysis: Offers tools for in-depth analysis of performance data to support decision-making.
