The Business Strategy Hierarchy: A Comprehensive Guide for Entrepreneurs
The first step toward running a successful business is to understand its strategy and how it works. A good business strategy can help you create a roadmap for achieving your goals, staying ahead of competition, and growing your brand. However, creating and implementing a successful strategy can be challenging, and requires a thorough understanding of the business strategy hierarchy. In this article, we will dive into the different levels of the business strategy hierarchy, and how they work together to create a winning business strategy.
Level #1: Corporate Strategy
Corporate strategy is the highest level of the business strategy hierarchy, and it defines the overall goals and objectives of the organization. This level of strategy is usually determined by the top-level executives and the CEO, who set the direction for the entire company. Corporate strategy focuses on the long-term vision of the business and outlines the steps the organization will take to achieve these goals.
Level #2: Business Unit Strategy
Business unit strategy is the next level of the business strategy hierarchy. It focuses on how the company can compete in specific markets, product lines, or regions. This level of strategy is generally developed by the leadership team of each business unit, and it includes tactics such as marketing, product development, and pricing strategy. Business unit strategy is closely aligned with corporate strategy and helps to achieve the goals set by the top-level executives.
Level #3: Operational Strategy
Operational strategy is the lowest level of the business strategy hierarchy, and it focuses on the day-to-day activities of the business. This level of strategy is developed by frontline managers and employees, and it includes tactics such as production, distribution, and supply chain management. Operational strategy is closely linked to business unit strategy, and it helps to implement the tactics needed to achieve the business unit’s goals.
The Importance of Aligning the Business Strategy Hierarchy
Aligning the different levels of the business strategy hierarchy is critical for achieving business success. Without alignment, the different levels of strategy can contradict each other, and the company’s resources can be wasted. Alignment ensures that every level of strategy is working toward the same goals, and that the organization is moving in the right direction.
Real-World Examples of Successful Business Strategy Hierarchy
One of the most successful examples of a company that has aligned its business strategy hierarchy is Apple Inc. Its corporate strategy is focused on innovation, customer experience, and luxury brand positioning. The business unit strategy is aligned with this corporate strategy by providing exceptional customer service, high-quality products, and premium prices. The operational strategy is also aligned with the business unit strategy, with a focus on quality manufacturing, efficient supply chain management, and effective cost controls.
Another successful example is Amazon Inc. Its corporate strategy is focused on customer satisfaction, innovation, and operational excellence. The business unit strategy is aligned with this by providing customers with the widest selection of products, affordable prices, and fast delivery. The operational strategy is also aligned with the business unit strategy, with a focus on cutting-edge technology, efficient shipping, and exceptional customer service.
Key Takeaways
Understanding the business strategy hierarchy is critical for achieving business success. Corporate strategy is the highest level of the hierarchy and outlines the company’s overall goals and objectives. Business unit strategy focuses on individual markets or product lines and is closely aligned with the corporate strategy. Operational strategy is the lowest level of the hierarchy and focuses on the day-to-day activities needed to achieve the business unit’s goals. All three levels of strategy should be aligned to ensure that the company’s resources are used efficiently and that the organization is moving in the right direction. Real-world examples of successful business strategy hierarchy include Apple Inc. and Amazon Inc.
