Business Strategy Development: A Comprehensive Guide

Published On: June 21, 20235.4 min read

To achieve growth and long-term success, businesses must have a clear and effective business strategy development process. Understanding business level strategy, its types, and the steps involved in developing a successful strategy is crucial for business leaders to determine the best path for their organizations.

Introduction to Business Strategy Development

The primary goal of a business strategy is to drive growth and profitability through creating and maintaining a competitive edge and providing value to customers. To achieve this, businesses must carefully analyze their market, competition, and internal capabilities to determine the most effective approach for each strategic business unit (SBU).

In this process, businesses must be adaptable and forward-thinking, as market conditions and customer needs can change rapidly. By continuously refining strategies and investing in their core competencies, businesses can maintain a strong position in their respective industries and foster long-term success.

Understanding Business Level Strategy

Business level strategy refers to the strategic planning and execution of initiatives of businesses that enables them to compete in their industry.

This strategy focuses on gaining a competitive advantage and creating customer value within the specific market in which the business operates.

Each business unit within an organization should have its own business level strategy, considering the unique market conditions, competition, and customer needs.

The Importance of Business Level Strategy

Developing and implementing a well-defined business level strategy helps initiate and drive forward the following business aspects:

Competitive Advantage: A strong business strategy helps organizations gain and maintain a competitive advantage in their industry.

Customer Value Creation: By focusing on creating value for customers, businesses can attract and retain target customers, driving growth and profitability.

Decision-Making Guidance: A clear business strategy guides decision-making processes throughout the organization, ensuring that resources are allocated efficiently and effectively.

Long-Term Planning: Business level strategy provides the foundation for long-term planning, enabling organizations to set and achieve SMART (specific, measurable, achievable, relevant, time-bound) goals.

Adaptability: By continuously refining their business strategy, organizations can adapt to changing market conditions and customer needs, ensuring long-term success.

Types of Business Level Strategies

There are several types of business level strategies that organizations can adopt to achieve their goals. These include:

Cost Leadership: This strategy focuses on producing products or services at a lower cost than competitors, enabling the business to offer lower prices without compromising profitability.

Differentiation: This strategy aims to develop and market products or services that stand out from competitors due to their unique features, quality, or other factors that create value for customers.

Focused Low-Cost: This strategy targets a specific market segment, offering products or services at a lower cost than competitors within that niche.

Focused Differentiation: Similar to focused low-cost, this strategy targets a specific market segment but aims to differentiate the offerings through unique features, quality, or other factors.

Integrated Low-Cost Differentiation: This strategy combines elements of cost leadership and differentiation to create a unique value proposition that appeals to a broad range of customers.

Steps for Developing a Business Level Strategy

The process of developing a successful business level strategy involves the following steps:

Conduct a SWOT Analysis: Evaluate the organization’s strengths, weaknesses, opportunities, and threats to identify areas of focus and potential competitive advantages.

Identify Key Success Factors: Determine the factors that are critical for the success of the business, such as customer satisfaction, product quality, or operational efficiency.

Formulate the Strategy: Based on the insights gained from the SWOT analysis and key success factors, select the most appropriate business level strategy that aligns with the organization’s goals and market conditions. Several businesses find it helpful to use a guide or template for a One Page Strategic Plan to ensure your strategy is set up for success.

Implementation & Execution: Translate the chosen strategy into actionable steps, assigning responsibilities, and prioritizing tasks. Ensure that resources are allocated effectively and that the organization is prepared to execute the strategy.

Monitor & Evaluate: Regularly assess the performance of the strategy, using objectives and key results and key performance indicators (OKRs and KPIs) to track progress and make adjustments as needed.

Competitive Advantage and Core Competencies

A competitive advantage is achieved when a business can provide greater value to its customers than its competitors. To establish and maintain a competitive advantage, businesses must develop and leverage their core competencies, which are the unique capabilities or resources that set the business apart from its rivals.

Examples of core competencies might include product innovation, operational efficiency, exceptional customer service, or a strong brand reputation. By focusing on developing and enhancing these core competencies, businesses can create a sustainable competitive advantage that drives growth and profitability.

Analyzing Market and Customer Needs

A successful business strategy must be grounded in a deep understanding of the market in which the business operates and the needs and preferences of its target customers. This requires ongoing research and analysis to identify market trend, collect customer feedback, and define potential opportunities and threats.

By staying attuned to market and customer needs, businesses can adapt their strategies to remain relevant and competitive, ensuring long-term success in a constantly evolving market.

The Role of Corporate Level Strategy in Business Strategy Development

Corporate level strategy sets the overall direction for the organization, determining which markets the company will compete in and how resources will be allocated across different business units. This high-level strategy provides the framework within which business level strategies are developed and executed.

To ensure alignment between corporate and business level strategies, organizations must establish clear communication channels and processes for sharing information and insights across all levels of the organization. This will facilitate the development of cohesive and effective strategies that support the organization’s overall goals and objectives.

Aligning Business Level Strategy with Functional Level Strategy

Once a business level strategy has been developed, it must be cascaded down to the functional departments within the organization, such as marketing, operations, finance, and human resources. These functional departments must then develop their own strategies and tactics to support the overall business strategy. 

By aligning functional level strategies with the overarching business strategy, organizations can ensure that all departments are working in harmony.

Ultimately, goal alignment across the board maximizes efficiency and drives the success of the business as a whole.


Business strategy development is a critical process for any organization looking to achieve long-term success and growth. By understanding the importance of business level strategy, identifying the most suitable strategy type, and aligning it with corporate and functional level strategies, businesses can create a strong foundation for sustainable competitive advantage and ongoing success.

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