corporate strategy assignment example

Corporate Level Strategy: Explained with Examples and Types

A corporate-level strategy refers to the overarching strategic plan that dictates the direction of the entire organization. It’s the highest level of strategy, covering all of the firm’s diverse operations, and is typically set by top management and the board of directors.

Key aspects of corporate-level strategy include:

• Growth strategy:  Determining how the corporation plans to grow, whether through internal development (new products, new markets), external methods (acquisitions, mergers, strategic alliances), or a combination of both.
• Stability strategy:  If a corporation is satisfied with its current growth and success rate, it may opt for a stability strategy, which involves maintaining the status quo.
• Retrenchment/turnaround strategy:  When a corporation faces significant problems, it may adopt a retrenchment strategy to realign resources, reduce the size, or improve efficiency to improve financial performance.
• Portfolio management:  At the corporate level, the organization must manage its portfolio of businesses effectively. This can involve deciding to invest in, hold, harvest (reduce investment), or divest certain business units.
• Geographic strategy:  Corporations must also decide on their geographic scope, from local to global. This involves deciding which markets to enter, when, and on what scale.
• Competitive strategy:  This involves the plan of action that a company develops to gain a competitive advantage in its market, such as cost leadership, differentiation, or a focus strategy.

In large corporations with several business units, a corporate strategy also involves deciding how much autonomy to give each business unit, how to allocate resources, and how they should interact with each other. This holistic strategy must align with the organization’s overall mission, vision, and long-term objectives.

Examples of Corporate-Level Strategy

Sure, here are a few examples of corporate-level strategies that well-known companies have implemented:

• Amazon’s Growth Strategy:  Amazon began as an online bookstore but didn’t stop there. It expanded its product line to include electronics, clothing, and more, developing into a comprehensive online retail giant. It also expanded into new business areas like cloud computing services with Amazon Web Services (AWS), which has become a significant part of its business.
• Google’s Diversification Strategy:  Google started as a search engine but, over time, diversified into various other sectors. For example, it acquired YouTube, created Android OS, launched Google Cloud, and ventured into self-driving cars with Waymo. These initiatives have helped Google stay competitive and innovative while spreading risk across various sectors.
• Coca-Cola’s Geographic Expansion Strategy:  Coca-Cola’s corporate strategy involved expanding its geographic footprint from its original base in the US to almost every country in the world. This international expansion allowed Coca-Cola to become one of the most recognized brands globally and helped them diversify their markets, reducing dependence on any single region.
• Facebook’s Acquisition Strategy:  Facebook’s corporate strategy involves acquiring and integrating potential competitors into its portfolio. Some notable examples include Instagram and WhatsApp. These acquisitions helped Facebook grow its user base, diversify its services, and maintain its competitive edge in the social networking industry.
• Microsoft’s Turnaround Strategy:  In the mid-2010s, Microsoft underwent a strategic shift under CEO Satya Nadella. The company transitioned from a “devices and services” strategy to a “cloud-first, mobile-first” approach. This shift led to significant growth in cloud services like Azure and Office 365 and helped Microsoft regain its position as one of the leading tech companies.
• Unilever’s Sustainability Strategy:  Unilever launched the Unilever Sustainable Living Plan in 2010 to reduce its environmental footprint and increase its positive social impact. This strategy, which involves every aspect of the corporation, reflects a commitment to sustainability that is becoming increasingly important to consumers, employees, and stakeholders.

Remember that the success of a corporate-level strategy depends on many factors, including the company’s context, resources, and capabilities, as well as external factors like market trends and competitive landscape.

Types of Corporate-Level Strategy

Corporate-level strategies essentially focus on decisions about what business areas to compete in and how to manage these business areas to achieve corporate goals. Some of the key types of corporate-level strategy include:

• Growth Strategy:  A corporation may decide to expand its activities. This can be accomplished in various ways, such as by developing new products, entering new markets, increasing market share in existing markets, or through mergers and acquisitions. Growth Hacking Strategy: Examples, Case Study, B2B
• Stability Strategy:  This strategy is pursued when a corporation is satisfied with the same business and wants to continue the same activities. It’s often used in a predictable and stable environment where the business operations are successful and there are minimal opportunities or needs for growth.
• Retrenchment Strategy:  This strategy involves reducing the company’s size or diversity, often through selling or closing certain businesses or divisions. This is typically used when a company faces difficulties and needs to refocus its resources on areas where it can be more competitive. What is a Retrenchment strategy: Explained with types & examples
• Diversification Strategy:  Under this strategy, a corporation decides to enter into new markets with new products. Diversification can be related (where the new businesses have some connection to the existing businesses) or unrelated (where the new businesses are not connected to the existing businesses).
• International Strategy:  Companies that expand their operations beyond their home country must adopt an international strategy. This could involve exporting, licensing, franchising, establishing joint ventures with a foreign company, or setting up a wholly-owned subsidiary in another country. International Business, Marketing Strategy & Strategic Management
• Portfolio Strategy:  In this strategy, a corporation manages its businesses as a portfolio, similar to how an investor would manage a portfolio of investments. The corporation invests in business units expected to perform well and divests from those that do not.

Each type of corporate-level strategy provides different ways for a corporation to define and pursue its goals. The best choice of strategy depends on the corporation’s current situation, its resources and capabilities, the environment in which it operates, and the vision of its leadership.

Case Study on Corporate Level Strategy

Let’s take a look at the corporate-level strategy of Disney:

Disney’s Diversification and Expansion Strategy:

Disney, which started in the 1920s as a motion picture company, has successfully adopted a diversification and expansion strategy to evolve into a diversified global entertainment company. This strategy can be seen in the various segments of the company’s operations:

• Theme Parks and Resorts:  Disney’s decision to create Disneyland in the 1950s was a key part of its diversification strategy. The company later expanded this segment by establishing Disney World and international theme parks in Paris, Tokyo, Hong Kong, and Shanghai.
• Media Networks:  Disney diversified into television with the creation of the Disney Channel and later expanded into network television with the acquisition of ABC. It also purchased ESPN to enter into the sports broadcasting market.
• Studio Entertainment:  Disney has continuously expanded its studio entertainment segment by acquiring other studios such as Pixar, Marvel, Lucasfilm (Star Wars franchise), and most recently, 21st Century Fox. These acquisitions have allowed Disney to expand its movie portfolio and capitalize on popular franchises.
• Consumer Products and Interactive Media:  Disney has used its brand and characters to diversify into consumer products and digital games, creating a comprehensive entertainment experience for consumers.
• Disney+:  Seeing the success of streaming services like Netflix and Amazon Prime, Disney launched its streaming service, Disney+, which rapidly gained a substantial subscriber base.

Disney’s corporate-level strategy has been successful because of the synergy between its business units. For example, a movie from Marvel can drive consumer product sales, visits to theme parks, viewership on their media networks, and subscribers for Disney+. This synergy, along with the strong Disney brand, has allowed the company to succeed across various entertainment segments.

Disney’s corporate-level strategy shows how diversification and expansion, coupled with strong execution, can create a leading position in a competitive industry. It’s also a good example of how a company can use its resources (in this case, Disney’s brand and characters) to create synergies between different business units.

Disney’s journey to becoming the World’s greatest storyteller

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Corporate strategy: what is it and how to do it (with examples).

Table of contents

Corporate strategy in a nutshell, what is corporate level business strategy, how to create a corporate strategy, typical mistakes when creating a corporate strategy.

In this article, we will dive deeper into the topic of corporate strategy. Note that when we talk about “corporate strategy” we mean it in the same way that it is used by McKinsey , Bain , and BCG (see links for each firm's perspective on corporate strategy). Across all three firms, corporate strategy typically refers to the overall portfolio strategy that a diversified company can employ, whereas business level strategy refers to how you create and sustain a competitive advantage within a certain industry.

To learn more, take a look at our post on the three levels of strategy . You can also read this excellent article by Michael Porter on the distinction between corporate and business-level strategy.

A diversified company is made up of a number of distinct businesses (or business units) as well as a corporate headquarter. These parts together form an enterprise.

Corporate strategy, in a nutshell, has one single purpose: ensuring that the whole equals more than the sum of its parts.

In other words, the goal of a corporate strategy is to create a roadmap for sustained value creation across its entire portfolio. This means both enabling each business to fulfill its strategic potential and deciding where, when, and how to shift the entire portfolio in a new direction.

Corporate strategy goes by various names, such as portfolio strategy, organizational strategy, or simply company strategy.

In a standard organizational structure, business units (also called strategic business units) function as semi-autonomous entities, each focusing on its own markets, customer segments, and value propositions. These units collectively constitute the corporation and are coordinated by a central corporate head office. The degree of coordination depends on the type of corporate strategy you choose (see the section on Examples of corporate strategy further down).

Renowned strategy scholar Michael Porter defines corporate strategy as…

A diversified company has two levels of strategy: business unit (or competitive) strategy and corporate (or companywide) strategy. Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes . Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units. Corporate strategy is what makes the corporate whole add up to more than the sum of its business unit parts.

The corporate strategy serves as the all-encompassing strategy for the entire organization. It establishes boundaries and provides guidance for the strategies of individual business units. In addition, it allocates and coordinates resources across the group to both enable each strategic business unit to reach its full strategic potential, and to add or divest new businesses that will bring the entire organization to the next step of growth. Finally, a corporate strategy also lays out how to communicate to external stakeholders, especially with public companies where TSR and stock price are important factors.

Ideally, the corporate strategy comprises a set of objectives and actions designed to empower the group to generate value that exceeds the cumulative impact of its individual components.

The primary objective of a corporate strategy is to formulate a roadmap for consistently generating value throughout its entire portfolio.

There are five main elements of creating a corporate strategy:

• Vision and ambition: Setting a unified vision, ambition, and overall goals for your organization that will act as guiding stars for the rest of your choices.
• Portfolio choices: Decide which businesses you should and should not be in going forward, as well as understand the strategic potential and path to achieve it for each business.
• Resource allocation: Allocating resources (capital and time) across business units in accordance with your portfolio map to enable your overall portfolio to achieve its strategic potential and ultimate aims.
• Parenting choices: Maximizing the advantages that come from being a group by creating and achieving synergies, implementing productive cultures, leveraging brand assets, etc.
• Overall roadmap: Laying out the overall roadmap to achieve a sustained competitive advantage and superior value generation across the entire portfolio.

1. Establish a cohesive vision and shared ambition

First, your corporate strategy must state the overall mission, vision, and purpose of the organization. This serves to unify the organization and act as a directional tool when making choices on things like potential acquisitions, overall strategy, where to double-down on investments and innovations etc.

A good example of a corporate mission and purpose is Unilever. Even though they are a multinational conglomerate with over 400 brands in their portfolio, they still manage to articulate a unified purpose - “to make sustainable living commonplace” - that guides their strategy overall and the choices made on a day-to-day basis in each business unit and team.

In addition to a mission, vision, and purpose, the corporate strategy should also lay out some more tangible ambitions in terms of a target portfolio and qualitative and quantitative goals.  The quantitative goals are often externally or market-driven (depending if you are a public company) and should define what good looks like for the organization and thereby define what the full value creation potential is thought to be. The qualitative goals are often more internally or company-driven and should articulate the key elements of the target portfolio as well as align and energize internal and external stakeholders.

When setting a unified vision and ambition in your corporate strategy ask yourself:

• What is our purpose as a company?
• What is the broader mission and vision we want to fulfill as a company?
• What is the level of value creation we should target (in terms of traditional or triple bottom-line and/or shareholder value)?

2. Navigate and decide on portfolio options

Second, your corporate strategy should include a review of your company’s entire portfolio of business units (or products/brands, depending on the way it is set up).

A portfolio review allows the organization to decide what to focus on, which industries and markets to compete in, how to diversify the company’s portfolio of products and services, etc. In its essence, the portfolio review allows you to identify the businesses or assets with the highest strategic potential, both stand-alone and as a part of the group, and their path to achieving this full potential.

In practice, the portfolio review means making difficult choices on where to acquire, divest, and transform the portfolio, and importantly, how to allocate resources at a high level across business units (i.e., which businesses do you invest in for innovation and growth versus which businesses should be optimized for efficiency and cash-maximization). Allocating resources is an element in itself (covered in the next section), but the portfolio review lays out the guide to which businesses or assets should receive resources.

To do a portfolio review, you need to have sufficient strategic insight into each business unit to understand their current potential, future opportunities or threats, and how to tackle them.  The strategic insight often comes from the business unit strategy, and the portfolio overview is then created in a matrix with one axis looking at the BU’s current ability-to-win or growth (internal) and the other axis looking at the BU’s market conditions and changes (external) ( BCG’s Growth-Share matrix ) and McKinsey’s GE matrix ) are classic examples of a portfolio tool).

When making portfolio choices in your corporate strategy, ask yourself:

• How attractive is each business or asset in our portfolio, and are they achieving their full potential?
• Is the market for each business strong or weak, improving or declining? Is there an opportunity to strengthen the competitive position of each business?
• Is there an opportunity to expand our competitive position with acquisitions?
• Are we the best owners of each business, or should we divest?
• What is our target portfolio of businesses or assets, and what is required for us to achieve that target?

See our Business Strategy template for ready-to-use slides on both a portfolio overview and a business level strategy.

3. Make hard financial decisions

The third element of a corporate strategy is allocating resources, more specifically, making financial decisions on where and when to invest in new acquisitions or businesses, how to balance investments versus shareholder returns, how to allocate resources across different business units or product lines, etc.

In general, there are three main areas of financial choices for public companies:

A. Capital structure

The capital structure refers to the combination of debt and equity within a company. While diving deep into this subject is beyond our scope here, at the corporate strategy level, it is crucial to determine the funding allocation across the portfolio and establish financial guardrails for that funding. Factors such as shareholder payout requirements, preferred leverage levels, and risk tolerance often shape decisions in this regard.

B. Capital deployment

After establishing the allocated funding and corresponding guardrails, the corporate strategy must distribute this funding among portfolio businesses based on the outcomes of the portfolio review. This usually involves investments and acquisitions in businesses or assets with significant strategic potential, while simultaneously reducing costs through efficiency improvements and other optimizations in businesses that are closer to realizing their full potential.

