Business Strategy

Business strategy refers to the strategy of a single business firm or a strategic business unit in a diversified corporation. According to Michael Porter (Porter, M.E. Competitive strategy. New York: Free Press, 1980), a firm needs to formulate a business strategy that incorporates either cost leadership, differentiation or focus to achieve a competitive advantage. More recently, the meaning of business strategy has expanded, ranging from the document that contains the firm’s business plan to the strategy of the whole firm, to the strategy of departments and divisions inside the firm. On the other hand, hybrid strategies chasing the lower/lowest cost and product differentiation concurrently have appeared under the label ‘integrated cost leadership-differentiation strategy’. For this reason, extracting a unique meaning of the phrase ‘business strategy’ has become increasingly difficult. In this article I sketch the rise of business strategy, discuss its meaning in academia and in practice, and endeavour to connect these meanings to the evolution of competitive strategy, cooperative strategies and the business model.