Types of Business Strategy

Cite this article as:"Types of Business Strategy," in The Business Professor, updated April 9, 2020, last accessed October 26, 2020, https://thebusinessprofessor.com/lesson/types-of-business-strategy/.


What are the Types of Business Strategy?

There are generally 3 Types of Business Strategies:

  • Organizational (Corporate) Strategy – A corporate-level strategy focuses on high-level decisions that affect the market in which the company competes. It may also regard what the company stands for and how it will be perceived by stakeholders and third parties. Organizational Strategies are generally broken down into Growth-Based Strategies, Stability Strategies, Retrenchment Strategies, or Mix of these Strategies
  • Competitive Strategy – A competitive strategy focuses on how a business unit will compete against competitors within the market. Implementing a business unit’s competitive strategy should further the organization-level strategy. The primary understanding of competitive strategies comes from Michael Porter’s Generic Strategies, which include Cost-Based Strategy, Differentiation Strategy, and Focus Strategy. The objective of a competitive strategy is to establish some form of competitive advantage within the market. The primary tool for measuring the competitive position of an organization in the market is Porter’s 5 Forces Model. This model identified: New Entrants, Substitutes, Buyer Power, Supplier Power, and the Current Rivalry in the market.
  • Functional Strategy – A function strategy concerns how an operational division will achieve its objectives. Carrying out a functional Strategy is in support of a business unit’s competitive strategy.

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