What Are the Three Main Types of Corporate Strategies? – Ace Chapman (2023)

Corporate strategy is how businesses strive to develop unique selling points, create value, and capture market share.
If they don’t follow specific marketing efforts and business activities, the company could hope to generate more revenue without doing anything to achieve it.
When you look at successful corporate strategies, small businesses can help to target various methods within the organization.
Today, we answer the question, what are the three main types of corporate strategies?
These can help you create a quarterly strategic plan.

What Are the Three Main Types of Corporate Strategies?

Growth Platform Strategy

The growth platform strategy focuses on scaling revenue to achieve the next level of profit.
In most cases, this requires you to open a new market, roll out new products, or find new demographics.
As a business leader, you have to consider what you want to tackle using a growth platform as the corporate strategy.
You can implement more than one of these strategies (listed below), but it could place a burden on your fulfillment centers and operations.
Using multiple growth strategies can also make it harder to track progress.
You may have cross-over metrics, which can make it hard to decipher which strategy is currently working effectively for you.
Within the realm of the growth platform strategy, there are four types.
These include vertical and horizontal integration, market penetration, and diversification.
Learn more about these growth strategies and how they are implemented.

Vertical Integration

Through vertical integration, you put more control of your operational process into integrating key segments.
For example, if you are a clothing manufacturer, you might acquire a textile company.
This can help you control the material flow for your clothing lines.
It can also help you add a second income line because, through the textile company, you can supply other clothing stores with the materials they need.
In turn, this helps to control costs for your manufacturing company.
Another example of vertical integration with corporations or small businesses is when a restaurant sources its vegetables from a farm that it operates and owns.
You can ensure quality control here, and you can also plan your menus better based on the plants that are available.
It is also a great way to market yourself as a sustainable restaurant, grabbing the attention of environmentalists.

Horizontal Integration

This growth strategy is designed to take your existing services or products and acquire new operations for the business.
This can happen as a merger or because the company rolled out a new product in its line.
Remember when Apple started moving away from computers and into music?
This is an example of a horizontal integration strategy.
However, you don’t have to think of such well-known brands; small companies can also benefit.
For example, local gyms can establish a horizontal integration strategy if it acquires an agreement to sell health supplements.
It still has gym memberships and classes as its base income, but it can also offer a related product on top of its current services.

Market Penetration

You may find that the market penetration strategy is a bit overwhelming at first; after all, it requires you to take a hard look at your numbers.
For example, you may know that your target demographic consists of men between the ages of 25 and 35 in your particular ZIP code.
From that, you can tell that your target market is around 50,000 people, and you’ve already got 1,000 as a client.
The market penetration growth strategy is going to have you change your marketing efforts to increase that rate from two to three percent.
As another example, a local roofing company is concerned about its market penetration.
Most of the business earned is local, but there are many competitors in the area, offering high-ticket services to the homeowners.
This roofing company has to develop a new strategy so that consumers see it as the best value.

Diversification

With diversification, you take a company outside of what it usually does for services and products.
For example, Disney started out with cartoons but then expanded into creating theme parks.
From there, it progressed to resorts and merchandising.
In most cases, you aren’t going to link cartoon companies with resorts, but the diversification that happened made sense in the business model and the vision of growth that Walt Disney had for his company.
As a local business owner, you could start by leasing some of the space in which you are located.
Eventually, you might want to buy the building that is going to house your company and five other ones.
That can help you build equity and increase your monthly cash flow because of rent from the tenants.

Consolidation Strategies to Help with Growth

Many times, horizontal integration utilizes a consolidation strategy for growth.
It’s easiest to explain in acquisition and merger examples.
You may know that JPMorgan Chase acquired a variety of small banks so that it could expand into various new markets where it didn’t have branch locations already.
This allowed the company to buy existing books of business with clients who already needed the service from those active branches.
The companies were servicing clients under state and federal regulations.
Therefore, the growth was less expensive, and the company opened many new chapters.
Acquisitions and mergers often deal with buying new companies and selling divisions that don’t align with the company mission.
It can also focus on dividing all of the components into smaller sections to serve the public’s needs better.
Usually, mergers are more effective when it applies economies of scale into the transaction.
Small companies that want to expand can also take advantage of mergers or acquisitions.
For example, if a CPA firm buys another one, it can grow its business and move to another area.
Here, it is important to focus on the cost of doing business, the loyalty of your employees, and how happy the customers are.

Global Strategies to Help with Expansion

What Are the Three Main Types of Corporate Strategies? – Ace Chapman (1)
Every company can be a global business in the market today.
Even smaller ones can utilize the internet and offer fast delivery methods to help develop its global expansion strategy.
While most people think of selling services and goods in the global market, that’s not all you can do.
Strategies can also include using your global resources to cut material and supply costs, as well as manufacturing costs.
Companies can then obtain the raw materials they need to provide specialty products.
For example, someone who custom-makes guitars can order specialty wood from South America to create a unique and amazing sound.