C. Capital markets communication

For public companies or those with external stakeholders such as VC funds, the final aspect of your financial strategy involves encapsulating your various decisions within a compelling narrative. This narrative should align strategically with your overall strategy, ideally contributing to an increase in your external value.

When allocating resources in your corporate strategy ask yourself:

• What is our optimal capital structure both in terms of internal and external risk tolerance and stakeholder requirements?
• How much headroom do we have to fund our portfolio growth toward our desired state, and which constraints or guardrails do we need to put in place?
• How should we divide our limited resources to maximize our portfolio potential (and how should we communicate it internally to avoid loss of motivation in some areas)?
• Are our financial choices consistent and cohesive in a way that makes it easy for us to communicate in a compelling story? If we experience difficulty in crafting our story, should we revisit some of our choices?

4. Leverage the advantage of being a group

The fourth crucial element of an effective corporate strategy focuses on how the corporate entity can optimize the performance of each business unit, aiming to achieve a collective impact greater than the sum of the individual parts. The role or form that the corporate parent should take to achieve this needs to be considered in three main areas:

Best Portfolio Operator: The portfolio operator aspect refers to the way the corporate parent can utilize the portfolio to create synergies that maximize the value creation across business units. This can be both across different value chain(s) and fostering collaboration between business units.

Ask yourself:

• How can the corporate parent facilitate collaboration among business units and portfolio companies?
• What synergies can be harnessed to enhance overall performance?
• In what ways can costs be shared for mutual benefit?
• Which customers offer opportunities for cross-linkage?
• Which capabilities can be shared effectively and efficiently?

Best Owner: The best owner aspect refers to the corporate capabilities to capture value across current businesses and actively develop the portfolio through the integration of new businesses and shedding old assets. This can be in the form of both management and operating capabilities, as well as proprietary assets like brand or technology.

• How can the corporate parent add distinctive value to the development and management of the portfolio?
• What strategies can be employed to capture and allocate value effectively across diverse businesses, elevating the entire portfolio?
• What acquisitions and divestments should be considered to optimize the organization's overall value creation?

Best Culture Champion: The best culture champion aspect refers to the ability of the corporate parent to create a shared mission and alignment across the portfolio and instill values and behaviors that serve to energize and mobilize talent across the organization.

• How can the corporate parent generate enthusiasm and mobilize latent talent throughout the organization?
• What values and principles should be instilled to foster a positive and productive organizational culture?
• Which individuals should be recruited to lead each business unit, steering them towards a shared path of value creation?

5. Lay out the path to achieving the full potential

The final component of a corporate strategy involves outlining a comprehensive roadmap for continuous value creation. The level of detail in this roadmap may vary depending on the extent of the corporate parent's involvement in each business unit strategy. However, a commonly recognized framework for such roadmaps is to divide them into three time horizons: short-term, medium-term, and long-term.

Different consulting houses use different terminologies for these horizons. BCG calls it Funding The Journey (short-term) and Winning in the Medium Term (medium-term) when talking about Digital Transformations . McKinsey has their famous Three Horizons of Growth that are similarly divided into the short-, medium-, and long-term. And Bain talks about Quick Hits, the 3-5 Year Plan, and Next-stage Thinking when discussing corporate strategy.

Common to all of them is the general concept of dividing your roadmap into a) immediate opportunities , b) bigger opportunities that need more work to realize , and c) long-term, transformational initiatives and ideas .

The first horizon a) is most often focused on quick wins or low-hanging fruit that can save cash or quickly increase revenues within existing products and services. These cash-generating initiatives help fund the bigger, longer-term initiatives.

The second horizon b) is most often centered around big opportunities to increase the enterprise value, e.g., through bigger innovations to products or business models. These opportunities typically need a time scale of 3-7 years before the return on investment becomes positive.

The third horizon c) is where you find the truly transformative opportunities and initiatives that will (if done right) future-proof the company beyond the foreseeable next few years. These opportunities can range from complete transformations of the corporate portfolio and overall purpose and business to a potential exit or handover strategy.

Every opportunity should be broken down into initiatives and actions, and then assembled into a coherent roadmap. The level of granularity in this roadmap tends to diminish as the timeline extends further into the future.

Depending on how the corporate parent is organized compared to business units, the roadmap will include more or less concrete elements for each business. It is important, however, that the corporate office sum up the efforts across portfolios and make sure any shared resources are not overextended.

When creating your corporate strategy roadmap, ask yourself:

• What is the prioritized list of initiatives that will help us achieve our ambition?
• What are our no-regret moves that can help our current businesses achieve their strategic potential?
• What are our must-do bold moves to help us in our next stage of growth?
• Is our roadmap cohesive across our portfolio?
• Do we have the right management structure to ensure we can actually carry out this roadmap and be agile enough to adapt when we need to?

Corporate strategy examples

There are many examples of corporate strategies. The most relevant way that we have come across to classify corporate strategy is the four-quadrant matrix approach by Donald Sull, Stefano Turconi, Charles Sull, and James Yoder in their MIT Sloan Management Review article “Four Logics of Corporate Strategy.” Here, the they divide corporate strategy into four archetypes depending on the degree of connection between the business units and the corporate parent and the degree of connection between the business units themselves. This results in four types of corporate strategy:

• The portfolio strategy (low corporate-BU connection and low BU-BU connection): In a portfolio corporate strategy, the corporate parent primarily decides which businesses to enter and exit and how to allocate resources (if there are any shared) across these businesses. The business units themselves act independently of both corporate and the other units. This type of strategy is typically used by more traditional conglomerates like GE and Tata Group, as well as private equity firms such as KKR & Co. and The Blackstone Group.  
• The leverage strategy (high corporate-BU connection, low BU-BU connection): The leverage corporate strategy is useful when the corporate parent has some strong assets like brand, procurement power, or expertise, but each individual business unit within the portfolio does not need to rely on the others.  In this case, the corporate strategy centers on how to best deploy those assets into each business and translate that to a competitive strategy in general, as well as how to expand the portfolio with new business units. The individual businesses typically don’t have their own stand-alone strategies but focus on local tactics. Examples of a corporate strategy are typically franchises like McDonald’s or Trader Joe’s, where each individual McDonald’s is strongly dependent on the corporate assets but almost completely independent from the other stores.   
• The federal strategy (low corporate-BU connection, high BU-BU connection): The "federal" logic involves loose confederations of businesses collaborating to pass business between them, jointly lobby regulators, or share best practices, all without a dominant corporate parent. In this case, there is typically next to no corporate strategy but, instead, rules and norms governing the interaction between business units. Examples of a federal corporate strategy include Star Alliance in airlines and The Leading Hotels of the World in lodging.  
• The integrative strategy (high corporate-BU connection, high BU-BU connection): The integrative corporate strategy characterizes companies where business units depend on both corporate assets and each other for success. For instance, Walt Disney's theme parks, movie studios, consumer products, and children’s television divisions leverage the company’s iconic brands and characters to enhance customers’ willingness to pay. They generate revenues through cross-promotion and selling each other’s products. The integrative corporate strategy is perhaps one of the most comprehensive and involves both how to best deploy assets and resources across the portfolio, how to facilitate collaboration between business units, and of course how to expand and develop the overall portfolio. Each business unit has its own strategy but this is closely linked to the corporate strategy.

A solid corporate strategy can lift the entire organization and each business unit up, and is integral to creating sustained competitive advantage as a whole.

However, it is an often overlooked discipline (see e.g., this article from McKinsey ), and there are many mistakes that can be made along the way.

Here, we’ve gathered some of the most common mistakes we’ve seen:

• Peanut-butter approach to resource allocation: Way too often, companies fall into the trap of spreading available funds thinly and somewhat evenly across their entire portfolio instead of making hard decisions on where to invest heavily and where to cut ruthlessly.  It can be challenging to have a conversation with each business head or manager, and it seems easier in the moment to just allocate in a “fair” way. Similarly it can feel less risky to give every business unit enough to avoid tough times and protect downside. But by not making hard choices and investing in high potential upside, your company runs the risk of falling behind.  
• Expecting every business unit to follow the same strategy process and KPI structure: Another common mistake in corporate strategy planning and organizational structures is to assume every business should follow the same strategy process and be measured on similar KPIs. Although this can seem like a meta-conversation, the strategy process and type of KPIs you impose on each BU can have a profound effect on the outputs. For example, suppose you have a business with high strategic potential and the need for continuous innovation to achieve that potential. In that case, it will be detrimental to require the leadership of that business to come up with detailed five-year plans or to measure them on bottom-line cost savings. Innovation is inherently unpredictable and requires plans and KPIs that can accommodate the needed mistakes and bumps in a business model that is still finding its feet. Conversely, it makes no sense to measure a stable cash cow business on the amount of new ideas or R&D. Instead, here, you would want to capitalize on the fact that these businesses are typically quite stable and make 10-year strategy plans that emphasize efficiency and maintaining market shares. Becoming a truly excellent corporate strategist requires you to juggle these different business needs.  
• Biased towards existing assets you own vs. those you should own: We’ve also seen a (often unconscious) bias towards existing businesses or assets rather than thinking in terms of the highest potential target portfolio. This locks companies into a too narrow box defined by the limits on existing businesses, and the corporate strategy becomes a game of micro-optimizing each BU. Instead, you should think of yourself in terms of the “owner” or “parent” and ask yourself how you can become the best owner for the portfolio overall and your stakeholders. This means setting an ambitious target portfolio, looking not just at the existing businesses but also the blank spaces in-between, and setting up a corporate process to integrate new acquisitions in ways that don’t stifle their potential or detract from the value they were originally meant to bring to the portfolio (look up examples like the Disney-Pixar merger for how to succeed in this regard). 

• Expecting the future to be a linear continuation of today: A fourth common mistake is being too narrow-minded in your projection of future scenarios and expecting the future to be some predictable version of today. It’s not a problem basing your most likely future scenario on a linear projection of your business today, but you need to also include scenarios where the industries your businesses play in are disrupted by e.g. technology or otherwise fundamentally changed. In other words, you must include not just an assessment of your current market landscape but also a deeper understanding of shifts in your industry ecosystems.  
• Basing decisions on managers, not potential: We have sometimes also seen corporate strategies driven more by current reporting structures and incentive schemes than true business potentials and boundaries. It’s inherently human for managers and heads of businesses to want to protect their own turfs. Still, the overall portfolio will sometimes benefit from a structural shake-up to allow an area to reach its full strategic potential. It’s the job of the corporate strategy to recognize and enable this path to its full potential without being constrained by incremental management plans or current reporting structures.  
• Seeing M&A as the end, not the means: Finally, we often see the M&A arm of a corporate strategy treated almost as an end in itself, resulting in deal fever and a single-deal perspective. M&A should always be a way to increase the organization's overall value, which means you must view it as a multi-step, long-term journey focusing on acquiring the right assets at the right valuation for your company.

However, if you’re aware of these common mistakes and make sure to include the five core components listed above, you’re well on your way to creating a solid corporate strategy.

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Business Strategy Examples In 2024: Examples, Case Studies, And Tools

A business strategy is a deliberate plan that helps a business to achieve a long-term vision and mission by drafting a business model to execute that business strategy. A business strategy, in most cases, doesn’t follow a linear path, and execution will help shape it along the way.

Table of Contents

What is a business strategy?

At this stage, it is important to clarify a few critical aspects.

As an HBR working paper entitled “From Strategy to Business Models and to Tactics” pointed out:

Put succinctly, business model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders. Strategy refers to the choice of business model through which the firm will compete in the marketplace. Tactics refers to the residual choices open to a firm by virtue of the business model that it employs.

Personally, I have a controversial relationship with the concept of “strategy.” I feel it’s too easy to make it foggy and empty of practical meaning.

Yet strategy and vision matter in business.

A strategy isn’t just a calculated path, but often a philosophical choice about how the world works.

Usually, it takes years and, at times, also decades for a strategy to become viable. And once it does become viable, it seems obvious only in hindsight.

In this guide, we see what that means.  

In the real world, the difficult part is understanding the problem

In the real world, a lot of time and resources are spent on defining the problem.

Classic case studies at business school assume in most scenarios that the problem is known and the solution needs to be found.

In the real world, the problem is unknown, the situation is highly ambiguous, and the most difficult part is making the decision that might solve that same problem you’re trying to figure out. 

How do you execute a strategy in that context? Business modeling can help!

Is a business strategy the same thing as a business model?

As the business world started to change dramatically, again, by the early 2000s, also the concept of strategy changed with it. 

In the previous era, the strategy was primarily made of locking in the supply chain to guarantee a strong distribution toward the marketplace. 

And yet, the web enabled new companies to form with a bottom-up approach.

In short, product development cycles shortened, and frameworks like lean , agile , and continuous innovation became integrated into a world where software took over. 

Where most of the processes before the digital age, were physical in nature. As the web took off, most of the processes became digital.

In short, the software would become the core enhancer of hardware. 

We’ve seen how in cases like Apple’s iPhone , it wasn’t just the hardware that made the difference.

But it was the development ecosystem and the applications that enhanced the capabilities of the device. 

Thus, from a product standpoint, hardware has been enhanced more and more with the software side.

At the same time, the way companies developed products in the first place changed. 

Software and digits-based companies could gather feedback early on, thus enabling the customers’ feedback as a key element of the whole product development cycle. 

Therefore, wherein the previous era, companies spent billions of budgets to release markets, and products, with little customer feedback.

In the digital era, customer feedback became built into the product development loop. 

That led to frameworks with faster and faster product releases, which also changed the way we do marketing . 

In a classic MVP approach, the loop (build, measure, learn) has to be very quick, and it has to lead to the so-called product/market fit .

As the web made the ability to gather customers’ feedback early on, and as the whole process becomes less and less expensive, also lean approaches evolved, to gain feedback from customers as early as possible. 

From build > demo > sell, to demo > sell > build , lean approaches got leaner. 

