Examples of Corporate Business Strategies

Corporate strategy is the way in which a business strives to create value, develop a unique selling advantage and capture maximum market share. Without specific business activities and marketing efforts, a business might merely be churning its activities in hopes of generating more revenues. When examining successful corporate strategy examples, small business owners can identify methods to target within their own organizations. Consider these examples of corporate business-success stories when sitting down to create your next quarterly strategic plan.

Growth Platform Strategies

Growth platform strategies seek to scale revenues to the next level of profits. Usually, this requires opening new markets, finding new demographics to penetrate or rolling out new competitive products. As a business leader, you must consider exactly how you want to tackle a growth platform as a corporate strategy. Implementing more than one growth strategy at a time may place a burden on operations and fulfillment centers. Tracking growth for one product through several growth strategies may also lead to cross-over metrics, making it tough to decipher which strategy is working most effectively.

There are four main types of growth strategies: horizontal integration, vertical integration, diversification and market penetration. Consider these examples of corporation growth strategies and how they become implemented.

Horizontal Integration: This growth strategy takes the existing products or services and acquires new business operations. Acquisition could be through a merger or through its own new rollout of a new product. When Apple began to focus its efforts from only computers to music, this was a horizontal integration strategy.

On a smaller scale, a local gym could establish a horizontal integration strategy by acquiring a distribution agreement for health supplements to offer, in addition to the gym classes and memberships.

Vertical Integration: This growth strategy focuses greater control of an operations process by integrating a key segment. For example, a clothing manufacturer could acquire a textile company. This helps control the flow of materials for the clothing lines, adds a secondary line of income by supplying other clothing companies with material and helps in cost control for the primary company.

Another example of corporation or small business vertical integration is of a restaurant sourcing its own vegetables from a farm it owns and operates. This ensures quality control, better planning of menus based on what is available, and it could provide a hook to consumers intrigued by the sustainable concept.

Diversification: This growth strategy takes a company outside the realm of what it usually does in terms of products or services. Disney started with cartoons, and then expanded into theme parks, resorts and ultimately merchandising. Typically, one would not link a cartoon company with a resort, but this diversification makes sense to the business model and growth vision that Walt Disney had for the company.

A local business owner could start by leasing the space his optometry store is situated in. Eventually, he could look to buy the building that might house his business and five other businesses, enabling him to build more equity and increase his monthly cash flow with tenant rents.

Market Penetration: This is a growth strategy that takes a cold, hard look at the numbers. If your target demographic is comprised of men between the ages of 25 and 35 in your ZIP Code, you may have a target market of 50,000 people, with 1,000 as your clients. A market penetration strategy would seek to change marketing efforts to increase the penetration rate from 2 percent to 3 percent.

A local roofing company may be very concerned about market penetration, and, since most business is local, there are usually a lot of competitors in the market, which are the occasional high-ticket services to homeowners. The roofing company needs to develop a strategy where consumers see them as the best for the best value.

Consolidation Strategies for Growth

Horizontal integration often uses the consolidation strategy for growth. This is best described in mergers and acquisitions examples. JP Morgan Chase acquired many smaller banks to seamlessly expand into new markets where Chase didn’t already have branch locations. This allowed the banking powerhouse to buy an existing book of business with clients needing servicing with active branches, which were already servicing clients under federal and state regulations. This is a less expensive way to grow, compared to opening hundreds of new branches.

As a corporation strategy, mergers and acquisitions technically deals with not only buying new companies, but also selling off divisions that don’t align with the mission, or of dividing the components into smaller ones to better serve the the public’d needs. Mergers are most effective when applying the economies of scale to a transaction, meaning, that if the company can grow in a large, but efficient manner with operations, then it will become more profitable with each consumer sale.

For a local or small business owner looking to expand, mergers and acquisitions should be considered on a cost-benefit basis. For example, if a local CPA firm buys another firm, this is a quick way to expand the entire book of business. However, consider the cost of the business, the satisfaction of the customers and the loyalty of the employees. You don’t want to pay a hefty fee to acquire one company, only to find that the reason it was for sale is that the clients were unhappy and that a majority left shortly after the acquisition.

Global Strategies for Expansion

Every business has the ability to be a global company in today’s market. Unlike any other period in history, even a small company is able to utilize the internet and its fast-delivery methods to develop a global expansion strategy. Strategies are not limited to trying to sell goods and services in a global market. Strategies also includes using global resources to cut manufacturing costs, material and supply costs. Businesses are able to obtain unique raw materials to offer specialty products. For example, a custom guitar maker could order special wood from a South American rain forest that creates a unique sound.

