Once a company has produced an environmental analysis, it must develop and implement strategies to achieve objectives and compete successfully in the chosen markets. Two approaches used for this purpose are corporate strategies and competitive strategies. Though similar, these strategies differ and should be designed in an integrated way to improve performance profitability. In this article we will look at what sets these two approaches apart.

By way of review: strategy can be understood as the lines of action—taken together—by which a company creates and captures value in a given market. To achieve this a company, especially larger ones, must develop corporate strategies that integrate competitive strategies.

Corporate strategy is the level of strategy that deals primarily with uncertainty; thus, it is concerned with the company as a whole. It is where decisions are made regarding overall growth and the direction a company should take. Corporate strategy is arguably the most comprehensive level of strategy. It consists of two dimensions: a) capturing synergies between business units, and (b) identifying and managing uncertainty. Corporate strategy is also concerned with diversification, expansion, size reduction, mergers and acquisitions, and disinvestments.

The corporate strategy is naturally the more comprehensive of the two types. The most established view in the literature is that improving business units’ competitive strategies is the essence of corporate strategy. Corporate strategy leaders should be focused on identifying and capturing synergies between units. In this way, corporate strategies encompass competitive strategies.

The competitive strategy, also known as the business strategy, is deployed from the corporate strategy. It is a plan developed by a company to achieve advantage over the main competitors in a given business. This strategy is developed by identifying the company’s opportunities, threats, strengths and weaknesses to compare them with those of the competition.

Developing a competitive strategy is more relevant when the company is in a market where several similar competing products/services are available to customers. This strategy helps the company develop a sustainable position in the sector and should provide a superior return on investment.

A competitive strategy can be seen as the process of research, planning, and development of initiatives to increase company market share and overcome competition. Competitive strategies focus on how the business unit will compete and, as Porter teaches us, involve the generic strategies cost leadership, cost focus, differentiation, and differentiation focus.

The corporate strategy is longer-term: it focuses on shareholder value and sustainability, area of competition, diversification, and mergers and acquisitions. It involves the Board of Directors and CEO. The competitive strategy is shorter-term: it focuses on competitive advantage, market share, and how to compete. It involves business unit leaders, and division and department heads.

In sum, it can be said that the corporate strategy includes two different, equally relevant issues: in which business the corporation should compete, and how executives should manage the different business units. Competitive strategy refers to how to develop competitive advantage in each of the businesses in which the company competes.