Business-level strategies examine how companies compete in a given industry.
Companies obtain these strategies when executives make decisions about whether their source of competitive advantage is based on price or differentiation and whether their scope of operations targets a broad or narrow market. Business-level strategies refer specifically to strategic planning and the execution of initiatives for a specific business.
Business strategy is considered the “middle” level in the general strategic hierarchy. That's why recognizable organizations often combine business strategy with corporate strategy in the form of a single level of strategy.In general, this type of strategy would be ideal for companies that already have a niche in which they would like to produce more specialized products or services. Your functional-level strategy will begin to address the specific actions that functional departments will take to achieve the strategic objectives and projects of the business strategy. Companies that use a focused differentiation strategy can defend themselves in the same way as companies with a broad differentiation strategy. Business-level strategy theory also states that you can focus mainly on three strategies that, as an organization, you can use to succeed in the market, such as cost leadership, focus or differentiation.
This gives us the ability to begin to develop strategies that can promote competitive advantage and create value, the ultimate goal of business-level strategy. In a quick understanding, in this strategy, this company will charge lower prices for its items than others in the same sector to compete with them and increase their purchasing power. Then, they can develop their own strategies and tactics to achieve these areas of focus, which should flow upwards to help achieve the strategic objectives and projects of the business strategy. The price of products is a key marketing parameter that helps companies survive and stay ahead of the competition.
As a result of the more restricted and unique nature of business-level strategy, the concept of a company's core competencies becomes very important. Strategies at this level focus on standing up to competition, defending market share and, at the same time, making a profit. Companies that meet needs and create value for customers are usually successful companies. As a result, organizations with only one distinct business usually combine business strategy with corporate strategy as a single level of strategy.
To apply cost leadership to companies, a single company can reduce the final cost of its product or service by reducing costs elsewhere in the company. To be more specific, a business-level cost leadership strategy is a strategy that companies use to increase efficiency, reduce production costs to bring them below the industry average or competition in the area. Core competencies are now the components of a business that is different from those in the market and can offer value to customers.