By Fraser Sherman Updated September 04, 2020
Strategy can be nothing but a buzzword, but successful businesses make it mean something. Actually, it means several things: corporate, business and functional strategies are different levels of strategic management. All three are designed to help a business achieve its goals, but they're not identical.
Corporate strategy is your company's big-picture goals. If you're large enough to have separate departments, each department should have a business strategy based on the corporate goals. The functional strategy is a detailed plan for moving toward the company goals.
Three Levels of Strategy
Focused Momentum defines the corporate strategy vs. business strategy vs. functional strategy distinction. Corporate strategy sets the goals for the company as a whole. Business strategy sets goals for departments or divisions: financial strategy, manufacturing strategy or sales strategy, for example. At small companies, business strategy may be identical to corporate strategy. Functional strategies lay out how the company will meet the goals of the corporate and business strategies.
According to Tools Hero, functional strategy is the most detailed. If a corporate objective is to "proactively manage risk," the functional strategy includes the tactics and methods to achieve it. Functional strategies involve departmental goals as well as big-picture corporate and business goals. For example, if the corporate strategy prioritizes innovation, the research and development functional strategy might focus on developing innovative new products.
Corporate-Level Strategy Examples
ClearPoint Strategy advises that corporate strategy is particularly important if your business has multiple product lines or offers a variety of services. Each product line needs its own business strategy, but the company still needs an overall corporate strategy. You can derive corporate strategy by studying your vision and mission statement and setting goals based on them. Possible strategic goals at this level include:
- Expand sources of revenue.
- Build customers' trust.
- Use technology to improve efficiency.
- Provide skills training to staff.
- Communicate your strategic goals to your team.
The primary distinction between corporate strategy and business strategy is that different business units each interpret the corporate goals in a way that makes sense for them. At the corporate level, "provide skills training to staff" is a blanket goal for the whole company. The customer service team and the finance department's business strategies may include skills training, but they'll prioritize different types of skills.
Developing a Functional Strategy
Say the customer service department adopts "provide skills training" as a business-level strategy. That might mean training staff to resolve problems over the phone promptly, listen to a customer's complaint, or acquire fluency in Spanish because a lot of your customers speak Spanish. These business-level strategy examples then lead to a list of functional strategies.
Functional strategies require more projects and more detail. If learning Spanish is important, do you want all the team to be fluent? Maybe a minimum of one person on every shift? And does this align with the corporate goals? Perhaps instead of providing training, the corporate goal is to improve the quality of your hires, which would result in different business and functional strategies.
It's important to measure the success of your functional strategies. However, you don't want to be obsessive about it. Benchmarks are useful, but some managers succumb to accumulating more data on the team's performance than is useful.
FAQs
As the corporate strategy defines the direction of the business and what it wants to achieve, the functional strategy explains how to support the execution of corporate goals and objectives.
What is the difference between corporate strategy and functional strategy Quizlet? ›
Corporate strategy deals with the organisation as a whole. Business strategy deals with decisions that are linked to specific products and markets that can be differentiated from other products and markets in the same organisation. Functional strategy is concerned with the various activities of business.
What is an example of a functional strategy? ›
Some examples include:
- Human Resource Strategy: Focusing on talent development, performance management, and employee engagement.
- Marketing Strategy: Determining target markets, product positioning, and segmentation.
- Financial Strategy: Managing financial resources, investment decisions, and cost control.
Corporate strategies are devised to provide long-term direction and focus the company's resources on a few specific overall objectives. They are more driven by the company's mission, vision, values, and delivering value to shareholders. On the other hand, business strategies are more medium to short-term in nature.
What is the difference between functional planning and corporate planning? ›
Corporate strategy is your company's big-picture goals. If you're large enough to have separate departments, each department should have a business strategy based on the corporate goals. The functional strategy is a detailed plan for moving toward the company goals.
What is the difference between functional and corporate? ›
Corporate strategy is the overall plan that guides the other two strategies. Business strategy is related to the particular market, product or resources whereas functional strategy is specific to various departmental actions. Let's understand all these 3 types of strategies in detail.
What is corporate strategy function? ›
What is corporate strategy? When clearly defined, a corporate strategy will work to establish the overall value of a business, set strategic goals and motivate employees to achieve them. It is a continuous process that should be carefully tailored to respond appropriately to changing conditions in the marketplace.
What is corporate level strategy with examples? ›
1) Corporate Level Strategy
That destination affects all the strategies and decisions in every other part of your business. So, for example, if your business has reached market saturation and you need to diversify to survive, your corporate level strategy would be to spread to new markets.
What is the functional strategy of Coca Cola? ›
Functional Strategy Powering Global Growth
This involved partnering up with local bottling companies while focusing internally on brand building and product concentrate manufacturing. Such bottling partnerships gave Coca-Cola a highly asset-light and flexible structure, making rapid global expansion more feasible.
What are the benefits of functional strategy? ›
A functional strategy helps set objectives that guide the optimum allocation of resources among different business functions. This strategy also guides and facilitates coordination among the functions to maximise their outcomes.
A corporate strategy sets the strategic goals for the company as a whole. A business strategy sets the strategic goals for the business unit. If a company is small, its corporate and business strategies are one and the same.
What is the three 3 main types of corporate strategies? ›
These three corporate strategies examples can be applied to specific periods in a business' existence:
- Growth: To expand the business and increase profits.
- Stability: To maintain current business operations.
- Renewal: To revive an ailing business.
Its planning involves focusing on the organization's structure and identifying the problems in different business areas. The responsibility for appropriate strategy formulation lies with the top-level managers of the company. They discuss, analyze and finalize strategies to move forward in the market.
What is functional level strategy? ›
Functional level strategies are the actions and goals assigned to various departments that support your business level strategy and corporate level strategy. These strategies specify the outcomes you want to see achieved from the daily operations of specific departments (or functions) of your business.
What is the difference between a corporate strategy and a functional strategy quizlet? ›
The difference between a corporate strategy and a functional strategy is that: A. the former focuses on how a strategic business unit will compete in its product domain and the latter sets long-term direction for the total enterprise.
What is the relationship between corporate business and functional level strategies? ›
Business-level strategy: This strategy focuses on how corporate aspirations will be implemented within individual company settings. Functional-level strategy: This strategy focuses on the individual tasks of departments and employees in working toward corporate goals.
What is the difference between corporate strategy and brand strategy? ›
Timeframe: A business strategy is typically focused on the short to medium term and can be adjusted and updated as needed to respond to changes in the market. In contrast, a brand strategy is typically developed for the long term and is focused on building, maintaining, and growing the brand over time.
What is the difference between corporate strategy and market strategy? ›
The corporate strategy is your company's car engine. It drives the business towards its long-terms goals. The marketing strategy is a business-level strategy document, defining how you will attract customers to your product.
Which of the following summarizes the difference between corporate strategy and business strategy? ›
The general distinction is that business strategy addresses how we should compete, while corporate strategy is concerned with in which businesses we should compete. Specifically, business strategy. refers to the ways in which a firm plans to achieve its objectives within a particular business.
What is the difference between corporate strategy and vision? ›
Strategy defines the direction you will take to achieve your vision. Strategy aligns the entire organization around what you want to accomplish and serves as a guide for how to turn the vision into reality. It lays out your goals and the key initiatives to be successful. Strategy is not the tactical work you will do.
