What is a business strategy?

A business strategy outlines the specific ways in which an organisation plans to position itself, achieve its short-term and long-term goals, and grow over a period of time. It draws on other important business resources, such as the organisation’s mission, its vision, and its values, to help chart its direction forward and deliver on its objectives.

A business strategy helps underpin an organisation’s other important strategies – for example, functional operational strategies – and helps staff, customers, investors, and other stakeholders better understand how it plans to achieve its goals.

A successful business strategy also ensures that an organisation – regardless of whether it’s a startup, a small business, or a global corporation– maintains a competitive advantage in its market. It’s there to help guide decision-making, particularly on matters such as business priorities, and resource allocation.

Where business strategies sit within organisations

A business strategy typically comes second to an organisation’s corporate strategy. The corporate strategy looks at the bigger picture – the market a business is operating in, new markets that may be profitable to enter, and how best to ensure company growth. 

The business strategy helps feed into the corporate strategy, and acts as a roadmap to help deliver on the corporate strategy. Sometimes, it may also feed into a competitive strategy, which outlines methods for strengthening an organisation’s market position, attracting clients away from competitors, and defining the unique selling points within the brand as well as its products and services.

At the same time, the functional and operating strategies feed into the business strategy. These two frameworks are responsible for effectively and efficiently delivering on the organisation’s objectives as outlined in the corporate, competitive, and business strategies.

It’s also worth noting that there are a number of other strategies that typically sit under an organisation’s business strategy. These can include the:

  • marketing strategy
  • pricing strategy
  • brand strategy
  • sales strategy
  • communications strategy
  • advertising strategy
  • PR and media strategy
  • social media strategy
  • promotion strategy

What is the difference between a business strategy and a business plan?

While a business strategy acts as an overarching strategic framework within an organisation, a business plan is more granular, outlining day-to-day activities and work. Effectively, a business plan is one of the tools that helps deliver the business strategy.

Business strategies are also separate to business models, which are the methods used to generate sales and growth within a business. Examples of business models include direct sales, subscriptions, and franchises.

Five questions a business strategy should answer

Global employment network Indeed suggests that there are five main questions a business strategy needs to answer in order to be useful to its business.

  1. Why is the organisation in business?
  2. What are its key selling points or core strengths?
  3. Who are its ideal customers?
  4. Which offers provide the best results for its customers and its company bottom-line?
  5. Will this strategic framework help the business achieve its goals and objectives?

Adequately answering these questions can help a business create or improve its market value, establish or enhance its reputation, and acquire customers in greater numbers.

What makes a good business strategy?

A lot of work goes on behind the scenes during business strategy formulation. 

Strategic management, including CEOs and business leaders, need to be on board and help drive the new strategy forward. 

This requires extensive analysis – in everything from the supply chain to market research –, as well as a thorough understanding of the organisation’s competitive position and competencies. This can be better understood through simple tools, such as a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis or template.

Stakeholders – such as staff groups – should also be brought into the development process to help ensure its success.

The Chartered Management Institute (CMI) recommends that a good strategy is developed to be:

  • flexible
  • responsive
  • creative
  • challenging
  • realistic
  • focused
  • engaging

And in order to be effective, strategic planning also needs to be implemented appropriately. The CMI recommends implementation techniques such as: 

  • ensuring that plans are aligned with the organisation’s mission, vision and values
  • building an effective leadership team
  • creating a dedicated implementation plan
  • allocating sufficient budgetary resources
  • assigning objectives and responsibilities to the appropriate people
  • aligning structures, processes, and people throughout the organisation
  • communicating the strategy
  • reviewing and reporting on progress
  • making strategic adjustments as necessary
  • developing an organisational culture that supports the strategy

Types of business strategies

There are a number of different business strategies used within the business world.

