Business level strategy is different for each market segment due to the distinct environment. Business-level strategies can also be known as corporate strategies or Strategic Business Unit (SBU). The concept of a Strategic Business Unit (SBU) is based on recognizing the distinct markets served by the business.
Business Level Strategy
The business level strategy is helpful to meet the requirements of clients from various segments and provide the best value for them. They try to accomplish a clear and simple goal: to have an easy victory against competitors in a tasting test. Thus, satisfying the needs of different customers in various segments aids the company in maintaining and increasing its competitive edge.
For instance, Domino’s Pizza owes its success to its Turnaround strategy, which produced positive outcomes because of the entire organization’s efforts. Corporate strategy is only part of the entire set of business strategies. However, it deals with various subjects. While business is concerning with and has an impact on its business strategies, the first focus is on the structure and balance of growth and renewal rather than implementation of market strategy.
Importance of Business Level Strategy
Here are some of the benefits of business strategy:
1. Coordinate Unit Activities
The common goal of a business-level strategy is the coordination of individual unit-relation activities in the business. The activities of a unit can classify into departments and specific job roles. Coordinating these groups or individuals is generally the responsibility of an administrator or supervisor. The manager is accountable for ensuring that all employees are on the same page and focusing on achieving the goals or objectives. Supervisors and managers could also be accountable for distributing resources across various activities.
2. Utilize Human Resources
Businesses must be able to utilize the available human resources within their organization and the wider economy. Most companies require human labor to achieve their business goals and targets. Businesses develop a strategy for their business to ensure that their organization has enough workers to provide an exact amount of products or ensure the strategy is accountable for ensuring that the correct kind of labor is procured for business functions. It is the main importance of business level strategy. That typically involves assessing whether skilled or untrained workers are helpful to perform business tasks.
3. Develop Distinctive Advantages
Establishing distinct competitive advantages or core competencies is crucial to building an effective business. Competitive advantages and core competencies provide unique capabilities or actions that a company can use to make products that are superior to other companies. Examples of this business level strategy include purchasing economic resources with lower costs than competitors, highly efficient and efficient production equipment, exclusive products or services that other companies can’t duplicate, and an efficient supply chain to get products to customers quickly.
4. Identify Market Niches
Finding a niche in the market usually involves doing an economic analysis and determining whether the demand for a particular product needs to be met or whether more products need to be available to meet the current demand. Although these are the most common market niches in business-level strategies, other niches might be based on changing the existing product, targeting certain demographics and other similar strategies. The ability to fill a niche in a particular market can allow companies to charge consumers higher prices as substitute goods might not be available in the current economic marketplace.
5. Cost Leadership
Cost management is a corporate strategy that requires the efforts of designers, suppliers, research and development, the production process and even distribution. Businesses need help to determine the cost of a product to generate the highest return and remain competitive. Cost leadership is important for business level strategy. If a business cannot achieve cost leadership, the company may also want to differentiate the product by offering services that competitors don’t offer.
Businesses can succeed through differentiation strategies by joining a specific market segment and offering products and services that customers perceive as valuable. This tiny segment typically demands high-quality products, new ideas, technological capabilities, and superior customer service. By entering markets with specialized needs, businesses can increase the price of a product due to the industry’s unique requirements.
Limitations of Business Level Strategy
A business person can describe the weaknesses of business strategies as they are:
- The complexity of deciding on the best business-level strategy an organization must take care to keep an eye on business performance and beware of being complacent.
- Time-consuming and not economically viable business-level strategies oblige the business to be alert to the needs of its customers as well as the possible invasion of competitors.
- It can be challenging to implement. When a business has adopted an approach, it must only develop tunnel vision once the company has reached some level of accomplishment. It is one of the limitations of business level strategy.
- Business strategy needs to take into account the larger problems. It’s just in restriction to particular problems.
- Business strategies are always changing. They are never constant. It causes a challenge in getting more knowledge of the strategies.
- A business strategy is exclusively focusing on a particular business unit.
- Business strategy is concerned with real issues. It cannot deal with intangible problems since it isn’t pre-planned by nature.