What is Business Strategy – Levels And Why It Is Important


A business strategy can be simply defined as a set of plans, decisions, and actions taken by the business firm in response to the environment to achieve business goals and objectives.

Many academic books have defined business strategy as a theoretical concept. But practically different types of businesses have different sets of business goals according to their business models.

Therefore to achieve desired goals, the management of a company should formulate its business strategy, with relevance to its business model. Thus to secure a strong competitive position in the market.

Since the business market is dynamic, there is a need for top-level management to create a framework. With critical analysis to overcome challenges and failures and to meet the business opportunities to succeed in the business.

Why Business Strategy is Important?

Business Plan

Business Plan states the full process of your business clearly that includes goals, and time frame to achieve it. It gives a road map and direction to the entire business. A business strategy is a part of a business plan that describes techniques to execute the stated goals.

Current Market Position

Check your current position in the marketplace. If you’re standing in the right place, then it is ok. If not, there would be a big puzzle to solve. Some strategy tools might help you in determining the market position of your company. Also, it helps in identifying the hidden facts that hamper your growth.

Strength & Weakness

Not every business is successful at the initial stages. Also, it is not permanent. If you’re struggling, then it is significant to understand the strength and weakness of your company.

Strategy tools like SWOT, Gap analysis, and VRIO will be useful for all founders to overcome failures.

Cost & Price Optimization

Managing the overall cost and fixing the price of your product is a crucial task. Sometimes, it might be difficult for you to manage cash-flow in your company. In such hard situations, you need to cut off and optimize extra cost to create the product. Pricing strategies play a major role in determining the profit and return on investment.

Effective Communication

Literally, it means the Marketing communications between the seller, marketing channels, distributor, and buyer. Marketing strategy is an essential thing for a marketing manager to analyze the gap in reaching the brand to the customer.

Identifying the customer base, their intent are key factors in building strong communication to promote your product.

Further, it creates brand essence that personally connects the brand with your target customer.

Growth Tracking

Business strategy is useful to track the performance and growth of your company. Measuring with the performance indicators and metrics might guide you to rectify your mistakes. This will improve your performance and help you to achieve success in the long-term.

Competitive Advantage

Competitive advantage is gained by a proper Business strategy that allocates every resource of a firm. By delivering a high-quality product with minimal cost and loyalty to the client or customer, you can outperform the competitor.

Levels of Business Strategy

A well-organized strategy and its successful implementation are significant for business victory.  Business strategy is classified into three levels as the business operates at various levels in an organization.

Corporate-Level Strategy

The corporate-level strategy is the highest level strategy done by top-level management. Which includes a master plan for the entire management that integrates all the units and levels of a firm. This strategy clearly illustrates the major plan in the long term for the entire business operations from end to end.

Business-Level Strategy

The business-level strategy is the second level of a management strategy that operates at a specific business level. It is created by top-level managers and officials working in a firm. This business-level strategy abides by the rules and guidelines devised by top-level management and acts as a medium between top-level and low-level management.

Functional-Level strategy

The Functional level strategy is created by various operational departments in a firm. These departments include Finance, Sales, Marketing, Human Resource, Research, and Development. It is developed by these department heads and it adheres to the strategy formulated by top management and maintains interrelationship between these departments.

Effective communication between the departments is important for regular work-flow in an organization. It is the responsibility of middle-level managers to manage the system with perfect strategy.

It is important to have different strategies at different levels, where these comprehensive strategies combine to work for an organization to achieve a common goal.

Key Elements and Frameworks

Business Objective:

The business objective tells what a company wants to become in the future?

Without a proper business objective entire idea would seem to be vague, which ends up in confusion. Creating a business strategy pertaining to your objective will make you land on the path of success.

Business Objectives should include other elements like Vision and Mission Statements, and setting short-term and long-term goals.

Core Values

In common, core values are the essential elements of a company. It tells which is right or wrong for the organization as a whole. Integrating all these values gives a single direction towards success.

Documenting and sharing these values with each employee would act as a principal guideline. Though it is considered as a belief, it drives every person of your company.

SWOT Analysis:

Critical analysis at a ground level should be done before the decision-making process. This uses many tools for the evaluation of the strategic position in an organization. One such important tool is SWOT.





It is an important element of business strategy, as it manipulates the threats and weakness and finds new opportunities to overcome the problems.

Gap Analysis

Gap analysis is used to find the gap between the current performance and the business potential. Also, it determines the capabilities of all the resources of a company.

Whether it will be enough to achieve the target. If not, the requirements should be improved to give the expected results.

Key Performance Indicators

Key Performance Indicators (KPI’s) are the measurable value that represents the performance of the company. KPI’s are the important component for a business strategy that intends to achieve long-term success.

It includes all the financial and operational achievements of your company. It helps the managers in making decisions with a clear vision.

Resource Allocation

With all the performance metrics recorded, a strategy is important to allocate the necessary resources. It is needed to evaluate the current resources. Do you need extra resources for operations? Strategy tells how to procure the required resources and allocate them.

Tactical Action Plans

To get your business off the ground, tactical measures are required.

Tactical action is significant to accomplish a successful business strategy. All the efforts that you put in, should be placed in the right order. Unless there is no tactical action, these efforts would be wasted.

Reader’s Insight:

Let us know if we missed out on anything in this article Business strategy, levels and importance. Share your thoughts in the comment section.

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