Business Strategy – Definition, Importance, and Levels

business strategy

Businesses all around the world offer products and services in cutthroat marketplaces where they must raise owner and shareholder value to remain in business.


This necessitates a strategy that aids managers in directing their choices and efficiently allocating resources to meet important goals. This technique is another name for this plan.

Around the world, there are several instances of prosperous enterprises. While having a strong staff and adequate funding have been key components in their success, there is one more element that guarantees that firms accomplish their goals: a foolproof business strategy.

Business strategy: What is it?

Although it is simple to describe, how it is formed and carried out is what distinguishes a firm. A firm’s decisions and activities made to realize its wider vision collectively constitute its business strategy. Businesses may become market leaders in their industry by understanding what a business plan is and how to implement it effectively. A business plan is the foundation of every company, and any flaws might result in the corporate objectives slipping out of reach.

Business strategy’s importance

A corporate goal without a strategy is nothing more than a pipe dream. If you join the market without a solid plan, it is nothing less than a risk.


The relevance of business strategy is becoming more and more clear as competition rises, and organizations are employing a wide variety of business strategies. Here are five justifications for why your company needs a plan.

  • Planning: A business plan includes a corporate strategy. The strategy shows you how to achieve the goals that are laid forth in the company plan. It is a strategy for getting where you want to go. Strengths and Drawbacks Most of the time, you discover who you are.
  • Strengths and Shortcomings: When developing a strategy, you often learn about your true strengths and weaknesses. Additionally, it enables you to capitalize on your strengths and utilize them to mask your inadequacies (or eliminate them).
  • Efficiency and Effectiveness: Business processes naturally become more efficient and effective when every step is planned, every resource is allotted, and everyone is aware of what has to be done.
  • Competitive Advantage: A business strategy focuses on using the company’s advantages to provide the brand with a distinctive position in the market. From the viewpoint of the consumer, this provides the firm with a distinct identity.
  • Control: It also determines the course to be taken and the interim objectives to be met. This makes it simple to manage the tasks and check that they are progressing according to plan.

What distinguishes strategy from tactics?

It’s important to comprehend the differences between a strategy and a tactic before we go into the specifics of developing a plan.


Despite the frequent confusion between the two names, they mean completely distinct things:


An organization’s long-term objectives and the plan it has to achieve them are referred to as its strategy. In other words, it demonstrates the strategy for achieving the stated goal.


The particular steps used to accomplish the objectives in accordance with the strategy are referred to as a tactic.


For instance, business A’s strategy can seek to enter the smartphone market as the least expensive supplier. Then, their management must bargain with suppliers to lower the prices of the electronic components used in manufacturing. This is a technique to carry out the predetermined plan.

Business Model, Business Plan, and Business Strategy: What’s the Difference?

Let’s examine the distinctions between the aforementioned three immediately. A business plan includes a company strategy. Additionally, each of these is a component of a business model. A business model is essentially a blueprint outlining how a firm runs, generates income and accomplishes its goals. A business plan specifies each of them as a component of the company model and lays out the steps necessary to accomplish each goal.


Various Business Strategy Levels

Every level of a firm employs a different set of business tactics. The many layers of business strategy are determined by the objectives that each department of a corporation seeks to accomplish. There are three stages of business strategy based on common criteria.


Business Level

The highest level is this one. It outlines the objectives and strategies for achieving them. This level specifically outlines the organization’s purpose, vision, and corporate goals.


Organizational Level

Each organizational unit’s business plan will be unique at this level. This is so that different tactics may be used for each unit to achieve greater efficiency as each has unique procedures and operations. Every business plan, though, needs to be in line with the aims and goals of the corporation.


Functioning Degree

At the functional level, marketing, sales, operations, finance, and other departments establish the strategy. Such functional level plans are required to guarantee the effectiveness of daily operations inside the business. These all work together to achieve the same objective.

Several tiers of business strategies

The corporate, business and functional levels are the three levels at which strategies are commonly applied.

The strategic framework of an organization is made up of all three levels:


  1. Corporate Level: Corporate-level strategies are the highest management’s strategic plans for the organization. They serve as the foundation for the mission and vision statements and significantly affect the success of the business over time. They serve as guidance for decisions including expansion, purchases, diversification, and investments.


  1. Business Level: Strategies at the business level are integrated into the corporate vision, but they are focused on a particular industry. At this stage, the vision and goals are translated into specific business strategies that determine how an organization will compete in the market.


  1. Functional Level: Strategies at the functional level are intended to explain how functional divisions like marketing, human resources, or research and development might complement the established corporate and business strategies of a company.


A company frequently employs various methods at each level. To effectively reflect the various demands of each layer, is very crucial.


Even if there is a chance that different strategies will have competing priorities and goals, these risks may be minimized with proper risk management. In a moment, we shall return to this statement.