And the era of customer-centrism and customer obsession developed:

This whole change flipped the strategy world upside down.

And from elaborate business plans , we moved to business modeling , as an experimental tool, that enabled entrepreneurs to gather feedback continuously.

In a customer-centered business world, business models have become effective thinking tools, to represent a business and a business strategy on a single page, which helped the whole execution process. 

The key building blocks of a classic business model approach, like a business model canvas or lean startup canvas  move around the concept of value proposition , that glue them together. 

And from the supply chain , we moved to customer value chains .

Where most digital business models  learned to gather customers’ feedback in multiple ways. 

The business strategy formed in the digital era, therefore, developed its own customer-centered view of the world, and the business theory world followed.

Academics, following practitioners, moved away from traditional models (like Porter’s Five Forces ) to more customer-centered approaches ( business model canvas , lean canvas).  

The mindset shift flipped from distribution and optimization on the supply side.

To optimize on the demand side, or how to build products that people want, in the first place. This is the new mantra.

No more grandiose business plans, just substantial testing, iteration, and experimentation. 

In this new context, we can understand the strategy developed by several players and how business modeling has become the most important strategy tool. 

And the interesting part is, whether you want to scale to become a tech giant, or you just want to build a small, viable business, it all starts from the same place!

Is business strategy a science?

Business strategy is more of an art than a science.

In short, a business strategy starts with a series of assumptions about how the business world looks in a certain period of time and for a certain target of people.

Whether those assumptions will turn out to be successful will highly depend on several factors.

For instance, back in the late 1990s when the web took over, new startups came up with the idea of revolutionizing many services.

While those ideas seemed to make sense, they turned out to be completely off, and many of those startups failed in what would be recognized as a dot-com bubble.

While in hindsight certain aspects of that bubble came up (like frauds, or schemes).

In general, some of the ideas for which startups got financed seemed to be visionary and turned out to work a decade later (see DoorDash , or Instacart , in relation to Webvan’s bankruptcy). 

For instance, some startups tried to bring on-demand streaming to the web (which today we call Netflix ). Those ideas proved to be too early.

They made sense but from the commercial standpoint, they didn’t.

Thus, if we were to use the scientific method, once those assumptions would have proved wrong in the real world, we would have discarded them.

However, those assumptions proved to be wrong, in that time period, given the current circumstances.

While we can use the scientific inquiry process in business strategy, it’s hard to say that it is a scientific discipline.

So what’s the use of business strategy?

In my opinion, business strategy is useful for three main reasons:

• Focus : chose one path over another.
• Vision : have a long-term strategic goal.
• Commercial viability : create a self-sustainable business.

As a practitioner, someone who tries to build successful businesses, I don’t need to be “scientific.”

I need to make sure not to be completely off track. For that matter, I aim at creating businesses.

Thus, I need to understand where to focus my attention in a relatively long period of time (3-5 years at least) and make sure that those ideas I pursue are able to generate profits, which – in my opinion – might be a valid indicator that those ideas are correct for the time being.

If those conditions are met, I’ll call it a “successful business.”

Those ideas will become a business model , that executes a business strategy.

This doesn’t mean those ideas, turned into a business model , pushed into the world will always be successful (profitable).

As the marketplace evolves I will need to adjust, and tweak a business model to fit with the new evolving scenarios, and I’ll need to be able to “bet” on new possible business models .

Survivorship bias

Survivorship bias is a phenomenon where what’s not visible (because extinct) isn’t taken into account when analyzing the past.

In short, we analyze the past based on what’s visible.

This error happens in any field, and in business, we might get fooled by that as well.

In short, when we analyze the past we do that in hindsight.

That makes us cherry-pick the things that survived and assume that those carry the successful characteristics we’re looking for.

For instance, for each Amazon or Google that survived there were hundreds if not thousands of companies that failed, with the same kind of “successful features” as Amazon or Google.  

So why do we analyze successful companies in the first place? In my opinion, there are several reasons: 

• Those successful companies have turned into Super Gatekeepers to billions of people : as I showed in the gatekeeping hypothesis , and in the surfer’s model , a go-to-market strategy for startups will need to be able to leverage existing digital pipelines to reach key customers.

• Modeling and experimentation : another key point is about modeling what’s working for other businesses and borrowing parts of those models, to see what works for our business. By borrowing parts you can build your own business model, yet that requires a lot of testing. 

• Skin in the game testing : therefore business models become key tools for experimentation, where we can use real customers’ feedback (not a survey, or opinions but actions) and test our hypotheses and assumptions. When we’re able to sell our products, when people keep getting back to our platform, or service, there is no best way to test our assumptions that measure those actions. 

Lindy effect and aging in reverse

Nicholas Nassim Taleb , in his book Antifragile , popularized a concept called Lindy Effect .

In very simple terms the Lindy Effect states that in technology (like any other field where the object of discussion is  non-perishable)  things age in reverse.

Thus, life expectancy, rather than diminishing with age, has a longer life expectancy.

Therefore, a technology that has lived for two thousand years, has a life expectancy of another thousand years.

That is a probabilistic rule of thumb that works on averages.

Thus, if a technology (say the Internet) has stayed with us for twenty years, it doesn’t mean we can expect only to live for another twenty years at least.

But as the Internet has proved successful already, the Lindy Effect might not apply.

In short, as we have additional information about a phenomenon the Lindy Effect might lose relevance.

For instance, if I know a person is twenty, yet sick of a terminal disease, I can’t expect to use normal life expectancy tables.

So I’ll have to apply that information to understand the future.

Strategies take years to fully roll out

It was 2006, when Tesla, with his co-founder   Martin Eberhard , launched a sports car that broke down the trade-off between high performance and fuel efficiency.

Tesla, which for a few years had been building up an electric sports car ready to be marketed, finally pulled it off.

As Elon Musk would   explain   Back in 2012:  

In 2006 our plan was to build an electric sports car followed by an affordable electric sedan, and reduce our dependence on oil…delivering Model S is a key part of that plan and represents Tesla’s transition to a mass-production automaker and the most compelling car company of the 21st century.

The beauty of a strategy that turns into a successful company, is that it might take years to roll out and seem obvious only in hindsight. 

This connects to what I like to call the transitional business model.

Or the idea, that many companies, before getting into a fully rolled out business strategy, transition through a period of low scalability and low market size, which will help them gain initial traction. 

As a transitional business model proves viable, it helps the company shape its long-term vision, while its built-in strategy is different from the long-term strategy.

The transitional business model will guarantee survival. It will help further refine the long-term strategy and it will also work as a reality check. 

As the transitional business model proves viable, the company moves to its long-term strategy execution. 

As the business strategy gets rolled out, over the years, it becomes evident and obvious, and yet none managed to pull it off.

When Netflix moved from DVD rental to streaming. DVD rental was the transitional business model that helped Netflix stay in business in the first place.

And yet, when Netflix moved from DVD to streaming it had to apparently change its strategy.

When, in reality, it was rolling out its long-term strategy, shaped by the transitional business model. 

Caveat: Frameworks work until suddenly they don’t

When you stumbled upon a “business formula,” you can’t stop there.

That business formula, if you’re lucky, will allow you to succeed in the long term. Yet as more and more people will find that out, that will lose relevance.

And the matter is, the reality is a villain. Things work for years until they suddenly don’t work anymore.

We’ll see some frameworks, but the real deal is not a framework but the inquiry process that makes us discover those frameworks.

In short, the value is in the repeatable process of discovery and not in the discovery itself. A discovery, once spread, loses value.

Master a business strategy process

There isn’t a size-fits-all business playbook that you can apply to all the scenarios.

Some of the business case studies we’ll see throughout this article will show companies that have dominated the tech space in the last decade and more.

While the playbook executed by those companies worked for the time being.

That doesn’t mean you should play according to their playbook. If at all you’ll need to figure out your own.

Thus, what matters is the process behind finding your business playbook and my hope is that this guide will inspire you and give you some good ideas on how to develop your own business strategy process!

Business strategy case studies

We’ll look now at a few case studies of companies that, at the time of this writing, are playing an important role in the business world.

• Alibaba Business Strategy.
• Amazon Business Strategy.
• Apple Business Strategy.
• Airbnb Business Strategy.
• Baidu Business Strategy.
• Booking Business Strategy.
• DuckDuckGo Business Strategy.
• Google (Alphabet) Business Strategy.

What is a business model’s essence?

Keeping in mind the distinction between business strategy and business models is critical.

The other element used in this guide is a business model essence.

Shortly, I’ve been looking for a way to summarize the key elements of any business in a couple of lines of text:

Therefore, for the sake of this discussion, you’ll find each company’s business strategy, a business model essence that will help us navigate through the noisy business world.

From there, we’ll see the business strategy of a company.

Alibaba Business Strategy

Business Model Essence : Online Stores Leveraging On An E-Commerce/Marketplace Distribution And Monetization Strategy  

As pointed out in Alibaba’s annual report for 2017:

We derive revenue from our four business segments: core commerce, cloud computing, digital media and entertainment, and innovation initiatives and others. We derive most of our revenue from our core commerce segment, which accounted for 85% of our total revenue in fiscal year 2017, while cloud computing, digital media and entertainment, and innovation initiatives and others contributed 4%, 9% and 2%, respectively. We derive a substantial majority of our core commerce revenue from online marketing services. 

Alibaba, like Amazon , became an “everything store” in China.

It leveraged its success to build also other media platforms ( Youku Todou and UCWeb). The e-commerce, marketplace business model has become quite common since the dawn of the web.

From that business model tech giants like Amazon , eBay and Alibaba have raised.

Alibaba’s vision, mission, and core principles

Alibaba’s Business Strategy starts from its core values defined in its annual report:

• Customer First : “The interests of our community of consumers, merchants, and enterprises must be our first”
• Teamwork: “ We believe teamwork enables ordinary people to achieve extraordinary things.”
• Embrace Change   I”n this fast-changing world, we must be flexible, innovative, and ready to adapt to new business conditions in order to maintain sustainability and vitality in our business.”
• Integrity “We expect our people to uphold the highest standards of honesty and to deliver on their commitments.”
• Passion “We expect our people to approach everything with fire in their belly and never give up on doing what they believe is right.”
• Commitment  “Employees who demonstrate perseverance and excellence are richly rewarded. Nothing should be taken for granted as we encourage our people to “work happily and live seriously.”

Alibaba’s mission is “ to make it easy to do business anywhere, ” and its vision is “to build the future infrastructure of commerce… a company that would last at least 102 years.”

For that vision to be executed it has three major stakeholders: users, consumers, and merchants.

The focus on the “at least 102 years” might seem fluffy words, yet those are important as this kind of goal helps you keep a long-term vision while executing short-term plans.

It isn’t unusual for founders to set such visions, as they help keep the company on track in the long run.

And this is where a business strategy starts.

All the business models designed by Alibaba will follow its vision, mission, and values they aim to create in the long run.

Read : Alibaba Business Model

Alibaba ecosystem and value proposition

These elements gave rise to an ecosystem made of “consumers, merchants, brands, retailers, other businesses, third-party service providers and strategic alliance partners.”

As Alibaba points out in its annual report “our ecosystem has strong self-reinforcing network effects benefitting its various participants, who are in turn invested in our ecosystem’s growth and success.”

Network effects are a critical ingredient for marketplaces’ success.

To give you an idea, the more buyers join the platform, the more Alibaba’s recommendation engine will be able to suggest relevant items to buy for other customers, and at the same time the more merchants will join in, given the larger and larger business opportunities.

Keeping these network effects going is a vital element of long-term success but also among the greatest challenge of any marketplace that wants to be relevant.

Even though Alibaba’s essence is in online commerce, the company has several business model s running and a business strategy that at its core is evolving quickly.

Thus, the core commerce has made it possible for Alibaba to build a whole new set of “companies within a company.”

From digital entertainment and media, logistics services, payment, financial services, and cloud services with Alibaba Cloud.

Thus, from a successful existing online business model , Alibaba has expanded in many other areas.

And its future business strategy focuses on developing, nurturing, and growing its ecosystem.

More precisely, its strategic long-term goal is to “serve two billion consumers around the world and support ten million businesses to operate profitably on its platforms”

To achieve that Alibaba is focusing on three key activities:

• Globalization.
• Rural expansion.
• And big data and cloud computing.

For its core commerce activities, Alibaba has designed a value proposition that moves around a few pillars:

• Broad selection: over 1.5 billion listings as of March 31, 2018.
• Convenience:  seamless experience anytime, anywhere from online and offline.
• Engaging, personalized experience: personalized shopping recommendations and opportunities for social engagement.
• Value for money: competitive prices offered via a marketplace business model.
• Merchant quality: review and rating system to keep merchants’ quality high.
• Authentic products: merchant quality ratings, clear refund, and return policies, and the Alipay escrow system.

From that value proposition , Alibaba has been able to grow its customer base and offer wider and broader products, until it expanded in the service and cloud business.

Amazon Business Strategy

Business Model Essence : E-Commerce/Marketplace Distribution And Monetization Model Leveraging On Proprietary Infrastructure To Offer Third-Party Services

Starting in 1994 as a bookstore, Amazon soon expanded and became the everything store.

While the company’s core business model is based on its online store.

Amazon launched its physical stores, which generated already over five billion dollars in revenues in 2017.

Amazon Prime (a subscription service) also plays a crucial role in Amazon’s overall business model , as it makes customers spend more and be more loyal to the platform. 

Besides, the company also has its cloud infrastructure called AWS, which is a world leader and a business with high margins. Amazon also has an advertising business worth a few billion dollars.

Thus, the Amazon business model mix looks like many companies in one. Amazon measures its success via a customer experience obsession, lowering prices, stable tech infrastructure, and free cash flow generation.

Therefore, even though in the minds of most people Amazon is the “everything store.”

In reality, its revenue generation shows us that it has become a way more complex organization, that also has a good chunk of advertising revenue and third-party services.

For instance, Amazon is also a key player with its AWS in the cloud space.

And is well a key player in the digital advertising space, together with Google and Facebook :

Amazon has been widely investing in its technological infrastructure since the 2000s, which eventually turned into a key component of its business model .

