Corporate vs. Business Strategy

Summary

This video from the Marriott School of Business explains the distinction between business and corporate strategy. Business strategy focuses on a single unit's competition, value offering, delivery, and sustainability in a specific market. Corporate strategy, however, considers the collective businesses under a corporation and how they interact. The example of Jay Dogs, a local restaurant, and its hypothetical corporate siblings—a hotdog manufacturer and an event planning company—illustrates how different units may require unique strategies or share resources, depending on their customer base and operational overlap.

Takeaways

• 📊 Business strategy focuses on one specific unit providing a product or service in a particular market.
• 🏢 Corporate strategy deals with a family of businesses and how these units work together under a single corporate umbrella.
• ❓ Four key questions for business strategy: Where do we compete? What unique value do we offer? How do we deliver that value? How do we sustain that value?
• 🌭 J Dawgs, a local fast food restaurant, is used as an example of a business strategy centered around convenience, connection to BYU, and high-quality food.
• 📦 Corporate strategy involves analyzing different business units with different customers and value propositions, like a hotdog manufacturer and an event planning company.
• 🔗 Vertical integration refers to owning multiple stages in a product's value chain, like a corporation owning both a hotdog restaurant and its supplier.
• 🍽️ Related businesses may have different customer needs, such as casual catering for J Dawgs versus formal events requiring a different food service.
• ⚖️ Business strategies can be completely separate or overlap, depending on how much resource sharing occurs between units.
• 🔄 The extent of resource sharing between businesses determines whether they operate under the same or different strategies.
• 🔍 Corporate strategy helps manage multiple configurations of related businesses and strategies, ensuring the right balance between autonomy and resource sharing.

Q & A

What is the difference between business strategy and corporate strategy?

Business strategy focuses on a single unit that provides a product or service in a particular market. Corporate strategy considers a set of businesses under one corporate umbrella and how they work together or independently.

What are the four key questions to analyze a business strategy?

The four key questions are: 1) Where do we compete? 2) What unique value do we offer to customers? 3) How do we deliver that value? 4) How do we sustain our ability to deliver that value?

How does Jay Dogs deliver unique value to its customers?

Jay Dogs delivers unique value through its convenience, connection to BYU, quality, taste, and unique elements such as its special sauce, brand, and high-quality vendor relationships.

What is vertical integration in the context of corporate strategy?

Vertical integration refers to a company owning more than one stage in a product's value chain. For example, owning both a hotdog manufacturer and a restaurant that sells those hotdogs.

What is the main difference between the customers of Jay Dogs and a hotdog manufacturer?

Jay Dogs' customers are consumers who buy hot dogs when they're hungry, while the hotdog manufacturer sells to restaurants and retail outlets that need hotdogs for resale.

How do the hotdog manufacturer and event planning businesses differ in terms of customers?

The hotdog manufacturer targets restaurants and retailers that need hotdogs for resale, while the event planning company targets individuals and organizations planning events, which may involve catering services.

What factors determine whether J Dogs and J Burgers are considered separate businesses or not?

The extent of resource sharing determines whether J Dogs and J Burgers are considered separate businesses. If they share 100% of resources, they are likely the same business. If they share 0%, they are different businesses.

Why is it important to understand how businesses within a corporation relate to each other?

Understanding how businesses relate to each other helps determine how many strategies are needed and how much of the strategy should be shared across business units.

What might be a messy situation in corporate strategy according to the video?

A messy situation occurs when a corporation shares resources between business units partially, such as 50%. This creates complexities in determining the extent of shared strategies versus customized strategies.

What is the role of corporate strategy when managing multiple business units?

Corporate strategy's role is to manage different business configurations, determine the degree of resource sharing, and decide whether each unit should maximize its own performance or work together for overall corporate success.