An owner who dreams big, creating a vision of future success, will need a strategy to turn dream to reality. A general strategy points the company in the proper direction, but more specific strategies are needed to meet the challenges of the journey. Most specific are operational strategies, which involve the daily operations of the company. Less specific are business level strategies, which competitively position the company in the market. Competing successfully at the business level eventually achieves the corporate strategy – a term used regardless of company structure – fulfilling the original vision the owner had for the company.

Corporate Strategy

An owner creates corporate-level strategy to move the whole company toward long-term goals. When hatching corporate strategy, an owner asks, “What business should the company be in?” After answering that question, the owner then decides what a successful future would look like, setting company vision. For instance, an owner might decide that in five years, the company will have locations all over the East Coast or will be the industry sales leader.

Grand Strategy

A company adopts a grand strategy to provide a specific thrust to the activities that will achieve the vision. There are different types of grand strategies for different purposes. A growth strategy, for example, means expansion. For instance, a grocer may open more stores or buy competing shops. Integration is a type of grand strategy that reduces costs or stabilizes operations. Vertical integration means controlling resources and distribution channels. A company adding related product lines to battle competitors is practicing horizontal integration. A bakery might begin offering candy, for example. Retrenching narrows a company down to core competencies. Diversifying moves companies into new products or market segments. A stability strategy steadies a company by keeping it the same.

Business Strategy

Business strategy is set by middle managers running divisions, departments or teams. Business strategies either adapt to the environment or concentrate on competition. Competitive strategies succeed by relying on core competencies. A company may try to differentiate itself from the competition by great customer service or products. Cost leadership offers customers low prices and so must keep costs down. A small business using a focus strategy courts a specific market or customer type.

Adaptive Strategy

Three adaptive business strategies help a company match its abilities to the business environment: prospector, analyzer and defender. A defender strategy holds off competition by focusing on reliable products and efficient operations. Companies wanting to maintain position, yet also innovate choose an analyzer strategy. A company adding one product to an established product line, for example, would be using the analyzer strategy. Creative companies in dynamic environments prospect for opportunities and seize them. For instance, Apple innovates to compete.

Functional Strategy

Also known as operational strategy, functional strategy is created and enacted by functional managers at the lowest levels of a company, where day-to-day essential operations such as marketing, production, finance, human resources, or research and development occur. Time frames are short. For instance, to support a business strategy of cost leadership, the head of production may try to lower costs by decreasing manufacturing mistakes.