Read : Amazon Business Model

Amazon’s vision, mission, and core values

Jeff Bezos is obsessed with being in “day one,” which as he puts it , “ day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always  Day 1. “

It all starts from there, and to achieve that Jeff Bezos has highlighted a few core values that makeup Amazon ‘s culture and vision :

• Customer obsession.
• Resist proxies.
• Embrace external trends.
• High-velocity decision-making.

As pointed out by Amazon , “w hen Amazon.com launched in 1995, it was with the mission “ to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. ” 

This goal continues today, but Amazon ’s customers are worldwide now and have grown to include millions of Consumers, Sellers, Content Creators, and Developers & Enterprises.

Each of these groups has different needs, and we always work to meet those needs, innovating new solutions to make things easier, faster, better, and more cost-effective.”

In this case, Amazon ‘s mission also sounds like a vision statement.

Whatever you want to call it, this input is what makes a company look for long-term goals that keep them on track.

Of course, that doesn’t mean a well-crafted vision and mission statement is all that matters for business success.

Yet, it is what keeps you going when things seem to go awry.

Amazon moved from an online book store to the A-to-Z store it kept its mission almost intact while scaling up.

Start from a proof of concept, then scale up

It is interesting to notice how businesses evolve based on their commercial ability to scale up.

When Amazon started up as a bookstore, it made sense for several reasons, that spanned from logistics to pricing modes and industry specifics.

Yet, when Amazon finally proved that the whole web thing could be commercially viable, it didn’t wait, it grew rapidly.

From music to anything else it didn’t happen overnight, but it did happen quickly.

Thus, this is how Amazon’s mission shifted from “any book in the world” to “anything from A-Z.”

This isn’t a size-fits-all strategy. Amazon chose rapid growth, similar to a blitzscaling process as aggressive growth was a way to preserve itself.

Hadn’t Amazon grown so quickly, it could have been killed.

The opposite approach to this kind of strategy is a bootstrapped business, which is profitable right away and self-sustainable.

Decentralized and distributed value creation: the era of platforms and ecosystems

Before we move forward, I want to highlight a few key elements to have a deeper understanding of both Amazon and Alibaba’s business models and their strategies.

Before digitalization would show its use and commercial viability, most of the value creation processes were internalized.

That meant companies had to employ massive resources to generate value along that chain.

That changed when digitalization allowed the value creation process to be distributed, and we moved from centralized to grassroots content creation.

This is even clearer in the case of platforms, and marketplaces like Amazon and Alibaba.

For instance, where in the past the review process and quality insurance would be done centrally by making sure that the supply complied with the company’s quality guidelines.

Introducing distributed review systems, where the end-users checked against the quality compliance, allowed companies like Alibaba and Amazon to generate network effects, where the more users enriched the platforms with those reviews the more the platform could become valuable.

For that matter though, the main platform’s role will be to fight spam and attempt to trick the system.

Other than that (fighting spam is a challenging task) all the rest is managed at the decentralized level, and the value creation happens when more and more users review products and services on those platforms.

We’re referring here to the review system, but it applies almost to any aspect of a platform.

Amazon for years allowed third-party to feature their stores on Amazon ‘s platform, while they kept the inventory.

This meant an outsourced and distributed inventory system, spread across the supply side.

Therefore, the supply side not only made the platform more valuable by creating compelling offerings.

But it also made it more valuable from the operational standpoint, by allowing a better inventory system, which could be turned quickly.

Therefore, the critical aspect to understand in the digital era is decentralized value creation, which makes the value creation process less expensive for an organization, more valuable to its end users, and more scalable as it benefits from network effects.

How do decentralize value creation?

Many platform-like business models have leveraged a few aspects:

• User-generated content (Quora, Facebook , Instagram).
• Distributed inventory systems ( Amazon , Alibaba).
• Peer-to-peer networks ( Airbnb , Uber).

This implies a paradigm shift.

When you start thinking in terms of platforms, no longer you’ll need a plethora of people taking care of each aspect of it.

Rather you’ll need to understand how the value creation can be outsourced to a community of people and make sure the platform is on top of its game in a few aspects.

For instance, Amazon and Alibaba have to make sure their review system isn’t gamed. Airbnb has to make sure to be able to guarantee safety in the interactions from host to guests and vice-versa.

Quora has to make sure to keep its question machine to keep generating relevant questions for users to answer (the supply-side).

If you grasp this element of a platform, you’re on a good track to understanding how to build a successful platform or marketplace.

Apple Business Strategy

Business Model Label : Product-Based Company Leveraging On Locked-In Ecosystems With A Reversed Razor And Blade Business Strategy

Apple sells its products and resells third-party products in most of its major markets directly to consumers and small and mid-sized businesses through its retail and online stores and its direct sales force.

The Company also employs a variety of indirect distribution channels , such as third-party cellular network carriers, wholesalers, retailers, and value-added resellers.

During 2017, the Company’s net sales through its direct and indirect distribution channels accounted for 28% and 72%, respectively, of total net sales.

Many people look at the iPhone, or the previous products Apple has launched successfully in the last decade and assume that their success is due to those products.

In reality, Apple has followed throughout the years a strategy that focused on five key elements:

• Strong branding.
• Beautifully crafted products.
• Technological innovation.
• Strong distribution.
• Locked-in ecosystems.

In short, Apple can sell an iPhone at a premium price because it employs a reversed razor and blade strategy.

This strategy implies free access to Apple’s Ecosystem (ex. iTunes, and Apple Store).

That makes the whole experience through Apple’s devices extremely valuable.

Thanks to that experience, the perception of high-end (luxury-like) products, together with a reliable distribution, justifies Apple’s premium prices.

Apple’s managed to build a business platform on top of the iPhone, thus creating a strong competitive moat, which lasts to these days:

Therefore, Apple’s future success can’t be measured with the same lenses as the last decade.

The real question is: what product will Apple  be able to launch successfully?

And keep in mind it’s not just about the product. Apple’s formula summarized above can be replicated over and over again.

But it isn’t a simple formula. And as locked-in ecosystems, in which Apple controls as much as possible, the experience of its users has proved quite successful in the last decade.

That might not be so in the next, given the rise of more decentralized infrastructure.

For that matter, Amazon might be well moving from a reversed razor and blade model:

To a service-based model:

This isn’t surprising, as a service business has a few compelling advantages:

• High margins.
• A relatively stable revenue stream.
• Scalability.

As Apple has relied on home runs with its products, from the new Mac to the iPod, iPhone, and iPhones, that kind of success isn’t easy to replicate, and it makes the company relies on a continuous stream of fresh sales to keep the business growing.

A service business would balance things out.

It is important to remark this isn’t something new to Apple :

When Apple introduced the iPhone, it isn’t like it was an overnight success. It was successful, but it had to create a whole ecosystem to make the iPhone a continuous source of growth for the company!

When it comes to business strategy, as pointed out in Apple’s annual reports:

The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration.

Understanding this part is critical. As I explained above, at the time of this writing many think of Apple as the “iPhone company.”

Yet Apple is way more than that, and its business strategy is a mixture of creating ecosystems by leveraging on these pillars:

• Operating systems.
• Applications software.
• Innovative design.
• Ease-of-use.
• Seamless Integration.

Those elements together make Apple ‘s products successful. As Apple further explained:

As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital content and applications through its Digital Content and Services, which allows customers to discover and download or stream digital content, iOS, Mac, Apple Watch and Apple TV applications, and books through either a Mac or Windows personal computer or through iPhone, iPad and iPod touch® devices (“iOS devices”), Apple TV, Apple Watch and HomePod.

Once again, it isn’t anymore about creating a product, but about generating self-serve ecosystems.

How do you support those ecosystems?

It depends on what’s your target. A media company will primarily need an ecosystem made of content creators (take Quora or Facebook or YouTube ).

In many cases, a digital media company over time has to be able to nurture several communities to create a thriving ecosystem.

For instance, large tech companies or startups, often rely on several communities:

• Programmers and developers ( Google , Apple ).
• Content creators and publishers ( Google , Quora, YouTube ).
• Artists and creative talents ( Apple , YouTube ).

In Apple ‘s case though, the first ecosystem is the community of developers building third-party software products that complement the company’s offering:

The Company also supports a community for the development of third-party software and hardware products and digital content that complement the Company’s offerings.

When you combine that with a high-touch strategy (where skilled and knowledgeable salespeople interact with customers) you create a flywheel, where customers are retained for longer, the brand grows as a result of this high-touch activity which creates a better post-sale experience and triggers word of mouth and referral from existing customers:

The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers.Therefore, the Company’s strategy also includes building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.The Company believes ongoing investment in research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products, services and technologies.

Read : Apple Business Model

Airbnb Business Strategy

Business Model Essence : Peer-To-Peer House-Sharing Network With Fee-Based Monetization Strategy

As a peer-to-peer network, Airbnb allows individuals to rent from private owners for a fee.

Airbnb charges guests a service fee between 5% and 15% of the reservation subtotal; While the commission from hosts is generally 3%.

Airbnb also charges hosts who offer experiences a 20% service fee on the total price.

The digitalization that happened in the last two decades has facilitated the creation of peer-to-peer platforms in which business models disrupted the hospitality model created in the previous century by hotel chains like Marriott, Holiday Inn, and Hilton.

Airbnb is quickly branching out toward offering more experiences. We can call Airbnb the “marketplace of experiences.”

In short, just like Amazon started from books, Airbnb has started from house-sharing.

But that is the starting point, which gives the innovative company enough traction to validate its whole business model and expand to other areas.

The principal aim of Airbnb is to control the whole experience for its users. This means creating an end-to-end travel experience that embraces the entire process .

Thus, it’s not surprising that we’ll see Airbnb expanding its marketplace to more and more areas. This is also shown by the fact that Airbnb might soon offer bundled travel packages .

Just as we’ve seen in the case of Alibaba and Amazon , Airbnb follows a marketplace logic, where it needs to make the interactions between its key users (hosts and guests) as smooth as possible, with an emphasis on safety.

As a platform, Airbnb initially used a strategy of improving the quality of its supply by employing freelance photographers that could take pictures of host homes.

This, in turn, made those homes more interesting for guests, as they could appreciate those homes more.

As many people in real estate might know, the quality of the pictures is critical.

Although this might sound trivial, this is what improved the Airbnb supply side.

Indeed with better and professionally taken images, Airbnb improved its reach via search engines (yes, search engines are thirsty for fresh and original content, images comprised).

And it enhanced the experience of its potential customers.

Now Airbnb is converting its business model to digital experiences. In addition to changing the whole strategy.

Whereas Airbnb focused in the past on covering major cities across the world.

Changing travel habits made Airbnb focus on digital experiences and local, extra-metropolitan areas throughout the pandemic.

While, post-pandemic, as people travel for longer stays, the whole platform has been structured around these. 

Read : Airbnb Business Model

Baidu Business Strategy

Business Model Essence :  Online Marketing Free Services Advertising-Supported Revenue Model

Baidu makes money primarily via online marketing services (advertising). In fact, in 2017, Baidu made about $11.24 in online marketing services and a remaining almost $1.8 billion through other sources. According to Statista,

Baidu has an overall search market share of 73.8% of the Chinese market. Other sources of revenues comprise membership services of iQIYI (an innovative market-leading online entertainment service provider in China) and financial services.

At first sight, Baidu might seem the mirror image of Google , but in China.

However, this is a superficial view. While Baidu has followed in China a similar path to Google , it did take advantage of the fact that Google wasn’t available there, to build its dominant position.

Baidu also has a more efficient cost structure than Google. It had also introduced innovations in its search products (like voice search devices for kids) at a time when Google wasn’t there yet.

Read : Baidu Business Model

Baidu mission: two-pillar business strategy and value propositions acting as a glue for its key users/customers

In the past years, Baidu has followed an expansion business strategy focused on acquiring assets and companies that complemented its core business model .

As the leading Chinese search provider, in 2017, Baidu updated its mission to “ Baidu aims to make a complex world simpler through technology.”

This mission is achieved via a two-pillar strategy:

• Strengthening the mobile foundation (similar to Google’s mobile-first).
• And leading in artificial intelligence.

Baidu’s key partners comprise users, customers, Baidu union members, and content providers.

For each of those critical segments, Baidu has drafted a fundamental value proposition .

Thus, to generate a value chain that works for these stakeholders, Baidu has to balance it with a diversified value proposition :

• Users:  enjoying Baidu search experience want a search engine that gives them relevant results.
• Customers: with 775,000 active online marketing customers in 2017, consisting of SMEs, large domestic businesses, and multinational companies, distributed across retail and e-commerce, network service, medical and healthcare, franchise investment, financial services, education, online games, transportation, construction and decoration, and business services. Those businesses look for a trackable, and sustainable ROI for their paid advertising campaigns. By bidding on keywords, they can target specific audiences.
• Baidu Union Member: share revenues with Baidy by displaying banner ads on their sites in relevant spaces filled by the  Baidu search algorithm (think of it as Google’s AdSense Network ). Those publishers and sites can generate additional revenues and monetize their content without relying on complex infrastructure, that instead is employed by Baidu.
• Content Providers:  video copyright holders, app owners who list their apps on the Baidu app store, users who contribute their valuable and copyrighted content to Baidu products, and publishers. Those users get visibility or money in exchange for this content. Baidu has to make sure to allow those content providers to get in exchange for their work and creativity visibility and revenues.

Understanding how the value proposition for each player comes together is critical to understanding the business decisions a company like Baidu makes over time.

For instance, as Baidu (like Google ) moves more and more toward AI, the need to balance the value proposition for Baidu Union Members might fickle.

Booking Business Strategy

Business Model Essence :  House-Sharing Platform Leveraging On A Two-Sided Marketplace With A Commission-Based Revenue Model

Booking Holdings is the company that controls six main brands that comprise Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com, and OpenTable. 

Over 76% of the company’s revenues in 2017 came primarily via travel reservations commissions and travel insurance fees.

