What Are The 4 Types Of Business Strategies? [Explained]

If you’re interested, read on for more! 

What Is A Business Strategy?

A business strategy is every action a company takes to ensure it achieves its vision, mission, and goals. 

In short, a business strategy involves understanding what a company does, what it needs, and the steps it needs to take in order to achieve those goals.

It is the responsibility of the business owner to set these priorities and then delegate these resources.

Once everyone in the business is aware of the business strategy, a framework can be implemented to ensure the team is working towards business goals.

Here are some questions to ask yourself while trying to decide on how to implement these business strategies strategy into your business:

• Who are we?
• What makes our business unique?
• What are our plans for the future? 

It is important to have a thorough understanding of your business goals so you can make the best decisions for your business. Once you have this, you can switch your focus to the objectives that will ensure you achieve these goals. 

What Are The Four Types Of Business Strategies? 

The four types of business strategies are:

• Corporate Strategy
• Competitive Strategy
• Functional Strategy
• Operating Strategy

Let’s check these out in more detail!

Corporate Strategy

An organizational-level strategy, also known as a corporate strategy, is focused on the purpose, values, mission, and vision of the company. It relates to the goals of the organization, as well as the core value proposition, in this way.

The corporate business strategy also considered how stakeholders and other outsiders to the business will view the company values.

Corporate business strategies can be divided into:

• Growth-based strategies
• Stability strategies
• Retrenchment strategies
• A combination of all three 

Competitive Strategy

The competitive strategy is also called the business-level strategy. It concerns itself with how the business unit of the company will compete with rivals in the same industry. Its purpose is to create a long-term, competitive advantage for the business.

A business’ competitive strategy should advance the corporate strategy.

There are three foundational strategies that will help you understand competitive business strategies. They are:

• Cost-based strategies
  
• Differentiating strategies
  
• Focused (niche) strategies

Another important aspect of the competitivestrategy is Porter’s value chain. This chain is a series of steps that are involved in creating a finished product.

This chain also gauges actions taken during the process of value delivery. By doing so, the chain theory gives insight into how to use competitive strategies and where it is best to implement them.

Functional Strategy

The functional business strategy focuses on how the functional division of the business will accomplish the business goals. The functional business strategy maximizes resource productivity.

By doing so, it provides support for the competitive strategy. To achieve a competitive advantage, this strategy places emphasis on competence development. It also focuses on:

• Accounting
• Operations
• Marketing
• Finance
• Human resources
• Research and development 

The functional business strategy formulation is characterized in three different ways:

• The short-term nature of the business objectives
• How specific the business goals are
• How involved management is in the business

The main focus of the functional strategy is important operational elements of the business value chain. This includes:

• Pricing
• Cost-effectiveness
• Productivity
• Product design
• Image
• Efficiency
• Product life cycle

The functional strategy hones in on the most important people in these areas and helps to improve their performance.

What Are Some Examples Of The Best Business Strategies? 

Here are some examples of the best business strategies! 

1. Cross-Sell More Products 

There are businesses out there that focus on selling more than one product to the same set of customers. Online retailers, office supply companies, and banks all operate like this.

The average cart size will increase when you sell more products to your existing customers, and this negates the need to spend money on bringing in brand-new customers.

2. Creating An Innovative Product

Having an innovative product will really set your business apart, and you can establish yourself away from the competition. However, you need to know what “innovative” means in terms of your niche and how you are going to implement it.

3. Increase The Sales Of New Products 

Even if a business has popular products, it is always a good idea to continue to innovate by dedicating research and development resources to new products.

This will ensure that your business brings updated products to your industry and that you are keeping up with the trends of your industry. 

4. Increase Client Services 

Client services are vital to any thriving business.

A great way to increase your business’s reputation in regard to client services is to have goals that center around boosting the customer experience, such as an efficient call center, online support, an accessible place on your website for customer feedback, etc. 

5. Capture A Growing Market

To thrive in an ever-changing market, some corporations aim to combine with or acquire a rival company.

There are many businesses all over the world that implement this tactic into their business strategy to gain an advantage in their respective industries. 

Companies are now able to compete in markets where they previously did not have a strong advantage because they have gained a new business and still have the customers of the service or product. 

6. Create Distinct Products 

Not only is it important to create innovative products. You also need to make sure that your products are distinct.

This is a very popular business strategy, because it allows the business to focus on selling their products based on their features, technology, styling, or cost. 

7. Pricing Techniques

In regard to pricing, companies have two options! The first is to charge lower prices so more customers are drawn in. The second is to charge higher prices in order to give aspirational value to their products.

Typically, profit margins are rather slim, so if a business wants to sell its products for lower prices then it will need to sell a high volume of products in order to thrive.

On the flip side, businesses that want to sell their products for a high price can maintain the exclusivity of their products while still keeping a high-profit margin. 

8. The Use Of Technology

These days, technology is vital for a business to thrive!

Implementing digital business strategies, like a digital marketing strategy, into business plans will usually result in increased sales, higher productivity among employees, and sometimes, dominance in your chosen industry. 

Digital technology strategies can involve making research and development investments, hiring expert personnel, or purchasing a smaller business to access its technology. 

9. Increase Customer Loyalty

Customer loyalty is vital for business success. There are many tactics you can implement to maintain customer loyalty, such as reward schemes, personalized emails or messages, and delivering on business promises, such as high-quality products

10. Focus On Sustainability 

Sustainability is a very important factor in business success and something that customers care about.

So, it is important to consider sustainability in all of your business practices - how your company can become more sustainable, how it can contribute to worldwide sustainability, etc. 

For example, your business can implement a recycling program to lower the cost of energy or the environmental impact of the company. 

Final Thoughts 

A business strategy is the actions a company takes to achieve its vision and goals.

All businesses need business strategies if they want to see long-term success. There are four types of business strategies, all of which are important and need to be carefully considered so they can be implemented into your business in the best way.

The four business strategies are the corporate strategy; which focuses on the business mission, goals, and values, the competitive strategy, which focuses on how your business will compete with rival businesses in the same industry and how you can set yourself apart, the functional strategy; which focuses on how business goals will be established, and the operational strategy; which focuses on how effectively the operating divisions of the business deliver the corporate, competitive, and functional-level strategies.

We hope this article helped you understand what the four business strategies are and how to implement them into your business! Good luck!