Common business strategy examples include:

  • Cost leadership. Cost leadership business strategies focus on beating competitors’ prices. For example, businesses such as Amazon look for ways to increase efficiencies or reduce production costs so that their prices are lower than their competitors’ prices. They often rely on economies of scale.
  • Differentiation. Differentiation business strategies highlight the unique features of products and services to stand out from competitors.
  • Focused differentiation. Focused differentiation is typically used by businesses that target niche markets. For example, an eco-friendly child toy company might market itself specifically to environmentally conscious parents. 
  • Focused low-cost. Focused low-cost business strategies are similar to focused differentiation strategies, but their point of differentiation is specifically lower-cost products and services. 
  • Integrated low-cost/differentiation. An integrated low-cost/differentiation strategy is the middle ground between focused differentiation and focused low-cost business strategies. It’s effectively a hybrid model where differentiated products are sold at a lower-than-average price point.
  • Structuralist. A structuralist business strategy is one that is built around current market and industry norms. Everything from products to processes is structured around current market conditions and industry standards, and the business strategy is developed around this structure.
  • Growth. Growth strategies are suitable for businesses that want to actively expand into new markets and introduce new products or services. Their focus is on continual growth, increased revenue, and new business.
  • Price-skimming. Price-skimming strategies aim to quickly recoup initial expenses for things like production, manufacturing, and marketing. Businesses charge a higher-than-average price for their product or service to swiftly recover costs, and is commonly employed for organisations launching unique and innovative products to market for the first time.
  • Acquisition. An acquisition strategy relies on business purchases and mergers to grow an organisation. Benefits can include gaining valuable skills and staff – in addition to new funding pools and assets – as well as increasing market share, reducing competition, and diversification of products and services.

What is the main difference between a defensive and offensive strategy?

An offensive business strategy targets an organisation’s competitors. Whether it’s through lower, more competitive prices, new enhancements to products or services, or even marketing plans that directly attack the competition, an offensive strategy aims to take on a bigger share of the market.

A defensive business strategy, meanwhile, protects an organisation from its competitors. It aims to inspire customer loyalty and safeguard its market share, and will use tactics such as incentives, exclusive products – or exclusive arrangements with suppliers or partners – as well as above-average customer service, to entice and retain customers and maintain its competitive position.

Create business strategies that work

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What are the toughest challenges of leadership?

Business leaders around the globe face an array of internal and external burdens. The toughest challenges in leadership today include mounting pressure, strengthening communication and shaping corporate culture – and 57% of UK executives are facing a crisis in confidence.

With leadership spending nearly half of their time deliberating the needs of the business, critical decision-making is key. However, a quick-solutions approach often results in a misidentified problem, wasted resources and a back-pedalling effect which puts more stress on the internal infrastructure of the organisation. 

For any practising (or aspiring) business leader, it’s imperative to understand how to diagnose and dissolve the most pressing leadership problems.

What are the top five problems in leadership?

In 2020, the Center for Creative Leadership conducted a global study with 763 corporate leaders and found that businesses worldwide are facing the same top leadership challenges – regardless of industry, sector or organisational culture.

The report uncovered that the top five problems impacting leadership are:

  1. managerial effectiveness
  2. driving inspiration
  3. developing others
  4. guiding change
  5. managing relationships and politics

The report outlined a universal focus for managerial development across these areas.


For aspiring leaders, developing the relevant skills for optimum managerial effectiveness is essential. These skills range from top-level strategic thinking to time management – staying up-to-speed with the ever-changing demands of a leadership role. However, this was the most frequently reported challenge for executives across China, India, and the United States.

Business heads steer the ship. They oversee the most critical elements of a business, from finances through to operations, and will regularly face challenges ranging from redundancies to misconduct. However, poor decision-making is one of the key contributing factors to ineffective leadership, and studies have shown a spike in decision paralysis post-pandemic. In fact, a percentage of UK business leaders now believe their decisions to be less effective. 

Poor decisions lead to slack execution. CEO Coaching International attributes a failure of due diligence to spending time and resources in the wrong place. Many business leaders struggle to comprehensively understand their staff roles, making delegation difficult – while an inability or aversion to interpreting data effectively can derail meaningful goal-setting.