Almost 17% came from merchant fees, and the remaining revenues came from advertising earned via KAYAK.

As a distribution strategy, the company spent over $4.5 billion on performance-based and brand advertising.

Read : Booking Business Model

Booking mission, value proposition, and key players

Booking’s mission is to “help people experience the world.” Booking does that via a few primary brands:

• Booking.com.
• priceline.com.
• Rentalcars.com.

The mission of helping people experience the world is executed via three primary value propositions delivered to consumers, travelers, and business partners:

• Consumers are provided what Booking calls “the best choices and prices at any time, in any place, on any device.”
• People and travelers can easily find, book, and experience their travel desires.
• Business partners (like Hotels featured on Booking.com) are provided with platforms, tools, and insights in exchange.

Boomedium-term term strategy is focused on:

• Leveraging technology to provide the best experience.
• Growing partnerships with travel service providers and restaurants.
• Investing in profitable and sustainable growth.

DuckDuckGo Business Strategy

Business Model Essence : Privacy-based Search Engine Built On Google’s Weakness With An affiliate-based Revenue Model

DuckDuckGo makes money in two simple ways: Advertising and Affiliate Marketing.

Advertising is shown based on the keywords typed into the search box. Affiliate revenues come from Amazon and eBay affiliate programs.

When users buy after getting on those sites through DuckDuckGo the company collects a small commission.

While this model might not sound that exciting. DuckDuckGo managed to grow quickly by leveraging Google’s primary weakness: users’ privacy. Where Google’s primary asset is made of users’ data. DuckDuckGo throws that data away on the fly:

It is important to remark that DuckDuckGo is still figuring out a business model that can make it sustainable in the long term.

Indeed, the company got a venture round of $10 million back in August 2018.

DuckDuckGo will be tweaking its business model in the coming years, to reach a “ business model /market fit.”

Read : DuckDuckGo Business Model

Read : DuckDuckGo Story

Google (Alphabet) Business Strategy

Business Model Essence :  Free Search Engine Distributed Across Hardware, Browsers, And Members’ Websites With An Hidden Revenue Generation Model

As of 2017, over ninety billion dollars, which consisted of 86% of Google ’s revenues came from advertising networks.

The remaining fraction (about 13%) came from Apps, Google Cloud, and Hardware. While a bit more than 1% came from bets like Access, Calico, CapitalG, GV, Nest, Verily, Waymo, and X.

Google business model is changing over the years.

Even though advertising is still its cash cow, Google has been diversifying its revenues in other areas. 

While in 2015 90% of Google’s revenues came from advertising, in 2017, advertising revenues represented 86%.

Other revenues grew from about 10% in 2015 to almost 13% in 2017.

Why did Google get there? And where is Google going next? To understand that you need to understand the “moonshot thinking.”

Read : Google Business Model

Read : Google Cost Structure

Read : Baidu vs. Google

Understanding Google’s moonshot thinking and a breakthrough approach to business

As highlighted in the Alphabet annual report for 2018:

Many companies get comfortable doing what they have always done, making only incremental changes. This incrementalism leads to irrelevance over time, especially in technology, where change tends to be revolutionary, not evolutionary. People thought we were crazy when we acquired YouTube and Android and when we launched Chrome, but those efforts have matured into major platforms for digital video and mobile devices and a safer, popular browser. We continue to look toward the future and continue to invest for the long-term. As we said in the original founders’ letter, we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.

Understanding the moonshot approach to business is critical to understanding where Google (now Alphabet) got where it is today, and where it’s headed next.

Since the first shareholders’ letter from Google’s founders, Brin and Page they highlighted that “ Google is not a conventional company. We do not intend to become one.”

Google has successfully built ecosystems that today drive

To understand where Google is going next, you need to look at the AI Economy , in which the tech giant is trying to lead the pack.

Whether or not it will be successful will highly depend on its ability to keep creating successful ecosystems, just as Google has done with Google Maps (you might not realize but Google Maps powers up quite a large number of applications) and Android.

At the time of this writing, Google is widely investing in other areas, such as:

• Voice search.
• AI and machine learning applications.
• Self-driving cars.
• And other bets.

If that is not sufficient Google has made several moves in different spaces, to keep its dominance on mobile, while moving toward voice search, like the investment in KaiOS, which business model is interesting as it finally allows an ecosystem to be built on top of cheap mobile devices in developing countries:

That is why Google keeps making “smaller bets in areas that might seem very speculative or even strange when compared to its current businesses.”

Those other bets made “just” $595 million to Google in 2018.

This represented 0.4% of Google ‘s overall revenues , compared to the over $136 billion coming from the other segments.

Google ‘s North Star is its mission of “ organizing the world’s information and making it universally accessible and useful.” 

Read : KaiOS Business Model

Let’s go through a few other tips for a successful business strategy. 

Problem-first approach

The customer-problem quadrant by LEANSTACK’s Ash Maurya is a great starting point to define and understand the problem, that as an entrepreneur you will going to solve. 

Indeed, a successful business is such, based on the market’s rewards for the entrepreneur’s ability to solve a problem.

Keep in mind that defining and understanding problems in the real world is one of the most difficult things (that is why entrepreneurship is so hard).

To properly stumble on the right definition of the problem you’re solving, there might be some fine-tuning going on, which in the business world we like to call product-market fit . 

Business engineering skills

Another key element is not to lose sight of the context you’re operating.

As such, analyzing that properly might require some business engineering skills . 

To simplify your life you can use the FourWeekMBA business analysis framework.

Don’t strategize on a piece of paper

Strategies always work well on a piece of paper.

Yet when execution comes suddenly we can realize all the drawbacks of that.

In very few, rare cases, a designed strategy will work as expected.

However, the reason we plan and strategize isn’t just to make things work as we’d like them to.

But to communicate a vision we have to those people (employees, customers, stakeholders) who will help us get there. 

That is why when we strategize it’s important not to lose sight of the essence of our strategy, which is the long-term vision we have for our business.

The rest is execution, practice, and a lot of experimentation!

The innovation loop

Innovation starts by tweaking, testing, and experimenting also in unexpected ways.

Often though, as a business strategy is documented after the fact, it seems as if it was all part of a plan. 

In most cases, the innovation loop starts by stumbling upon that thing that will have a great impact on your business.

Therefore, as an entrepreneur, you need to keep pushing on those models that worked out.

But also to be on the lookout for new ways of doing things. 

Barbell approach 

In a barbel approach we want to have a clear distinction between two domains: 

• Core business : on the core business side, where you have a consolidated strategy, and a business model that has proved to work, it’s important to be structured. This means having a clear culture, following given processes, and slowly evolving your business model. 
• New bets : as your business model will become outdated over time, and that might happen also very quickly, you need to be on the lookout for new opportunities emerging, also in new, completely unrelated business fields. 

For instance, a tech giant like Google, has a part of its business skewed toward a few bets it placed on industries that are completely unrelated to its core business (search).

Those bets are not contributing at all to its bottom line (only some of those bets are generating revenues but those are extremely marginal compared to the overall turnover of the company). 

However, those might turn out widely successful (or huge failures) in the years to come. 

Thus, with a barbell approach, we want to consolidate what we have. But also be open to what might be coming next!

Business Explorers

Strategic analysis thinking tools.

Strategic analysis is a process to understand the organization’s environment and competitive landscape to formulate informed business decisions , to plan for the organizational structure and long-term direction. Strategic planning is also useful to experiment with business model design and assess the fit with the long-term vision of the business.

Business model canvas

The business model canvas aims to provide a keen understanding of your business model to provide strategic insights about your customers, product/service, and financial structure;

so that you can make better business decisions.

Blitzscaling canvas

In this article, I’ll focus on the Blitzscaling business model canvas. This is a model based on the concept of Blitzscaling.

That is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency. It focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Pretotyping

Pretotyping is a mixture of the words “pretend” and “prototype,” and it is a methodology used to validate business ideas to improve the chances of building a product or service that people want.

The pretotyping methodology comes from Alberto Savoia’s work summarized in the book “The Right It: Why So Many Ideas Fail and How to Make Sure Yours Succeed.”

This framework is a mixture of the words “pretend” and “prototype,” and it helps to answer such questions (about the product or service to build) as: Would I use it? How, how often, and when would I use it?

Would other people buy it? How much would they be willing to pay for it? How, how often, and when would they use it?

Value innovation and blue ocean strategy

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created.

At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken.

Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Growth hacking process

Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing , product, data analysis, and engineering work together to achieve rapid growth.

The growth hacking process goes through four key stages analyzing, ideating, prioritizing, and testing.

Pirate metrics

Venture capitalist , Dave McClure, coined the acronym AARRR which is a simplified model that enables us to understand what metrics and channels to look at. At each stage of the users’ path toward becoming customers and referrers of a brand.

Engines of growth

In the Lean Startup, Eric Ries defined the engine of growth as “the mechanism that startups use to achieve sustainable growth.”

He described sustainable growth as following a simple rule, “new customers come from the actions of past customers.”

The three engines of growth are the sticky engine, the viral engine, and the paid engine. Each of those can be measured and tracked by a few key metrics, and it helps plan your strategic moves.

The RTVN model is a straightforward framework that can help you design a business model when you’re at the very early stage of figuring out what you need to make it succeed.

Sales cycle

A sales cycle is the process that your company takes to sell your services and products.

In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.

Planning ahead of time the steps your sales team needs to take to close a big contract can help you grow the revenues for your business.

Comparable analysis

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company.

To find comparables, you can look at two key profiles: the business and economic profiles.

From the comparable company analysis, it is possible to understand the competitive landscape of the target organization.

Porter’s five forces

Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition.

It was published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s.

The model breaks down industries and markets by analyzing them through five forces which you can use to have a first assessment of the market you’re in.

Porter’s Generic Strategies

Porter’s Value Chain

Porter’s Diamond Model

Bowman’s Strategy Clock

VMOST Analysis

Fishbone Diagram

GE McKinsey Matrix

VRIO Framework

3C Analysis

AIDA stands for attention, interest, desire, and action. This is a model that is used in marketing to describe the potential journey a customer might go through, before purchasing a product or service. The variation of the AIDA model is the CAB model and the AIDCAS model.

PESTEL analysis

The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization.

This is a critical step that helps organizations identify potential threats and weaknesses. That can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Technology adoption curve

The technology adoption curve is a model that goes through five stages. Each of those stages (innovators, early adopters, early majority, late majority, and laggard) has a specific psychographic that makes that group of people ready to adopt a tech product.

This simple concept can help you define the right target for your business strategy.

Business model essence

A Business Model Essence, according to FourWeekMBA, is a way to find the critical characteristics of any business to have a clear understanding of that business in a few sentences.

That can be used to analyze existing businesses. Or to draft your Business Model and keep a strategic and execution focus on the key elements to be implemented in the short-medium term.

FourWeekMBA business model framework

An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand.

The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

TAM, SAM, and SOM

Understanding your TAM, SAM and SOM can help you navigate the market you’re in and to have a laser focus on the market you can reach with your product and service.

Brand Building

Value Proposition Design

Product-Market Fit

Freemium Decision Model

Organizational Design And Structures

Speed-Reversibility Matrix

Minimum Viable Product

SWOT Analysis

Revenue Modeling

Business Experimentation

Business Analysis

Ansoff Matrix

Key takeaway

I hope that in this guide you learned the critical aspects related to business strategy, with an emphasis on the entrepreneurial world. If business strategy would only be an academic discipline disjoined from reality, that would still be an interesting domain, yet purely speculative.

However, as a business strategy can be used as a useful tool to leverage on to build companies, hopefully, this guide will help you out in navigating through the seemingly noisy and confusing business world, dominated by technology. As a last but critical caveat, there isn’t a single way toward building a successful business.

And oftentimes the way you choose to build a business is really up to you, how you want to impact a community of people and your vision for the future!

Other resources: 

• Types of Business Models You Need to Know
• What Is a Business Model Canvas? Business Model Canvas Explained
• Blitzscaling Business Model Innovation Canvas In A Nutshell
• What Is a Value Proposition? Value Proposition Canvas Explained
• What Is a Lean Startup Canvas? Lean Startup Canvas Explained
• How to Write a One-Page Business Plan
• How to Build a Great Business Plan According to Peter Thiel
• How To Create A Business Model
• What Is Business Model Innovation And Why It Matters
• What Is Blitzscaling And Why It Matters
• Business Model Vs. Business Plan: When And How To Use Them
• The Five Key Factors That Lead To Successful Tech Startups
• Business Model Tools for Small Businesses and Startups

Additional Business Strategy Tactics

Blue ocean player.

Blue Sea Player

Constructive Disruptor

Niche player

Blitzscaler

Continuous Blitzscaler

What is business strategy?

What are examples of business strategies.

Things like product differentiation, business model innovation, technological innovation, more capital for growth, can all be moats that organizations focus on to gain an edge. Depending on the context, industry, and scenario, a business strategy might be more or less effective; that is why testing and experimentation are critical elements.

Connected Strategy Frameworks

ADKAR Model

Business Model Canvas

Lean Startup Canvas

Blitzscaling Canvas

Blue Ocean Strategy

Business Analysis Framework

Balanced Scorecard

Blue Ocean Strategy 

GAP Analysis

GE McKinsey Model

McKinsey 7-S Model

McKinsey’s Seven Degrees

McKinsey Horizon Model

Porter’s Five Forces

Porter’s Value Chain Model

PESTEL Analysis

Scenario Planning

STEEPLE Analysis

FourWeekMBA Business Toolbox

Business Engineering

Tech Business Model Template

Web3 Business Model Template

Asymmetric Business Models

Business Competition

Technological Modeling

Transitional Business Models

Minimum Viable Audience

Business Scaling

Market Expansion Theory

Speed-Reversibility

Asymmetric Betting

Growth Matrix

Revenue Streams Matrix

Pricing Strategies

Other business resources:

• What Is Business Model Innovation
• What Is a Business Model
• What Is Business Strategy
• What is Blitzscaling
• What Is Market Segmentation
• What Is a Marketing Strategy
• What is Growth Hacking

More Resources

About The Author

Gennaro Cuofano

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Course info, instructors.