Cost Leadership: If someone asked you what Walmart’s global strategy for expansion was, you would probably summarize it as “being the cheapest.” That is exactly what cost leadership is. With this strategy, your business seeks to beat out all of the competition by offering the same products for the lowest prices.

A small business needs to be wary of this global strategy for expansion, because a small business doesn’t have economies of scale on its side, meaning that it isn’t buying enough in wholesale or raw materials to be able to drop the prices so significantly that it makes a difference in the company’s bottom line. Without a margin that allows for profitability, a business is at risk of trying to compete with billion dollar global powerhouses. However, a small business could use one specific product or service segment as a “loss leader” strategy to get consumers in the door with a great, low-price offer and then cross-sell the high-margin products in the process. This is common with a mechanic’s shop offering a low-price oil change.

Market Expansion: Differentiation is also part of a global strategy. When you walk into a McDonald’s in Hawaii, you are able to get a local flavor of rice and Portuguese sausage for breakfast, a common local item. In Japan, you can get a Fillet-O-Ebi (shrimp) instead of a Fillet-O-Fish. As a global expansion strategy, diversification is really localization that looks at what is common, popular or desired in any one small market area, and then adjusts its resources to satisfy that need.

The small business owner might not have the global expansion capabilities, but he could adopt this same concept to a more regionalized business model. For example, if a local farmer provides fresh fruits and vegetables to local restaurants, he might use a specialty mix of salad greens that he offers to his gourmet restaurant clients, while keeping the standard items for his other customers.

Sourcing: This is one of the most essential strategies for large companies to cut costs and increase profits. If a manufacturing company is able to source materials or labor in another region that significantly cuts costs, this could greatly affect a company’s net profitability. Most consumers are familiar with large customer service call centers moving to India or the Philippines, where wages and operations costs are lower.

However, sourcing doesn’t always have to be about cost-cutting efforts. Starbucks is a great example of using small, regional sourcing to get specific types of coffee beans grown in different areas. It uses this model as its unique selling proposition, offering sustainable farming practices helping small communities around the world, while giving consumers robust and different flavor options.

Cooperative Strategy Partnerships

This corporate business strategy is designed to take advantage of strategic alliances. When one company helps another company through its own marketing and promotion, then both partners seek to increase brand awareness, service quality and products. Examples are everywhere. Barnes & Noble houses a Starbucks. Uber offers Spotify services as part of its services. Ford has an entire Eddie Bauer premium line of trucks and SUVs. These are all cooperative partnerships.

Small business owners can find these types of strategic partnerships on a smaller scale that becomes a win-win for all parties. Many small businesses don’t formalize these types of partnerships and refer to them as strategic alliances; two parties are aligned with the same goals. For example, an estate planning attorney develops a strategic alliance with a life insurance agent. A plumbing company might develop a strategic alliance with an electrician. In both cases, they serve the same market, thus they have the same clients with budgets in line with each other’s products or services.

Online Business Strategies

Businesses can use one of many online strategies to market, engage clients and create sales streams. Large corporations work at dominating search engines and advertising via keywords. This doesn’t mean that a small business can’t utilize online business strategies for growth.

Search Engine Optimization: This strategy works around developing websites, blogs and other online content under the business or corporation name. It is brand awareness with a superpower: when people search for something online, the brand with the best “digital footprint” is the first to get presented to consumers in search results pages. A digital footprint includes well-written and informative website data, blog posts that help consumers solve problems and videos that grab the attention of different types of online researchers. Geico spends a ton of money to create an online presence, offering information to consumers to help them better understand risk, protecting their family and insurance products.

Social Media Engagement: Many corporations, large and small, use social media to distribute information, deals and engage with their target audience and customers. Facebook’s entire business model is designed around learning about its users to then provide advertisers with free demographic information. This allows any business to better understand the buying trends of their target market and to then develop strategies to target that market. Social media also provides social proof when existing customers provide natural testimonials by answering questions or stating how happy they are with the company’s products or services. Many companies get great social media engagement by offering contests and games, so consumers are talking about the company online.

Online Ads, Stores and Sales Funnels: Amazon is the king of online retailing. It started as a small book reseller, and has become a global power company with products and service in too many niches to count. A small company might not be able to compete with the cost leadership strategy of Amazon, but with the right unique selling proposition, a small company can target customers who will buy from an online store.

Business leaders should review their business goals when creating corporate strategies for success. There is no formula, but there is a lot to learn and implement from large corporate examples.