What are 3 main types of strategy?

 

The three main types of strategy in strategic management are:

1. Corporate Strategy

• Definition: Corporate strategy focuses on the overall scope and direction of an organization, determining which industries or markets the firm should compete in. It involves decisions related to diversification, mergers & acquisitions, and resource allocation across business units.
• Key Theories:
• Chandler (1962) – "Structure follows strategy."
• Ansoff (1965) – Growth strategies (Market Penetration, Market Development, Product Development, Diversification).
• 
• Example: Amazon expanding from e-commerce to cloud computing (AWS) and digital streaming (Prime Video).

 

2. Business Strategy

• Definition: Business strategy (or competitive strategy) determines how a firm competes within a specific industry or market. It focuses on gaining a competitive advantage through cost leadership, differentiation, or focus strategies.
• Key Theories:
• Porter (1980) – Three Generic Strategies (Cost Leadership, Differentiation, Focus).

• Barney (1991) – Resource-Based View (RBV) and competitive advantage.
• Example: Tesla differentiating itself through advanced battery technology and premium electric vehicles.

 

3. Functional Strategy

• Definition: Functional strategy focuses on optimizing specific departments (marketing, operations, finance, HR) to support the broader business and corporate strategies. It ensures that functional areas align with overall strategic objectives.
• Key Theories:
• Kaplan & Norton (1992) – Balanced Scorecard approach for aligning business operations with strategy.
• Teece et al. (1997) – Dynamic Capabilities framework for functional adaptability.
Example: Apple's supply chain strategy to secure exclusive deals with suppliers for premium components.




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