• Rohan Sahani
• Prof. Arnoldo Hax

Departments

• Sloan School of Management

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Strategic Analysis

The process of conducting research on a company and its operating environment to formulate a strategy

What is Strategic Analysis?

Strategic analysis refers to the process of conducting research on a company and its operating environment to formulate a strategy. The definition of strategic analysis may differ from an academic or business perspective, but the process involves several common factors:

• Identifying and evaluating data relevant to the company’s strategy
• Defining the internal and external environments to be analyzed
• Using several analytic methods such as Porter’s five forces analysis, SWOT analysis , and value chain analysis

What is Strategy?

A strategy is a plan of actions taken by managers to achieve the company’s overall goal and other subsidiary goals. It often determines the success of a company. In strategy, a company is essentially asking itself, “Where do you want to play and how are you going to win?” The following guide gives a high-level overview of business strategy, its implementation, and the processes that lead to business success.

Vision, Mission, and Values

To develop a business strategy, a company needs a very well-defined understanding of what it is and what it represents. Strategists need to look at the following:

• Vision – What it wants to achieve in the future (5-10 years)
• Mission Statement – What business a company is in and how it rallies people
• Values – The fundamental beliefs of an organization reflecting its commitments and ethics

After gaining a deep understanding of the company’s vision, mission, and values, strategists can help the business undergo a strategic analysis. The purpose of a strategic analysis is to analyze an organization’s external and internal environment, assess current strategies, and generate and evaluate the most successful strategic alternatives.

Strategic Analysis Process

The following infographic demonstrates the strategic analysis process:

1. Perform an environmental analysis of current strategies

Starting from the beginning, a company needs to complete an environmental analysis of its current strategies. Internal environment considerations include issues such as operational inefficiencies, employee morale, and constraints from financial issues. External environment considerations include political trends, economic shifts, and changes in consumer tastes.

2. Determine the effectiveness of existing strategies

A key purpose of a strategic analysis is to determine the effectiveness of the current strategy amid the prevailing business environment. Strategists must ask themselves questions such as: Is our strategy failing or succeeding? Will we meet our stated goals? Does our strategy align with our vision, mission, and values?

3. Formulate plans

If the answer to the questions posed in the assessment stage is “No” or “Unsure,” we undergo a planning stage where the company proposes strategic alternatives. Strategists may propose ways to keep costs low and operations leaner. Potential strategic alternatives include changes in capital structure, changes in supply chain management, or any other alternative to a business process.

4. Recommend and implement the most viable strategy

Lastly, after assessing strategies and proposing alternatives, we reach a recommendation. After assessing all possible strategic alternatives, we choose to implement the most viable and quantitatively profitable strategy. After producing a recommendation, we iteratively repeat the entire process. Strategies must be implemented, assessed, and re-assessed. They must change because business environments are not static.

Levels of Strategy

Strategic plans involve three levels in terms of scope:

1. Corporate-level (Portfolio)

At the highest level, corporate strategy involves high-level strategic decisions that will help a company sustain a competitive advantage and remain profitable in the foreseeable future. Corporate-level decisions are all-encompassing of a company.

2. Business-level

At the median level of strategy are business-level decisions. The business-level strategy focuses on market position to help the company gain a competitive advantage in its own industry or other industries.

3. Functional-level

At the lowest level are functional-level decisions. They focus on activities within and between different functions, aimed at improving the efficiency of the overall business. These strategies are focused on particular functions and groups.

Related Readings

Thank you for reading CFI’s guide to Strategic Analysis. To keep learning and advancing your career, the following CFI resources will be helpful:

• Business Life Cycle
• Competitive Advantage
• Industry Analysis
• Types of Financial Analysis
• See all management & strategy resources
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BTEC Unit 43 Business Strategy HND Level 5 Assignment Sample, UK

Course: Pearson BTEC Level 5 Higher National Diploma in Business

The Pearson BTEC Level 5 Higher National Diploma in Business offers individuals aspiring to managerial roles across various market sectors the opportunity to cultivate and enhance strategic thinking and planning skills. This unit delves into general manager skills and competences, encompassing a diverse range of themes applicable in numerous contexts. 

Students will gain insight into various strategic approaches applicable at operational, tactical, and strategic levels within organizations. Through a comprehensive understanding of theories, models, and concepts, students will be equipped to make valuable contributions to business plans and operational directions. This unit prepares students to take on roles as junior managers, influencing decision-making and planning within organizations.

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Assignment Task 1: Analyse the impact and influence that the macro environment has on an organisation and its business strategies

The macro environment refers to the external factors that can significantly influence an organization’s operations and decision-making. These factors are beyond the organization’s control and can shape its overall business environment. Some of the key elements of the macro environment include:

• Economic Factors: The state of the economy, such as economic growth, inflation, exchange rates, and interest rates, can impact consumer spending, business investments, and overall demand for goods and services.
• Political Factors: Government policies, regulations, stability, and international relations can affect an organization’s operations, trade, and market access.
• Social Factors: Cultural trends, demographics, lifestyle changes, and societal attitudes can influence consumer behavior and market demands.
• Technological Factors: Advances in technology, innovation, and digital disruption can create new opportunities or threats for organizations.
• Environmental Factors: Environmental regulations, sustainability concerns, and climate change can affect industries and business strategies.

6.Legal Factors: Laws and regulations related to labor, intellectual property, competition, and other areas can impact how an organization conducts business.

Assignment Task 2: Assess an organisation’s internal environment and capabilities

The internal environment of an organization includes its resources, capabilities, and competencies. To assess this, several tools and frameworks can be utilized:

1.SWOT Analysis: This technique examines an organization’s strengths, weaknesses, opportunities, and threats, providing a comprehensive overview of its internal and external factors.

• Resource-Based View (RBV): RBV analyzes the organization’s unique resources and capabilities to identify competitive advantages and core competencies.
• Value Chain Analysis: This tool breaks down the organization’s activities into primary and support activities to understand the value added at each stage and identify areas of improvement.
• VRIO Analysis: VRIO assesses the value, rarity, inimitability, and organization of an organization’s resources to determine their competitive potential.

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Assignment Task 3: Apply the outcomes of an analysis, using an appropriate strategic management tool, in a given market sector

After analyzing both the macro environment and internal capabilities, organizations can apply various strategic management tools to make informed decisions in their chosen market sector. Some common tools include:

• Porter’s Five Forces: This framework analyzes the industry’s competitive forces (e.g., rivalry, bargaining power of buyers and suppliers, threat of substitutes, and barriers to entry) to identify the organization’s position within the market.
• Ansoff Matrix: This matrix helps organizations explore growth strategies, including market penetration, market development, product development, and diversification.
• BCG Matrix: The Boston Consulting Group matrix categorizes a company’s products into four quadrants based on market share and market growth rate, guiding resource allocation decisions.

4.PESTEL Analysis: PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal factors. This analysis helps organizations understand the external factors affecting their market sector.

Assignment Task 4: Develop a strategic management plan in an organisation, informed by models, theories and concepts, to achieve competitive advantage in a given market sector.

To achieve competitive advantage in a specific market sector, an organization can follow these steps:

• Set Clear Objectives: Define specific, measurable, achievable, relevant, and time-bound (SMART) objectives that align with the organization’s mission and vision.
• Identify Competitive Advantage: Based on the analysis of the macro environment, internal capabilities, and strategic tools, identify unique strengths and advantages that can differentiate the organization from competitors.
• Formulate Strategies: Develop strategic initiatives and action plans that leverage the identified competitive advantage to achieve the set objectives.
• Allocate Resources: Allocate resources effectively to support the chosen strategies and ensure their successful implementation.
• Monitor and Adjust: Continuously monitor the market, track performance against objectives, and be ready to adjust the strategic management plan as needed to respond to changes in the macro environment or internal capabilities.

Remember that each organization’s strategic management plan will be unique based on its industry, market position, and resources. Flexibility and adaptability are crucial in strategic planning to stay competitive and successful in the long run.

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Corporate Communication Strategy Assignment: Its Necessity, Scope And Application

Communicating strategically In Assignment 1 We examined the changing environment for business and factors impacting on communication in today's workplace. In Assignment 4 we explore how these changes have affected corporate communications and why it has become imperative for modern organisations to communicating strategically. Against this backdrop the focus of the assignment is on the corporate communications function itself.

Although not every organisation can include all the sub functions and responsibilities, to operate most effectively, a majority of these functions must be included in the overall communications function.

Your boss, the CEO of MnM Company, has asked you to prepare a report investigating the question: ‘Why and how should managers master the corporate communication function’? In so doing she expects you to examine the following foui sub-functions within the function:

• Identity. image, and reputation
• Corporate responsibility
• Media relations
• Crisis management.
• Stakeholder relations

1. Identity, image, and reputation: The purpose of this part of the report is to identify how corporate communication strategy assignment can improve the identity, image and reputation of an organization. By identifying it, this part will demonstrate that it would be important for managers of MnM to master corporate communication.

1.1 Issue 1: Lack of customer engagement Corporate communication is defined as a set of activities that are included in managing and orchestrating internal and external communications aimed at developing a positive point of view among stakeholders on which an organization highly depends. Corporate communication is also described as the messages that corporate organizations issue to its audiences such as customers, media partners, suppliers and channel partners. According to Doorley and Garcia (2015), corporate communication is considered as a link of an organization with the outside world. Now, strategically it is important for all the organizations to engage with the customers in a sense that the customers can understand that organization’s image identify and reputation (Van den Bogaert et al. 2017). In this scenario, identity means the visual manifestation of an organization's reality as conveyed through the name, logo, motto, products, services, stationery, uniforms and other tangible pieces (Wheeler 2017). In order to develop a strong brand identity, it is important for an organization to tap into the mind of the customers. Besides, names and logos also play a major role in developing brand identity (Hemsley-Brown et al. 2016). For example, whenever customer thinks about buying Pizza, the name and logo of Dominos or Pizza Hut come into their mind in the sense that these companies provide best quality pizzas. Now, this is the brand identity of Dominos and Pizza Hut and this brand identity is developed through their corporate communication. These organizations have implemented several different techniques to communicate with their external stakeholders, mainly the consumers.

As mentioned by Pansari and Kumar (2017) customer engagement is one of the major components of organizational success. In simple words, customer engagement is defined as an emotional connection between a customer and a brand. Highly engaged customers tend to buy more and promote more and show greater loyalty to an organization (Harmeling et al. 2017). Now, providing quality products is not enough to ensure customer loyalty as customer engagement through communication with customers and through providing superior customer services are also important (Kaura et al. 2015). Now, this customer engagement through communication and quality customer services are not possible without the presence of a sound corporate communication strategy. If after sales services of an organization is poor then the consumers will never buy again from that organization. On the other hand, depending on existing customers will never help an organization to acquire growth and to increase profits. For gaining growth and more profitability it would be important to gain new customers and this can be done only through customer engagement and customer engagement is possible through corporate communication. By showcasing existing or new products and elaborating why this product is better than the products of other companies, an organization can easily gain new customers. Now, this presentation of products and their benefits is mainly done on the website of an organization, its social media site, in newspapers and other marketing channels (Lerch and Gotsch 2015). Social media sites and websites where such presentation is done, customers are highly motivated to provide comments and suggestions about what they think about the product or what improvements can be added to the product. This is not only customer engagement but this is also corporate communication strategy assignment. Through this strategy, an organization helps customers to create a mindset that the organization values their suggestions that in turn improved brand identity, reputation and image of the organization.

In terms of MnM, corporate communication would be important if the organization wants to increase its sales, profitability and customer base. Now, implementing a corporate communication strategy will not be enough as implementing such a strategy without having ample amount of knowledge will actually affect and hamper the brand image and reputation (Zerfass et al. 2016). Today, most common and effective corporate communication strategy is communication through social media which is not an easy task to do. There are methods such as the selection of right platform, metrics, evaluation process and response time that ensure the success of social media communication. Therefore, in this scenario, it can be stated that it would be important for the managers of MnM to master corporate communication to ensure the development of the positive organizational image, reputation and identity.

1.2 Issue 2: Lack of competitive advantage Due to globalization, now business organizations can easily expand into an international country for acquiring new customers and to increase their sales. As a result, competition in every business industry around the world has increased significantly. In this condition, every business organizations are trying to display its products as a more superior product than the products sold by other companies in this field (Namada 2018). This process is called as gaining a competitive advantage over rivals (Weerawardena and Salunke 2017). There are several methods of gaining competitive advantage however; two most effective methods are product differentiation and new product development. Competitive advantage can easily be gained when an organization develops new product superior to the products of its competitors (Kumar and Pansari 2016). For example, Apple Inc. is considered the most famous smartphone brand around the world due to the fact that its products are better than the products of others such as Samsung or Nokia. MnM being a business organization must also have to do the same in order to survive in this highly competitive business atmosphere. Now, the question is how MnM can acquire competitive advantages (Liu and Atuahene-Gima 2018). MnM can develop new products and services and can increase its brand image, brand reputation and brand identity to gain the trust of its potential customers and to ensure retention of its existing customers.

Now, corporate communication plays a major role in developing the brand identity, reputation and image which is already mentioned previously (Kim and Ji 2017). In this section how corporate communication can help develop new products will be mentioned. It is already found that corporate communication means implementing strong and effective internal and external communication where internal communication is done with employees and external communication is done with the consumers. Now, developing new products without consulting with the customers will always be a disaster and Nokia is the biggest example of that. Nokia without implementing corporate communication strategy assignment just decided that they should manufacture windows smartphones with Microsoft and everyone knows what happened after that. Before developing a new product or a service it would be important to engage with the customers through social media, emails, direct communication and surveys. Through methods, an organization can understand what the customers are expecting in the future products and based on their demands new products can be developed that those customers will definitely buy. Communication with frontline employees that is also a part of corporate communication also plays a major role in it (West et al. 2015). Frontline employees are the employees who directly communicate with customers and these consumers know about customer expectations and requirements (Falola et al. 2018). Therefore, by implementing corporate communication strategy assignment on an organization can manufacture products that will attract the customers, both recent and potential customers. On the other hand, if an organization develops exactly the products that are expected or required by customers then the customers will definitely think that the organization thinks about the preferences of the customers. This thinking will automatically increase the brand image, identity and reputation of an organization among its customers which means, the customers will, again and again, buy from that organization (Awadzi-Calloway 2016).

