Corporate vs. Business Strategy

Summary

This video explains the distinction between business and corporate strategy. Business strategy focuses on a single unit, addressing key questions such as where to compete, the unique value offered, how to deliver that value, and how to sustain it. Corporate strategy, on the other hand, examines multiple business units within a corporation, evaluating how they interact and share resources. The video explores different business scenarios, such as the relationship between a restaurant, a hotdog manufacturer, and an event planning company, illustrating the need for tailored strategies and resource sharing decisions within a diversified corporate portfolio.

Takeaways

• 😀 Business strategy focuses on a single business unit and involves analyzing where to compete, what unique value to offer, how to deliver that value, and how to sustain it.
• 😀 A business is a unit that provides a product or service in a specific market, while a corporation is a family of businesses operating under a single umbrella.
• 😀 Corporate strategy deals with the overall portfolio of businesses within a corporation and how they relate or work together.
• 😀 A clear example of business strategy is Jay Dogs, a local restaurant that competes in the fast food space near BYU's campus, offering high-quality dogs and special sauce.
• 😀 In corporate strategy, different businesses like Jay Dogs, a hotdog manufacturer, and an event planning company may share some resources but cater to distinct customer needs and require separate strategies.
• 😀 Vertical integration occurs when a corporation owns different stages in a product's value chain, such as when Jay Dogs owns a hotdog manufacturer.
• 😀 J Dogs and the hotdog manufacturer are related because they are part of the same value chain but target different customers, such as hungry consumers versus retail outlets.
• 😀 The event planning company targets a different customer base, and while it may use Jay Dogs for catering in some cases, it may also require more formal services in other events.
• 😀 Corporate strategy involves deciding how resources are shared across business units and whether businesses should work independently or cooperate for greater overall performance.
• 😀 The relationship between businesses like Jay Dogs and J Burgers can vary from complete resource sharing (making them essentially the same business) to completely separate strategies if resources are not shared.
• 😀 Understanding how many businesses a corporation is involved in and how they relate to each other is essential for determining how many strategies are needed and how much strategy to share across business units.

Q & A

What is the main difference between business strategy and corporate strategy?

Business strategy focuses on a single unit providing a product or service in a specific market, answering questions like where to compete, what value to offer, how to deliver that value, and how to sustain it. Corporate strategy, on the other hand, looks at how a corporation’s various businesses interact, whether they share resources, and how they can work together to maximize overall performance.

How does Jay Dogs exemplify a business strategy?

Jay Dogs exemplifies business strategy by focusing on a single unit (a hot dog stand) that competes in the fast food market near BYU. It offers a unique value through its quality food, special sauce, and connection to BYU, and delivers that value through a unique brand and relationships with high-quality vendors.

What does it mean for a company to vertically integrate, and how is Jay Dogs an example of this?

Vertical integration occurs when a company owns multiple stages in a product’s value chain. In the case of Jay Dogs, if the company also owns a hot dog manufacturer, it is vertically integrated because the manufacturer supplies Jay Dogs with hot dogs, thus controlling both the production and retail aspects of the hot dog business.

Why are Jay Dogs, a hot dog manufacturer, and an event planning company considered different businesses despite being part of the same corporation?

These are considered different businesses because they target fundamentally different customers. Jay Dogs serves hungry consumers looking for fast food, while the event planning company works with individuals and organizations to plan events, often catering food for various occasions. Their customer bases and unique values are distinct.

What is the role of corporate strategy in managing different business units?

Corporate strategy manages the relationships between different business units by determining how resources should be shared across them, how they can work together to maximize corporate performance, and whether each business should pursue its own strategy or coordinate efforts with others.

How might the opening of a new business like Jay Burgers affect the corporate strategy of Jay Dogs?

The opening of Jay Burgers, a hamburger joint, could lead to shared resources between Jay Dogs and Jay Burgers, such as kitchen space, employees, or supply chains. Depending on how much the businesses share resources, they could either have the same strategy or different strategies for each, influencing how corporate strategy is structured.

What determines whether two businesses in the same corporation share a single strategy or multiple strategies?

The extent of resource sharing between the businesses determines whether they share a single strategy or multiple strategies. If resources are highly shared (e.g., shared space, staff, or supply chains), a single strategy is likely. If resources are not shared, separate strategies are likely needed.

What is the significance of understanding the relationships between businesses within a corporation?

Understanding the relationships between businesses within a corporation helps determine how many strategies are necessary and how resources should be allocated. It also helps in deciding whether businesses should work together or focus on their own performance for the overall benefit of the corporation.

What might happen if different business units within a corporation pursue conflicting strategies?

If different business units pursue conflicting strategies, it could lead to inefficiencies, missed opportunities, or internal competition. This is why it’s important to evaluate whether each business should pursue its own strategy or if the units should align their efforts for the greater corporate good.

How can corporate strategy influence the success of businesses like Jay Dogs and Jay Burgers?

Corporate strategy can influence the success of businesses like Jay Dogs and Jay Burgers by ensuring they are aligned in terms of resource sharing, operational efficiencies, and customer targeting. If managed well, corporate strategy can help both businesses maximize their performance and leverage synergies between them, leading to greater overall success.