What are the Different Types of Business Strategies

Are you ready to take your business to the next level? Do you want to succeed and reach new heights while staying competitive in today’s dynamic marketplace?

Developing a strategic plan can guide you in this journey. Knowing different types of strategies that businesses can use can benefit almost any organization, from small locally-run stores to huge conglomerates.

In this blog post, we’ll break down different kinds of business strategies so that no matter what kind of organizational structure or objectives are in play –you’ll have the tools and knowledge needed to create the perfect strategy for your business!

What is Business Strategy?

Business strategy is essential for companies to develop toto define their goals, objectives, and overall direction. 

A business strategy involves analyzing a company’s competitive position within its industry and creating plans to compete against other organizations.

It also includes setting long-term goals, understanding customer needs, and developing marketing plans to achieve them.

Nature of Business Strategy

Business strategy comprises several elements: competitive positioning, value proposition, market segmentation, pricing strategies, and differentiation. 

It focuses on long-term decisions that will shape the direction of a company and affect its overall success or failure.

It can be used to guide day-to-day operations as well as provide insight into potential opportunities for growth and expansion.

Importance of Business Strategy

Business strategy is important because it gives companies direction and purpose. It helps them stay focused on their mission and objectives while guiding management in making decisions that will shape the company’s future.

It allows companies to evaluate their current position within the market and develop plans for where they want to be. A well-crafted strategy can help a company reach its goals by providing a roadmap.

Levels of Business Strategy

Achieving corporate objectives is possible by implementing effective business strategies. 

Each firm’s employee, partner, and stakeholder follows a specific business strategy based on their role in the organization.

These strategies differ depending on their position but aim to achieve the same corporate goal. The three categories of business strategy are already established. 

Corporate Layer Strategy:

This is the highest level of strategy and is formulated by top-level management. It involves formulating a company’s vision and mission statement, setting goals for the organization, identifying objectives that need to be achieved to reach them, determining how resources will be allocated, and developing strategies to accomplish them.

Business Layer Strategy:

The next level of strategy is the business level. This layer focuses on developing strategies for each product, service, or unit within the organization. This strategy outlines how the firm will operate in each market and develop competitive advantages to stay ahead.

Functional Layer Strategy:

The last layer is the functional-level strategy which consists of strategies at the operational level. Teams or departments formulate this strategy and focus on specific operations. The functional-level strategy includes decisions related to marketing, production, finance, research and development, and human resources.

5 Types of Business Strategies

We will discuss the five most frequently used tactics at the business level. However, there are numerous other types available. Proper usage of these tactics will assist you in determining your company’s competitive advantage.

1. Cost Leadership

One of the most common types of business strategies is cost leadership. This strategy entails a company producing and selling products or services at a lower price than its competitors to gain a competitive advantage.

Companies that pursue this strategy focus on cutting costs and increasing efficiency in production so that they can offer their product or service for less than what other companies offer.

This could involve outsourcing non-essential services, reducing overhead costs, or changing the company’s production and sales process.

However, cost leadership strategies can be risky, as they require a large investment of resources to compete with rivals on price.

Additionally, this strategy only works if customers are price-conscious; if customer loyalty exists to a certain brand, cost leadership strategies will likely fail to succeed.


TCost leadership strategies’ main advantage is that they can provide a competitive edge in the market, allowing companies to attract more customers and increase sales. 

Additionally, such a strategy allows companies to maximize their profits by taking advantage of economies of scale.

2. Differentiation

Differentiation is a business strategy to identify and distinguish a company’s products or services from its competitors.

Companies often leverage differentiation to stand out in the marketplace by creating unique value propositions that appeal to customers, such as differentiated features, product quality, customer service, brand image, pricing, or distribution methods.

By differentiating their offerings from competitors in the market, companies can set themselves apart and capture more market share.

Differentiation is often used with other business strategies to help a company gain an advantage.


Differentiation offers many potential advantages for businesses. By distinguishing their products from those of competitors, companies can create a unique value proposition and gain customer loyalty.

Differentiating products or services can also increase demand and attract new customers who may be looking for something different from the market.

3. Focused Differentiation

Focused differentiation strategies involve targeting specific market segments with tailored products and services. 

Companies that employ this strategy focus on offering a unique set of benefits to their target customers, which can help them gain an edge over competitors.

For example, a business with specialized knowledge in the healthcare industry may use focused differentiation to attract customers who need assistance navigating complex regulations.

A business can create a unique competitive advantage by offering specialized services unavailable elsewhere. 

As an added benefit, focused differentiation strategies can help to limit competition while increasing customer loyalty and satisfaction.


The main advantage of a focused differentiation strategy is that it can help businesses establish themselves as experts in their respective fields. 

This can increase customer loyalty since customers know they are getting the best product or service for their needs. 

Additionally, this strategy can reduce competition, allowing the business to focus on providing more specialized services at higher prices.

4. Focused Low-Cost

This business strategy focuses on providing a product or service with a significantly lower cost than the competitors.

Companies utilizing this type of business strategy usually sustain their efforts by offering fewer options and focusing on customer segments that care about price and value more than anything else.

This business strategy is commonly used among companies in highly competitive markets, such as the fast-food industry and discount stores.

The key to this business strategy is offering a product or service that meets customer needs while offering prices significantly lower than competitors.


The main advantage of a focused low-cost strategy is that it can be used to gain market share quickly. This strategy can also attract customers looking for the best value for their money.

Additionally, this strategy can help companies maintain profits in highly competitive markets by driving down costs and offering more competitive prices than their competitors.

5. Integrated Low-Cost Differential

An integrated low-cost differential strategy is a business strategy aimed at simultaneously achieving cost leadership and differentiation.

This strategy allows businesses to differentiate their products from competitors by offering lower prices and achieving cost savings through better processes.

The key to success with this approach is to ensure that the costs saved are greater than the additional costs incurred to differentiate the product from competitors.

This approach can be a powerful tool for businesses managing cost and differentiation simultaneously.


The main advantage of an integrated low-cost differential strategy is that it enables businesses to be competitive in the market while still achieving cost savings.

This strategy can also help businesses stand out and gain more customers by differentiating their offerings from competitors.


What is the main business strategy?

The main business strategy is a company’s overall plan or direction to reach its goals. It outlines how a company will position itself in the marketplace, what markets it will enter or exit, and how it plans to compete with existing competitors.

It also defines specific tactics and activities managers should undertake to ensure success. The main business strategy guides a company’s short-term and long-term decisions and should be updated regularly as the business environment changes.

What is the most common business strategy?

The most common business strategy is to focus on a particular market. Businesses may target a specific demographic, geographic region, or niche product. 

By concentrating on a single market, businesses can better understand customer needs and develop the right mix of products and services that will appeal to them.

How many strategies should a business have?

The number of strategies a business should have depends on the size and scope of the business. Generally, most businesses will use multiple strategies simultaneously to achieve their overall goals.

Strategies may include marketing, finance, operations, research & development, human resources, and organizational design. These are all important components that work together to help a company reach its goals.

What are the strategies to make a business successful?

The strategies to make a business successful vary widely depending on the type of business, its size, and the industry. Generally, there are five main strategies that businesses use:

1. Increase market share

2. Reduce costs

3. Innovate and develop new products or services

4. Expand into new markets

5. Focus on customer satisfaction.


This article has provided a clear overview of the different business strategies and how each can help improve your company’s success. 

By understanding the purpose and benefits of each strategy, you’ll be better positioned to choose one that will support your company’s overall goals and objectives. 

With careful consideration and research, you can create an effective strategy to set your business up for success.

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