From the above discussion, it is clear that through corporate communications MnM will be able to manufacture products that will be aligned with the demands and expectations of its current and potential customers. If its products are exactly what the customers want then the customers will buy from MnM only which will help the organization to acquire competitive advantage over its rivals. If corporate communication is not implemented by MnM then it would be impossible for the organization to suppress its competitions and to acquire a leading market position in the industry where it is operating. Now, corporate communication strategy assignment does not end with just collecting information from customers or employees as the next part is to analyze the data and to identify new product development opportunities in a proper manner. If managers of MnM are not experts in this process then MnM will end up developing a product that the consumers did not want. It will not only waste a lot of resources of the company but will also prevent the organization from acquiring competitive advantage over its rivals. Therefore, in order to eliminate these issues, it would be highly important for the managers of MnM to become masters of corporate communication.

References AWADZI-CALLOWAY, J.A.C.Q.U.E.L.I.N.E., AWADZI, C. and AWADZI, W., 2016. The Role of Human Resource Specialists in Motivation, Training and Engagement in the Hospitality Industry. Consortium Journal of Hospitality & Tourism, 20(2).

Doorley, J. and Garcia, H.F., 2015. Reputation management: The key to successful public relations and corporate communication. Routledge.

Falola, H.O., Salau, O.P., Olokundun, M.A., Oyafunke-Omoniyi, C.O., Ibidunni, A.S. and Osibanjo, O.A., 2018. Employees’ intrapreneurial engagement initiatives and its influence on organisational survival. Business: Theory and Practice, 19, p.9.

Harmeling, C.M., Moffett, J.W., Arnold, M.J. and Carlson, B.D., 2017. Toward a theory of customer engagement marketing. Journal of the Academy of Marketing Science, 45(3), pp.312-335.

Hemsley-Brown, J., Melewar, T.C., Nguyen, B. and Wilson, E.J., 2016. Exploring brand identity, meaning, image, and reputation (BIMIR) in higher education: A special section.

Kaura, V., Durga Prasad, C.S. and Sharma, S., 2015. Service quality, service convenience, price and fairness, customer loyalty, and the mediating role of customer satisfaction. International Journal of Bank Marketing, 33(4), pp.404-422.

Kim, S. and Ji, Y., 2017. Chinese consumers' expectations of corporate communication on CSR and sustainability. Corporate Social Responsibility and Environmental Management, 24(6), pp.570-588.

Kumar, V. and Pansari, A., 2016. Competitive advantage through engagement. Journal of Marketing Research, 53(4), pp.497-514.

Lerch, C. and Gotsch, M., 2015. Digitalized product-service systems in manufacturing firms: A case study analysis. Research-Technology Management, 58(5), pp.45-52.

Liu, W. and Atuahene-Gima, K., 2018. Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets. Industrial Marketing Management, 73, pp.7-20.

Namada, J.M., 2018. Organizational learning and competitive advantage. In Handbook of Research on Knowledge Management for Contemporary Business Environments (pp. 86-104). IGI Global.

Pansari, A. and Kumar, V., 2017. Customer engagement: the construct, antecedents, and consequences. Journal of the Academy of Marketing Science, 45(3), pp.294-311.

Van den Bogaert, S., Declercq, J., Christiaens, T., Jacobs, G. and Bracke, P., 2017. In the Land of Pharma: a thematic analysis of the corporate communication of the pharmaceutical industry. In 13th Conference of the European Sociological Association

Weerawardena, J. and Salunke, S., 2017. Resolving the Market Learning-Firm Competitive Advantage Debate, an Empirical Investigation: An Abstract. In Marketing at the Confluence between Entertainment and Analytics (pp. 699-699). Springer, Cham.

West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.

Wheeler, A., 2017. Designing brand identity: an essential guide for the whole branding team. John Wiley & Sons.

Zerfass, A., Ver?i?, D. and Wiesenberg, M., 2016. Managing CEO communication and positioning: A cross-national study among corporate communication leaders. Journal of communication management, 20(1), pp.37-55.

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6 Examples of Corporate Social Responsibility That Were Successful

• 06 Jun 2019

Business is about more than just making a profit. Climate change, economic inequality, and other global challenges that impact communities worldwide have compelled companies to be purpose-driven and contribute to the greater good .

In a recent study by Deloitte , 93 percent of business leaders said they believe companies aren't just employers, but stewards of society. In addition, 95 percent reported they plan to take a stronger stance on large-scale issues in the coming years and devote significant resources to socially responsible initiatives. With more CEOs turning their focus to the long term, it’s important to consider what you can do in your career to make an impact .

Access your free e-book today.

What Is Corporate Social Responsibility?

Corporate social responsibility (CSR) is a business model in which for-profit companies seek ways to create social and environmental benefits while pursuing organizational goals, such as revenue growth and maximizing shareholder value.

Today’s organizations are implementing extensive corporate social responsibility programs, with many companies dedicating C-level executive roles and entire departments to social and environmental initiatives. These executives are commonly referred to as chief officers of corporate social responsibility or chief sustainability officers (CSO).

There are many types of corporate social responsibility , and CSR might look different for each organization, but the end goal is always the same: Do well by doing good . Companies that embrace corporate social responsibility aim to maintain profitability while supporting a larger purpose.

Rather than simply focusing on generating profit, or the bottom line, socially responsible companies are concerned with the triple bottom line , which considers the impact that business decisions have on profit, people, and the planet.

It’s no coincidence that some of today’s most profitable organizations are also socially responsible. Here are six successful examples of corporate social responsibility you can use to drive social change at your organization.

Check out our video on corporate social responsibility below, and subscribe to our YouTube channel for more explainer content!

6 Corporate Social Responsibility Examples

1. lego’s commitment to sustainability.

As one of the most reputable companies in the world, Lego aims to not only help children develop through creative play but also foster a healthy planet.

Lego is the first, and only, toy company to be named a World Wildlife Fund Climate Savers Partner , marking its pledge to reduce its carbon impact. And its commitment to sustainability extends beyond its partnerships.

By 2030, the toymaker plans to use environmentally friendly materials to produce all of its core products and packaging—and it’s already taken key steps to achieve that goal.

Over 2013 and 2014, Lego shrunk its box sizes by 14 percent , saving approximately 7,000 tons of cardboard. Then, in 2018, the company introduced 150 botanical pieces made from sustainably sourced sugarcane —a break from the petroleum-based plastic typically used to produce the company’s signature building blocks. The company has also recently committed to removing all single-use plastic packaging from its materials by 2025, among other initiatives .

Along with these changes, the toymaker has committed to investing $164 million into its Sustainable Materials Center , where researchers are experimenting with bio-based materials that can be implemented into the production process.

Through these initiatives, Lego is well on its way to tackling pressing environmental challenges and furthering its mission to help build a more sustainable future.

Related : What Does "Sustainability" Mean in Business?

2. Salesforce’s 1-1-1 Philanthropic Model

Beyond being a leader in the technology space, cloud-based software giant Salesforce is a trailblazer in corporate philanthropy.

Since its outset, the company has championed its 1-1-1 philanthropic model , which involves giving one percent of product, one percent of equity, and one percent of employees’ time to communities and the nonprofit sector.

To date, Salesforce employees have logged more than 5 million volunteer hours . Not only that, the company has awarded upwards of $406 million in grants and donated to more than 40,000 nonprofit organizations and educational institutions.

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3. Ben & Jerry’s Social Mission

At Ben & Jerry’s, positively impacting society is just as important as producing premium ice cream.

In 2012, the company became a certified B Corporation —a business that balances purpose and profit by meeting the highest standards of social and environmental performance, public transparency, and legal accountability.

As part of its overarching commitment to leading with progressive values, the ice cream maker established the Ben & Jerry’s Foundation in 1985, an organization dedicated to supporting grassroots movements that drive social change.

Each year, the foundation awards approximately $2.5 million in grants to organizations in Vermont and across the United States. Grant recipients have included the United Workers Association, a human rights group striving to end poverty, and the Clean Air Coalition, an environmental health and justice organization based in New York.

The foundation’s work earned it a National Committee for Responsive Philanthropy Award in 2014, and it continues to sponsor efforts to find solutions to systemic problems at both local and national levels.

Related : How to Create Social Change: 4 Business Strategies

4. Levi Strauss’s Social Impact

In addition to being one of the most successful fashion brands in history, Levi’s is also one of the first to push for a more ethical and sustainable supply chain.

In 1991, the brand created its Terms of Engagement , which established its global code of conduct regarding its supply chain and set standards for workers’ rights, a safe work environment, and an environmentally friendly production process.

To maintain its commitment in a changing world, Levi’s regularly updates its Terms of Engagement. In 2011, on the 20th anniversary of its code of conduct, Levi’s announced its Worker Well-being initiative to implement further programs focused on the health and well-being of supply chain workers.

Since 2011, the Worker Well-being initiative has been expanded to 12 countries, benefitting more than 100,000 workers. In 2016, the brand scaled up the initiative, vowing to expand the program to more than 300,000 workers and produce more than 80 percent of its product in Worker Well-being factories by 2025.

For its continued efforts to maintain the well-being of its people and the environment, Levi’s was named one of Engage for Good’s 2020 Golden Halo Award winners , the highest honor reserved for socially responsible companies.

5. Starbucks’s Commitment to Ethical Sourcing

Starbucks launched its first corporate social responsibility report in 2002 with the goal of becoming as well-known for its CSR initiatives as for its products. One of the ways the brand has fulfilled this goal is through ethical sourcing.

In 2015, Starbucks verified that 99 percent of its coffee supply chain is ethically sourced , and it seeks to boost that figure to 100 percent through continued efforts and partnerships with local coffee farmers and organizations.

The brand bases its approach on Coffee and Farmer Equity (CAFE) Practices , one of the coffee industry’s first set of ethical sourcing standards created in collaboration with Conservation International . CAFE assesses coffee farms against specific economic, social, and environmental standards, ensuring Starbucks can source its product while maintaining a positive social impact.

For its work, Starbucks was named one of the world’s most ethical companies in 2021 by Ethisphere.

6. New Belgium Brewing’s Sustainable Practices

New Belgium Brewing has always been a proponent of green initiatives . As early as 1999, it was one of the first breweries to use wind power to source 100 percent of its electricity, significantly reducing its operational carbon footprint.

In Harvard Business School Online’s Business and Climate Change course, Katie Wallace, New Belgium Brewing's chief environmental, social, and governance (ESG) officer, elaborates on the company’s sustainable practices.

"We have biogas here that we capture from our process water treatment plant," Wallace says in the course. "We make electricity with it. When we installed our solar panels on the Colorado packaging hall, it was the largest privately owned solar array at that time in Colorado. And today, we have many other sources of renewable electricity and have invested quite a bit in efficiencies."

New Belgium Brewing also turns outward in its sustainability practices by actively engaging with suppliers, customers, and competitors to promote broader environmental change. These efforts range from encouraging the use of renewable resources in supply chains to participating in policy-making discussions that foster industry-wide sustainability. For example, it co-founded the Glass Recycling Coalition to improve recycling nationwide after recognizing sustainability concerns in the bottling industry.

New Belgium's commitment to corporate social responsibility is an ongoing process, though. The brewery continues to set ambitious targets for reducing waste, conserving water, and supporting renewable energy projects to build a more sustainable future.

The Value of Being Socially Responsible

As these firms demonstrate , a deep and abiding commitment to corporate social responsibility can pay dividends. By learning from these initiatives and taking a values-driven approach to business, you can help your organization thrive and grow, even as it confronts global challenges.

Corporate social responsibility is critical for businesses today. It enables organizations to contribute to society while also achieving operational goals. By prioritizing social responsibility, you can build trust with your stakeholders and leave a positive impact.

Do you want to understand how to combine purpose and profit and more effectively tackle global challenges? Explore our online business in society courses , including Sustainable Business Strategy and Business and Climate Change , to learn more about how business can be a catalyst for system-level change.

This post was updated on May 30, 2024. It was originally published on June 6, 2019.

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6 Ways to Bring Strategy into Your Work Every Day

• David Lancefield

Small decisions about where to focus and what to do throughout your day may feel inconsequential, but their impacts accumulate.

Business leaders are expected to be strategic, and while organizational obstacles can prevent you from translating intent into strategic actions, so can your personal limitations and practices. It doesn’t have to be this way. Even when it feels like the odds are stacked against you, you have more choices than you may realize. Small decisions about where to focus and what to do throughout your day may feel inconsequential, but their impacts accumulate. Master those small decisions and before you know it, you’ll overcome the obstacles as you pursue your strategy with greater clarity, determination, and ultimately success. The author presents six ways to incorporate strategy into your daily practices.

Being strategic — that is, making a coherent set of choices to help you pursue an ambition or goal — is a nonnegotiable skill for business leaders. But it can be hard to practice, and strategies are notoriously hard to design and deliver. Sometimes we blame organizational obstacles. For example, micromanagement dampens enthusiasm for trying something new. Incentives encourage us to stick to the status quo. Poor communication makes it hard to know where to focus.

• David Lancefield is a  catalyst, strategist, and coach  for leaders. He’s advised more than 40 CEOs and hundreds of executives, was a senior partner at Strategy&, and is a guest lecturer at the London Business School. Find him on LinkedIn (@davidclancefield) or at  davidlancefield.com , where you can sign up for his free “Mastering Big Moments”  workbook .

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Whether your industry faces challenges from geopolitical strife, fallout from a global pandemic or rising aggression in the cybersecurity space, the threat vector for modern enterprises is undeniably powerful. Disaster recovery strategies provide the framework for team members to get a business back up and running after an unplanned event.