Important Elements of Business Strategies

The response to what, how, why, where, and how is a company plan. This is where all-encompassing leadership training programs come into play. These classes assist leaders in comprehending the fundamentals and other specifics of a business plan. You may enroll in these leadership courses to keep up with the most recent advancements in this field.

  • The mission, vision, and objectives are the first part. The steps that must be taken, when they must be taken, and how they must be taken will all be made apparent in this document.
  • The second factor is a company’s essential values, which have to be evident from the beginning.
  • A SWOT analysis is the third element. Strengths, Weaknesses, Opportunities, and Threats are referred to as SWOT. A SWOT analysis is the third element. Strengths, Weaknesses, Opportunities, and Threats are referred to as SWOT. This will provide information about the company’s present situation.
  • Operational strategies, which describe how the business will efficiently accomplish the stated objectives, make up the fourth component.
  • Resource allocation and resource acquisition make up the sixth component. It will answer questions like how many resources are required, how they will be allocated, etc.
  • The sixth element is a measurement, which refers to how each company action will be monitored and evaluated in relation to predetermined benchmarks.

Why is it crucial to have a business strategy?

  • Any firm must have a strategy in place to be successful.
  • It essentially represents the firm’s assets and liabilities and clarifies how the company intends to react to challenges and opportunities in the market in which it competes.
  • A strategy considers the available resources and how to effectively use them to accomplish its stated goals.
  • As a result, a strategy is sometimes referred to as the lighthouse for a company’s management since it unifies the activities of all functional areas and provides its staff with a Northstar to help them make decisions daily.
  • To illustrate this argument, even more, suppose a company doesn’t have a plan for how it would compete in a market:
  • Without such a plan, each department’s operations would be disorganized, which would reduce the organization’s overall performance. This incoherence inevitably leads to a loss of competitive advantage, which the market will take advantage of.

Business Strategy’s Nature

A business strategy is a collection of proactive management measures intended to improve the company’s performance overall and position in the market, as well as responses to unforeseen events and shifting market conditions.


Most of the firm’s current strategy is the consequence of previously taken initiatives and business techniques, but when market circumstances change unexpectedly, the organization needs a strategic response to deal with eventualities. Consequently, a portion of the company plan is developed as a rational response to unanticipated developments.

Examples of Business Strategies

I’ve gathered two instances of businesses—Amazon and Reckitt Benckiser—that have effectively carried out their general business plan to exemplify the previously outlined ideas.


Prime example: Amazon

The excellent customer service and quick shipping choices offered by Amazon are well recognized. Additionally, Amazon realizes its aim of being the world’s most customer-focused business by consistently innovating in both mature and emerging regions. The outcome? more expansion and higher shareholder value.


Jeff Bezos himself established the four guiding principles for the business in his first shareholder letter in 1997: obsessing about the customer rather than the competition, being passionate about creation, is dedicated to operational excellence, and having a long-term perspective.


The general business strategy of Amazon aims to obtain a competitive edge through reducing costs (cost leadership), together with its capacity for innovation in market competition. The end-needs customers are the main priority at all times.


This enables Amazon to catch up to its rivals, who frequently struggle to do so, within a few years (ST-Strategy). The general strategy of concentrating on choice, pricing, and economies of scale to generate value for customers is followed by all of its lower-level strategies (operational, marketing, etc.).


Amazon has become one of the most prosperous digital corporations of the twenty-first century because of its strategy structure.


Second instance: Reckitt Benckiser

Reckitt’s brand portfolio includes well-known household names like Finish, Dettol, Nurofen, Vanish, and Durex even though few customers are familiar with the company’s name.


To go back on a path of steady growth, the company had to alter its business plan in 2012 due to sluggish sales and growing competition.


According to the revised plan, RB:


Focused on R&D for new product lines, which enabled it to accomplish its high-level goals to boost sales and profits; increased its spending in markets with above-average growth to encourage more expansion; revised and increased spending on its brand and marketing initiatives;


To increase its net revenue growth by +200bps vs. market average every year till 2017, many key performance metrics were established and continuously tracked.

Reckitt was unable to meet all of its objectives, but changes to its business approach allowed it to increase sales and earnings beyond the industry standard.


  • Action plans for various goals are spelled forth in the business strategy. They are the backbone of a company’s growth and have the power to build or ruin enterprises.
  • The purpose, vision, as well as financial and non-financial goals, must all be accomplished. Depending on the objective, long-term and short-term strategies are formulated.
  • There are many different kinds of business strategies, including ones related to manufacturing, the supply chain, and human resources.
  • Multiple planning levels, including corporate, business, functional, and operational levels, are involved in strategies.
  • Along with generating income, they have a significant impact on how the company is positioned in the market.







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