Creating a disciplined plan, conducting thorough research and assembling the right team are the key components to successful execution. Gaining role clarity allows leaders to delegate more, deploy the right training initiatives and work on the tasks that maximise their own unique skill set. Effective annual planning and reporting also helps maintain company-wide precision and accountability, while clear and actionable goals create a more cohesive vision.

Driving inspiration

Without a clear plan or projection for the future, it’s difficult to motivate a team. Today’s executives are tasked with onboarding all stakeholders and creating a shared vision – but when you’re leading a team of varying experience levels and (sometimes conflicting) viewpoints, this can be challenging. 

With today’s teams comprising colleagues from numerous academic, educational, cultural and political backgrounds, the pressure is on for leaders to inspire on a collective and individual level. You’re only as strong as your workforce – and company growth, productivity, morale, and attendance suffer when staff feel disconnected and overlooked. But many business leaders struggle when it comes to effective communication.

This lack of coherence extends to company vision – and it’s difficult for any staff member to stay motivated without a clearly defined purpose to their role. With more millennials seeking employers that are both exciting and share their values and ethics, a lack of narrative could derail engagement, motivation and focus within the workforce.

Leaders need to lean in and commit to the process. Clarity and consistency are key, and it’s important to reinforce words with tangible actions. This breeds trust, while a transparent approach to conversation engenders respect. 

It’s important for employees to have a comprehensive understanding of their purpose and performance. Having an understanding of where their careers are headed will keep staff driving forward. Communication works both ways too, and leaders who are approachable and receptive to feedback are well placed to get the best out of their teams.

Equally, it’s important for leaders to communicate wins as much as areas to improve. Recognising achievements, developing quality incentives and offering staff flexibility boosts morale and keeps employees feeling valued.


To stay effective and relevant, businesses need to constantly level-up. 

Companies that lack the finance or resource, or simply fail to prioritise training and development, risk losing staff. Offering professional development boosts employee engagement and attracts top talent. 

Leaders should take an active role in mentoring, coaching and developing others. Promoting employees to upper management, or creating new roles to further professional development have significant impact – reaching as far as increasing profitability. Enabling and encouraging good internal communication fosters skills sharing between junior and senior-level stakeholders too.

Guiding change

Managing and mobilising change isn’t easy – and it’s one of the biggest challenges facing UK leaders. Companies need to be agile and adaptable to succeed, but mitigating the consequences of change is a balancing act.

A huge hurdle to change is team resistance – and often this comes from a lack of communication from leadership. Staff need clearly defined strategies to navigate change – but also an understanding of why these changes are happening in the first place. A closed-door approach builds resentment; employees want to be consulted about what directly impacts their role or environment. 

Change-capable leadership clearly communicates the purpose and value of change, in alignment with organisational goals. It fosters collaborative decision-making, directly involves stakeholders in the execution of plans and embraces emotional reactions to change.

Managing stakeholder relationships and politics

Executive alignment is essential, and can make or break modern businesses. Creating a unified force is a key part of leadership success. It’s important to establish an environment where staff support one another – and this extends to leadership. 

When a decision is made, executives need their senior team to be behind it. Business leaders that struggle to account for this may run into roadblocks. Navigating workplace conflict, establishing team norms and remaining politically savvy are some of the key demands in this area.

What are some emerging issues in leadership?

Redefining how people work in a post-pandemic world has been the biggest corporate challenge of recent times. Business leaders are confronting new approaches to crisis management and strategic resilience, while accommodating flexible working schedules and developing new staff wellbeing initiatives. 

Ultimately, it would appear that agility, adaptability and cohesion could be some of the biggest emerging battles that businesses will face.

Become a better business leader

Study the University of York’s 100% online Master of Business Administration (MBA) and take your first step toward becoming a better business leader. With modules spanning strategic thinking, operations management and change leadership, you’ll be primed with the critical, creative and compassionate skills required to navigate complex organisational boundaries in a considerate way. 

This immersive online course will grow your global network as you connect with peers from around the world, and will prepare you for a prospering career in international workplaces.