Companies deliver products and services after carefully allocating budget, workforce, time, and policies. Their operations must avoid arbitrary revisions and prioritize long-term gains. Therefore, managers and business leaders want a reliable strategy to increase their resilience. This post will explain what a business-level strategy includes, with its types and examples.
What is Business Level Strategy?
A business-level strategy provides specific procedures corresponding to various corporate activities to help companies realize their long-term objectives. Many firms offer business strategy services utilizing the latest technological innovations for periodic optimizations.
Managers refer to strategies for informed decision-making. Examples of strategically laid down business-level strategies include sales and marketing techniques. Likewise, a supply chain strategy prioritizes reducing the cost of material management while building a network of reputable suppliers.
Organizations build in-house teams when they have a skilled workforce. However, acquiring and nurturing the best talent in the market to develop a business-level strategy takes time and effort. Besides, modern corporations want automated analytics to improve their growth strategies.
These requirements prompt companies to seek external assistance, e.g., market research outsourcing, analytics consulting firms, etc.
Michael Porter’s Three Levels of Business Strategy
Imagine a pyramid divided into three levels describing different business strategy services. The company leaders’ plans responsible for business development, partnerships, mergers, and acquisitions belong to the topmost region known as corporate-level strategy.
Michael Porter’s pyramid mentions business-level strategy in the middle region. It is concerned with cost leadership, differentiation, and focus. Therefore, business-level strategy directly influences a company’s ongoing operations.
The functional strategy sits at the bottom of Porter’s pyramid. It determines how the business units, departmental teams, and individual team members work toward meeting the required business outcomes. A company’s functional strategy affects its relationships with employees, contractors, and consumers.
A thriving organization develops and modifies these three categories of business strategy to eliminate operational inefficiency and make the company more resilient against corporate risks. For example, companies avoid over-production risks using demand forecasting modules. They also protect their market share by providing affordable, low-cost services.
Types of Business Level Strategy
1| Cost Leadership Strategy
Some industries serve customers who prioritize affordability whenever purchasing, subscribing to, or using services. This situation implies two challenges that companies must overcome using business strategy services.
- Develop products and services with low financial requirements concerning production, distribution, repairs, refurbishment, and recycling.
- Provide commercial offerings at an attractive price point to increase their perceived affordability among consumers.
Organizations require healthy profit margins to sustain operations, satisfy investors, pay salaries, and open new branch offices across territories. Therefore, a cost leadership strategy helps corporations calculate competitive pricing with reasonable profit margins, and market research outsourcing can help you create it.
2| Differentiation Strategy
If you try to purchase an affordable smartphone or computer today, you will regret your decision tomorrow. After all, affordability can be secondary in creative and technologically complex industries. Many industries also evolve so fast that consumers want the latest and most advanced product features.
Cost considerations and pricing strategies are also valuable for luxurious or creative goods. However, differentiating yourself from competitors is essential if you offer unique technologies or rich human experiences. E.g., Disneyland, touch-enabled laptops, 5G handsets, an Intel i9 Processor.
Differentiation roadmaps in business strategy services follow a philosophy that contrasts with the cost leadership strategy. Moreover, customers are comfortable paying premium fees to acquire the latest offerings from reputable brands.
Note that the higher price points associated with luxury goods often enhance the client’s social status. For example, expensive accessories like high-end wristwatches and diamond necklaces subtly express an individual’s financial strength at corporate networking events.
3| Focus Strategy
Both the cost leadership strategy and differentiation strategy serve a larger market segment. However, focus strategies target a smaller market segment than other business-level strategy types.
Companies can also integrate low-cost leadership and differentiation strategies to optimize their focus strategy for their ideal client personas. They identify narrow niches by utilizing market research outsourcing and consumer analytics.
If a business utilizes a focus strategy, it avoids clashes with established corporate giants in the broader market segments. Additionally, you will encounter a smaller pool of competitors who cannot impact your sales by a significant margin.
3.1| Focus on Low-Cost Strategy
When consumers in smaller market segments want low prices, organizations develop a business-level strategy known as focus low-cost. Micro businesses are the most frequent users of this strategy. After all, they need more resources to build multiple products and deploy them simultaneously to benefit from numerous profit margin levels.