Worldwide, the popularity of disaster recovery strategies is understandably increasing. Last year, companies spent USD 219 billion on  cybersecurity  and solutions alone, a 12% increase from 2022,  according to a recent report by the International Data Corporation (IDC)  (link resides outside ibm.com).

A disaster recovery strategy lays out how your businesses will respond to a number of unplanned incidents. Strong disaster recovery strategies consist of disaster recovery plans (DR plans), business continuity plans (BCPs) and incident response plans (IRPs). Together, these documents help ensure businesses are prepared to face a variety of threats including power outages,  ransomware  and  malware  attacks, natural disasters and many more.

What is a disaster recovery plan (DRP)?

Disaster recovery plans (DRPs) are detailed documents describing how companies will respond to different types of disasters. Typically, companies either build DRPs themselves or outsource their disaster recovery process to a third-party DRP vendor. Along with business continuity plans (BCPs) and incident response plans (IRPs), DRPs play a critical role in the effectiveness of disaster recovery strategy.

What are business continuity plans and incident response plans?

Like DRPs, BCPs and IRPs are both parts of a larger disaster recovery strategy that a business can rely on to help restore normal operations in the event of a disaster. BCPs typically take a broader look at threats and resolution options than DRPs, focusing on what a company needs to restore connectivity. IRPs are a type of DRP that focuses exclusively on  cyberattacks  and threats to IT systems. IRPs clearly outline an organization’s real-time emergency response from the moment a threat is detected through its mitigation and resolution. 

Why having a disaster recovery strategy is important

Disasters can impact businesses in different ways, causing all kinds of complex problems. From an earthquake that affects physical infrastructure and worker safety to a cloud services outage that closes off access to sensitive data storage and customer services, having a sound disaster recovery strategy helps ensure businesses will recover quickly. Here are some of the greatest benefits of building a strong disaster recovery strategy:

• Maintaining business continuity:  Business continuity and  business continuity disaster recovery (BCDR)  help ensure organizations return to normal operations after an unplanned event, providing data protection, data backup and other critical services.
• Reducing costs:  According to  IBM’s recent Cost of Data Breach Report , the average cost of a data breach in 2023 was USD 4.45 million—a 15% increase over the last 3 years. Enterprises without disaster recovery strategies in place are risking costs and penalties that could far outweigh the money saved by not investing in the solution.
• Incurring less downtime:  Modern enterprises rely on complex technologies like cloud-based infrastructure solutions and cellular networks. When an unplanned incident disrupts business operations, it can cost millions. Additionally, the high-profile nature of cyberattacks, lengthy downtime, or human-error-related interruptions can cause customers and investors to flee.
• Maintaining compliance:  Businesses that operate in heavily regulated sectors like healthcare and personal finance face heavy fines and penalties for data breaches because of the critical nature of the data they manage. Having a strong disaster recovery strategy helps shorten response and recovery processes after an unplanned incident, which is critical in sectors where the amount of financial penalty is often tied to the duration of the breach.

How disaster recovery strategies work

The strongest disaster recovery strategies prepare businesses to face a wide variety of threats. A strong template for restoring normal operations can help build investor and customer confidence and increase the likelihood you will recover from whatever threats your business faces. Before we get into the actual components of disaster recovery strategies, let’s look at a few key terms.

• Failover /failback:  Failover is a widely used process in IT disaster recovery where operations are moved to a secondary system when a primary one fails due to a power outage, cyberattack or other threat. Failback is the process of switching back to the original system once normal processes have been restored. For example, a business could failover from its  data center  onto a secondary site where a redundant system will kick in instantly. If executed properly, failover/failback can create a seamless experience where a user/customer isn’t even aware they are being moved to a secondary system.
• Recovery time objective  (RTO):  RTO refers to the amount of time it takes to restore business operations after an unplanned incident. Establishing a reasonable RTO is one of the first things businesses need do when they’re creating their disaster recovery strategy.  
• Recovery point objective  (RPO):  Your business’ RPO is the amount of data it can afford to lose and still recover. Some enterprises constantly copy data to a remote data center to ensure continuity. Others set a tolerable RPO of a few minutes (or even hours) and know they will be able to recover from whatever was lost during that time.
• Disaster Recovery-as-a-Service (DRaaS):  DRaaS  is an approach to disaster recovery that’s been gaining popularity due to a growing awareness around the importance of data security. Companies that take a DRaaS approach to disaster recovery are essentially outsourcing their disaster recovery plans (DRPs) to a third party. This third party hosts and manages the necessary infrastructure for recovery, then creates and manages response plans and ensures a swift resumption of business-critical operations.  According to a recent report by Global Market Insights (GMI)  (link resides outside ibm.com), the market size for DRaaS was USD 11.5 billion in 2022 and was poised to grow by 22% in the years ahead.

Five steps to creating a strong disaster recovery strategy

Disaster recovery planning starts with a deep analysis of your most critical business processes—known as business impact analysis (BIA) and risk assessment (RA). While every business is different and will have unique requirements, there are several steps you can take regardless of your size or industry that will help ensure effective disaster recovery planning.

Step 1: Conduct a business impact analysis

Business impact analysis (BIA) is a careful assessment of every threat your company faces, along with the possible outcomes. Strong BIA looks at how threats might impact daily operations, communication channels, worker safety and other critical parts of your business. Examples of a few factors to consider when conducting BIA include loss of revenue, length and cost of downtime, cost of reputational repair (public relations), loss of customer or investor confidence (short and long term), and any penalties you might face because of compliance violations caused by an interruption.

Step 2: Perform a risk analysis

Threats vary greatly depending on your industry and the type of business you run. Conducting sound risk analysis (RA) is a critical step in crafting your strategy. You can assess each potential threat separately by considering two things——the likelihood it will occur and its potential impact on business operations. There are two widely used methods for this: qualitative and quantitative risk analysis. Qualitative risk analysis is based on perceived risk and quantitative analysis is performed using verifiable data.

Step 3: Create your asset inventory

Disaster recovery relies on having a complete picture of every asset your enterprise owns. This includes hardware, software, IT infrastructure, data and anything else that’s critical to your business operations. Here are three widely used labels for categorizing your assets:

• Critical:  Only label assets critical if they are required for normal business operations.
• Important:  Assign this label to assets your business uses at least once a day and, if disrupted, would have an impact on business operations (but not shut them down entirely).
• Unimportant:  These are assets your business uses infrequently that are not essential for normal business operations.

Step 4: Establish roles and responsibilities 

Clearly assigning roles and responsibilities is arguably the most important part of a disaster recovery strategy. Without it, no one will know what to do in the event of a disaster. While actual roles and responsibilities vary greatly according to company size, industry and type of business, there are a few roles and responsibilities that every recovery strategy should contain:

• Incident reporter:  An individual who is responsible for communicating with stakeholders and relevant authorities when disruptive events occur and maintaining up-to-date contact information for all relevant parties.
• Disaster recovery plan manager:  Your DRP manager ensures disaster recovery team members perform the tasks they’ve been assigned and that the strategy you put in place runs smoothly. 
• Asset manager:  You should assign someone the role of securing and protecting critical assets when a disaster strikes and reporting back on their status throughout the incident.

Step 5: Test and refine

To ensure your disaster recovery strategy is sound, you’ll need to practice it constantly and regularly update it according to any meaningful changes. For example, if your company acquires new assets after the formation of your DRP strategy, they will need to be folded into your plan to ensure they are protected going forward. Testing and refinement of your disaster recovery strategy can be broken down into three simple steps:

• Create an accurate simulation:  When rehearsing your DRP, try to create an environment as close to the actual scenario your company will face without putting anyone at physical risk.
• Identify problems:  Use the DRP testing process to identify faults and inconsistencies with your plan, simplify processes and address any issues with your backup procedures.
• Test your disaster recovery procedures:  Seeing how you’ll respond to an incident is vital, but it’s just as important to test the procedures you’ve put in place for restoring critical systems once the incident is over. Test how you’ll turn networks back on, recover any lost data and resume normal business operations. 

Disaster recovery solutions

Modern enterprises rely more than ever on technology to serve their customers. Even minor outages can cause critical downtime and impact customer and investor confidence. The IBM FlashSystem Cyber Recovery Guarantee is designed for anyone who purchases a new FlashSystem Array with IBM Storage expert care and IBM Storage Insights Pro.

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What is swing trading?

How does swing trading work, swing trading strategies, swing trading vs. day trading, the bottom line, what to know about swing trading and how to minimize risks of this speculative trading strategy.

Paid non-client promotion: Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate investing products to write unbiased product reviews.

• Swing trading is a speculative strategy where investors buy and hold assets to profit from expected price moves.
• Swing traders leverage technical analysis to determine entry (buy) and exit (sell) points.
• Swing traders are exposed to gap risk, where a security's price changes while the market is closed.

Investors approach the stock market with a variety of goals. Many invest for the long-term , seeking to build wealth over time, while others trade for short-term profits — and many people do both. There are a variety of strategies for trading, but one of the most accessible to newcomers is swing trading.   

Unlike day trading , where trading is extremely fast-paced, swing trading is slower. This strategy is a great way to understand market movements and dip your toe into technical analysis. Here's what the curious trader should know.

Swing trading is a trading strategy where investors buy a stock or some other asset and hold it — known as holding a position — for a short period of time (usually between a few days and up to several weeks) in the hopes of turning a profit.

The goal of the swing trader is to capture a portion of any potential price movement or "swing" in the market. Individual gains may be smaller as the trader focuses on short-term trends and seeks to cut losses quickly. However, small gains achieved consistently over time can add up to an attractive annual return.

The swing trader analyzes patterns in trading activity to buy or sell a stock in order to capitalize on price movements and momentum trends of stocks, typically focusing on large-cap stocks since they are the most heavily traded. Because these stocks have high trading volumes, they offer investors insight into how the market perceives the company and its security price movements. This active trading offers the information necessary for what's called technical analysis, which we'll cover in the next section. 

As with any style of trading, swing trading carries plenty of risks. Swing traders are exposed to several types of risk, the most common being gap risk, where a security's price rises or falls significantly based on news or events that occur while the market is closed, whether overnight or during a weekend.

The opening price will reflect the shock of any unexpected news. The longer the market is closed, the greater the risk. Abrupt changes in the market's direction also pose a risk, and swing traders may miss out on longer-term trends by focusing on shorter holding periods.

Example of swing trading

Let's take a look at a real-world example of how a swing trader may analyze Amazon's stock and determine when to buy or sell.

The candlestick chart above illustrates the "cup and handle" consolidation pattern, where the cup is u-shaped and the handle points slightly downward. This pattern is considered a bullish signal . 

If a swing trader wants to make a profitable trade in Amazon, they would likely purchase the stock at the top of the "cup," at or above the most recent high of $3,555. They should place a stop-loss order  at the most recent low in the cup handle ($3,395). Therefore, the risk — the maximum loss on the trade — is $160 ($3,555 - $3,395 = $160).

At the recommended reward/risk ratio of 3:1, which is considered good, you'd need to sell at $480 (3 x $160 = $480) above the entry price, or $4,035 ($3,555 + $480).

Why risk management is critical in swing trading

Risk management is the most essential component in a successful swing trading strategy. Traders should choose only liquid stocks and diversify positions among different sectors and capitalizations. 

Mike Dombrowski, head of capital markets at InterPrime Technologies, emphasizes the importance of risk management, saying that "each position should be roughly 2%-5% of total trading account capital. The most aggressive and professional traders may go up to 10% per position. That means a portfolio of five concentrated swing trades would represent 10%-25% of total trading account capital on average. 

Having cash in reserve allows you to add to the best-performing trades to help generate larger winners. As always, the key to swing trading is to minimize losses." He also notes that a desirable reward/risk ratio is 3:1, or 3 times the amount at risk.

Stop-loss orders are a vital tool in managing risk. When a stock falls below the stop price (or rises above the stop price for a short position), the stop-loss order converts to a market order , which is executed at the market price. With stop losses in place, the trader knows exactly how much capital is at risk because the risk of each position is limited to the difference between the current price and the stop price. 

A stop loss is an effective way to manage risk per trade.

Traders can deploy many strategies to determine when to buy and sell based on technical analysis, including: 

• Moving averages look for bullish or bearish crossover points
• Support and resistance triggers
• Moving Average Convergence/Divergence (MACD) crossovers
• Using the Fibonacci retracement pattern, which identifies support and resistance levels and potential reversals

Traders also use moving averages to determine the support (lower) and resistance (upper) levels of a price range. While some use a simple moving average (SMA), an exponential moving average (EMA) places more emphasis on recent data points. 

For example, a trader may use 9-, 13-, and 50-day EMAs to look for crossover points. When the stock price moves above, or "crosses" the moving averages, this signals an upward trend in price. When a stock price falls below the EMAs, it's a bearish signal and the trader should exit long positions and potentially put on shorts.  

Market extremes make swing trading more challenging. In a bull or bear market , actively traded stocks do not exhibit the same up-and-down movements within a range as they do in more stable market conditions. Momentum will propel the market up or down for an extended period. "[Traders should] always trade in the direction of the trend, taking long positions in bull markets and shorts when the markets trend downward," says Dombrowski.

Swing trading and day trading have many similarities, but the most marked difference is the frequency of trades. Swing traders focus on short-to-medium term positions while day traders close out their positions at the end of each trading day. Day trading is a full-time job, requiring the trader to monitor market movements throughout the day and trade frequently. A swing trader can manage and trade on the side while still maintaining a full-time job.

Let's look at the principal differences.

Swing trading is an easy way for new traders to get their feet wet in the market, with traders typically starting with $5k-$10k, although less is acceptable. The cardinal rule though is that this capital should be money the investor can afford to lose. Even with the strictest risk management, the unexpected is always possible.

More importantly, swing trading doesn't demand the same level of active attention as day trading, so the swing trader can start slowly and build the number of trades over time. But it does require the investor to take a deep dive into technical analysis, so an aptitude for charts and numbers is necessary.

For traders willing to spend time researching stocks and developing an understanding of technical analysis, swing trading offers the potential to accumulate attractive profits, slowly but steadily, over time.

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