Corporate strategy

Definition: Corporate strategy is a unique plan or framework that is long-term in nature,

designed with an objective to gain a competitive advantage over other market participants
while delivering both on customer/client and stakeholder promises (i.e. shareholder value).
Another, much simpler corporate strategy meaning is to see it as a set of decisions where a
company would place its bets for the future. Given that every organization has a limited
amount of resources, it needs to decide how it will prioritize the use of these resources.

Strategic Business Unit ( SBU)

Definition: A strategic business unit, popularly known as SBU, is a fully-functional unit of a
business that has its own vision and direction. Typically, a strategic business unit operates as
a separate unit, but it is also an important part of the company. It reports to the headquarters
about its operational status.

Description: A strategic business unit or SBU operates as an independent entity, but it has to
report directly to the headquarters of the organisation about the status of its operation. It
operates independently and is focused on a target market. It is big enough to have its own
support functions such as HR, training departments etc. There are several benefits of having
an SBU. This principle works best for organisations which have multiple product structure.
The best example of SBU are companies like Proctor and Gamble, LG etc. These companies
have different product categories under one roof. For example, LG as a company makes
consumer durables.

It makes refrigerators, washing machines, air-conditioners as well as televisions. These small

units are formed as separate SBUs so that revenues, costs as well as profits can be tracked
independently. Once a unit is given an SBU status, it can make its own decisions,
investments, budgets etc. It will be quick to react when the product market takes a shift or
changes start happening before the shift happens.

Example

Apple’s Business Level Strategies

Differentiation Strategy

Apple’s strategy is to engage a single company to provide operating system

and hardware for its products. This allows the company to concentrate on
design quality. Moreover, the company has positioned itself in the high-end
market because it has a reputation of creating products that are highly valued by
customers.
Another differentiation strategy that Apple has adopted relates to the
distribution of its products, where it has established retail stores around the
world.

 These strategies have made the company maximize profitability by offering

products that stand out in terms of high quality and design, advanced
innovation, and user-friendliness.

Cost Leadership Strategy

Apple has adopted this strategy by producing cost-effective, high-quality

products using affordable and economically viable raw materials

Another cost leadership strategy that Apple has applied is forming business
alliances with other successful companies, allowing the company to
concentrate on innovation and market intelligence.

Apple offers iTunes service that enables other firms to distribute music, videos
and games digitally at a low cost

 Eliminating the need for physical disks and tapes.

 Eliminating middlemen and selling its products directly through its website.