3.2| Focus Differentiation Strategy
“Niching down” is a famous phrase in the market research outsourcing industry, and it means identifying differentiation opportunities even in the smaller market segments. Think of finding a narrower audience in an already finite consumer base.
Organizations utilize focus differentiation strategies to create personalized activity-level products that solve one or two particular problems experienced by the customers.
Examples of Business-Level Strategies
Seventy-nine years ago, on 28 July 1943, Sweden witnessed the foundation of this enterprise that would become the leader of the customizable furniture sector. IKEA is a privately-held commercial entity that offers unique kitchen appliances and home decoration accessories.
If you want an internationally recognizable use case for integrating low-cost and differentiation strategies, IKEA has a unique position, setting new examples of business-level strategies. It operates in more than 63 countries through its 466+ stores to design and distribute easy-to-assemble furniture.
Business strategy services identify IKEA’s investments in automation and logistics as essential to a low-cost business-level strategy.
Meanwhile, this corporation’s commitment to finding and nourishing modernist product designers allows it to stand out. Market research outsourcing firms can offer more detailed insights to explain why IKEA is an important example of the differentiation strategy.
Steve Jobs encouraged the entire world to treat computing systems like sculptures. He showed to the world that computers could have a greater meaning than the read-write speeds or fastest memory modules. Every individual knows how this differentiation strategy made Apple one of the top technology enterprises.
When others were busy creating advertisement opportunities by mining user data, Apple created strictly encrypted programming environments following a privacy-first approach.
Today, many technology firms create affordable electronic devices by combining moderately performing processors with less powerful hardware. However, Apple doubles down on display technology, battery life, efficient use of memory, and camera quality.
Consider the situation of operating system upgrades on Android smartphones vs. Apple devices. The iPhone 6s (2015) has obtained all operating system upgrades until 2021. This fact means users used iOS 9 to iOS 15 on the same machine, i.e., support for six years. Android smartphones get one or two operating system updates.
The list of examples depicting the role of different business-level strategies often mentions Amazon, an American enterprise synonymous with e-commerce. This company does not have physical retail stores under its brand name, and this approach reduces operational costs.
Market research outsourcing firms conduct case studies to understand how Amazon achieves economies of scale. This company implements business-level strategies to increase employee productivity and resolve consumer complaints efficiently.
Automation and consumer analytics are also indispensable to Amazon warehouses. It maintains a network of delivery personnel in over a hundred countries. Besides, it empowers its clients with marketing automation, cloud computing environments, and artificial intelligence models.
Amazon has the strategically beneficial power of gathering consumer behavioral intelligence through its e-commerce platforms. Therefore, its advertisement solutions result from a differentiation business strategy that separates it from exclusively search-based ad networks.
How to Create Different Types of Business-Level Strategy?
- Understand what consumers want by leveraging market research outsourcing solutions. Moreover, your team must analyze the prevailing prices to calculate how market competition will affect your sales.
- Identify the top priorities of your business development ambitions and brainstorm the methods to achieve them. Ensuring participation from all stakeholders gives you practical input and new ideas.
- Study the examples of your competitor’s business-level strategies to learn about the risks and rewards associated with changes in the business model.
- Let professional business strategy services help you audit, optimize, and revise strategies whenever market trends change.
- Determine performance measurement metrics to assess whether the implemented business-level strategy has improved profits and market share. Conduct the related assessments regularly to track inefficiencies and prevent unwanted outcomes.
- Perform data quality or protection examinations to fix issues like incomplete datasets, database corruption, unauthorized data manipulation, and cyber security vulnerabilities.
Corporations require a central system that can guide their employees in executive decision-making. A business-level strategy helps the immediate stakeholders conceptualize different protocols to accomplish particular business objectives.
Michael Porter’s pyramid suggests three types of business-level strategies, and the examples of several organizations have helped you understand how to use them together. Nevertheless, you require extensive consumer intelligence from market research outsourcing firms to choose a business-level strategy roadmap.
A leader in business strategy services, SG Analytics helps companies acquire holistic consumer insights to develop impactful data-driven strategies. Contact us today if you want scalable trend discovery capabilities to streamline your business operations for excellent performance.