Market Expansion

Global strategy can also include differentiation.
For example, if you go to McDonald’s in Hawaii, you are going to get the local rice flavor and some Portuguese sausage for your breakfast.
However, at the same restaurant in Japan, you can get shrimp instead of the fish fillet.
This is considered a global expansion strategy, though it is actually localization.
It sees what is common, desired, or popular in a small area of the market and adjusts the resources to satisfy the need.
A small business owner may not have or need global expansion capabilities.
However, she could adopt the same concepts on a regionalized business model.
For example, a local farmer provides fruit and vegetables to local restaurants.
He might choose to offer a specialty blend of salad greens to his gourmet clients and keep the standard greens for other customers.

Cost Leadership

Cost leadership is all about being the least expensive in the market.
This strategy allows you to beat the competition by offering the lowest prices on the same products as other companies.
Small businesses should be wary of utilizing this global strategy for expansion.
You don’t have the same economies of scale on your side, which means that you aren’t buying enough raw materials or wholesale products to drop prices significantly to make much of a difference in your bottom line.

Sourcing

Large companies that want to increase profits and cut costs should definitely consider outsourcing.
If you own a manufacturing company and source labor or materials in another region to reduce your costs significantly, this is going to affect your profitability.
Consumers are very familiar with call centers moving to the Philippines or India because operational expenses and wages are lower.
Sourcing isn’t always about cutting costs, though.
Starbucks has used regional sources to get specific coffee bean types grown in various areas.
It’s a unique selling point because it offers sustainability and better farming practices to help smaller communities while customers get to try different flavors.

Cooperative Strategies and Partnerships

The cooperative strategy partnership option can help you take advantage of your strategic alliances.
When a company helps out another with promotion and marketing, both partners can increase brand awareness, have better quality products, and offer better service.
It’s possible to find examples of this everywhere:

  • Barns & Noble features a Starbucks inside the store.
  • Uber includes Spotify services.
  • Ford has a premium line of SUVs and trucks from Eddie Bauer.

Small companies can find such strategic partnerships, though on a smaller scale; nevertheless, both parties win.
In most cases, small businesses aren’t going to formalize these partnerships and call them strategic alliances where two parties have the same goals.
For example, an attorney specializing in estate planning can develop a strategic alliance with life insurance agents.
Plumbing companies might pair with electricians.
In each case, the companies serve the same markets, have the same customers, and more.

Online Business Strategies

Businesses can use a variety of online strategies to engage clients, market themselves, and create sales streams.
While large corporations dominate advertising and search engines with keywords, that doesn’t mean small businesses can’t also use these strategies, too.

SEO

Search engine optimization is a strategy that works by developing websites and online content under your company name.
This is brand awareness with a hidden superpower.
People search for information online, and the company with the best “footprint” is highest on the list of results.
Your footprint must contain informative and well-written website data and blog posts to help customers solve their problems.
Videos can also be used to grab their attention.
For example, Geico spends a lot of its money creating an online presence so that it can offer information to potential customers.

Social Media Engagement

Many corporations, both large and small, use social media to help distribute deals and information while engaging with customers and their target audience.
You may not know this, but Facebook’s business model is focused on learning about its users to provide free demographic information to advertisers.
This means that any business can understand the buying trends of its target audience and can develop strategies that focus on that market.
Social media can also provide proof of what you can do.
Existing customers can offer insight and testimonials in a more casual way.
Plus, they can answer questions and state that they are happy with the service or product.
Of course, this goes both ways, and the customer can say negative things if they had a bad experience.
It’s also possible to generate more engagement on social media by offering games or contests.
Your customers and potentials are going to be talking about you and sharing your posts.

Online Ads, Sales Funnels, and Stores

As you probably know, Amazon is the king when it comes to online retailing.
It started off as a book reseller and has now become a global power corporation with services and products in countless niches.
While small companies probably can’t compete on the same level as Amazon, you can find a unique selling proposition.
This allows you to target customers who want to buy from an online store.
Of course, you need to know and continuously review your business goals when creating a corporate strategy.
There’s no particular formula; you just have to learn and implement as you go along.

Conclusion

We understand that running a business is a tough prospect.
Whether you’re hoping to start one or you want to keep your current one afloat, you need the right strategy.
What are the three main types of corporate strategies?
This question is asked a lot, so we chose to talk about it in-depth.
After learning about the strategies and sub-parts, you can decide which one to focus on right now.
Continue implementing them and find the one that best fits your needs.

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