Business-Level and Corporate-Level Strategies
Every business in the modern world has to formulate and implement the best and most suitable strategy on how to conduct its operation. The choice of a business or corporate strategy significantly determines the success or failure of a business venture both in the short-run and in the long run. A suitable business or corporate strategy provides competitive advantage to a corporation, as well as the ability to effectively coordinate and arrange various activities. Many corporate strategies that an organization can choose exist, but the choice is highly influenced by its suitability and nature of the business. According to research, a business or corporate strategy may refer to a set of plans that clearly stipulates the direction an organization will pursue, and the steps it will take to achieve its goals.
Business level strategies usually represent the plans and methods a business organization uses to conduct various functions. Bigger business organizations may have several business-level strategies due to the presence of various departments each carrying out unique functions. These business strategies provide guidelines to the managers, owners and employees to follow in the business. This study uses Nokia Corporation in determining the various business-level strategies that the company uses to carry out its functions. Nokia is a business corporation within the telecommunication industry in which it distributes mobile phones and telecommunication devices. Nokia Corporation offers mobile phones and devices based on GSM, EDGE, 3G, WCDMA and CDMA. Nokia Corporation employs a number of strategies in its production, marketing and distribution of its various products. According to studies by Kozami (2002), business-level strategies provide a broad direction to the organization as they provide the most competitive interaction, and competitive advantage is the ultimate goal.
Among the business-level strategies employed by Nokia Corporation is the coordination of unit activities. Under this strategy, the corporation is divided under small departments and units where coordination of these activities falls under a manager or supervisor. The responsibility of allocating resources in a unit or department also falls to the supervisor or manager in charge. This strategy is effective in ensuring efficiency at the department level and allows specialization of activities that leads to improved innovation and creativity. Studies by Kozami (2002) indicate that such business strategies are the courses of action at each department in an organization, and they allow the corporation to serve identified customer groups according to their needs and specifications. In the process of doing this, the company uses its competencies to gain, enhance and sustain its strategic or competitive advantage.
As a business-level strategy, Nokia Corporation develops its own distinctive advantages over the competitors in the telecommunication industry. The corporation utilizes its huge economic base to acquire resources at a cost much lower than competitors do. The corporation also produces a wide range of efficient products according to market demand thereby taking over the competitors in terms of market domination. Intensive market research and quality of the labor force employed ensure the corporations stays ahead in meeting customers demand and adoption of the latest technology. The corporation strives to stay ahead by manufacturing unique telecommunication products that further provide competitive advantage to the organization. Research by Kozami (2002) points out that competitive advantage for any business arises from the skilful use of its core competencies.
The company diversifies its operation and production in order to capture a wide range of communication devices and entertainment such as music players, computers, gaming consoles and navigational devices. Intensive market research also provides another business-level strategy for the company. The corporation identifies market niches where its products dominate and penetrate easily. Another form of market niche includes modifications of an existing product into the latest version that suits the customers’ needs. Identifying a market niche for the company’s products has allowed the organization to charge higher consumer prices since its substitutes in such an economic market place. According to research by Ireland, Loskisson and Hitt (2006), a business level strategy has two dimensions; competitive advantage and competitive scope. This refers to the fact that, a business-level strategy that an organization chooses is a function of its competitive advantage and the breadth of the target market it wishes to serve.
Telecommunication industry especially in the production of communication devices such as mobile phones is characterized by high competition, and high rates of product differentiation. Nokia Corporation also uses this differentiation technique as a business-level strategy to produce goods and services that customers perceive as unique in ways that are important to them. Studies by Ireland, Loskisson and Hitt (2006) shows that, organization may create this uniqueness in the in products they produce either psychologically or physically. In the case of Nokia Corporation, the company creates this differentiation in various ways such as easy of repair of its products, durability and superior installation services. Psychologically, the company creates this differentiation in the form of after sale services offered and the courtesy of the sales people.
In general, a suitable business-level strategy is important for the success of the business, and it is necessary for a business such as Nokia Corporation, which operates in such a competitive environment to be in a position to coordinate the various business-level strategies available for their advantage. The choice of the strategies by Nokia Corporation aims to create both long-term and short-term maximum benefits to the company. This is justifiable on the basis that the company struggles to maintain relevance of its products in the telecommunication industry by staying up-to-date with the modern technology, trends and taste and preference of its customers’.
In contrast to business-level strategy, corporate-level strategy occupies a higher tier in the organizational hierarchy where the most general questions are addressed. Corporate-level strategy provides answers to major questions such as the types of products and services the company should produce, the size of the market served by the business and quantities of production. Studies indicate that, corporate strategy describes the pattern of decisions that would determine a firm’s goals and objectives. It also specifies the principal policies for achieving such goals. According to studies by Cunningham and Harney (2012), the focus of a corporate strategy is how best to create or generate value from the available resources. Nokia Corporation employs a wide range of corporate-level strategies to achieve its objectives. Among the strategies employed by Nokia include, stable financial performance of the organization, quality human resource management and efficient allocation of resources.
Among these corporate-level strategies employed by Nokia Corporation, there is the value-creating strategy, which aims to edge out the company’s competitors by gaining a large percentage of the market share. In this strategy, the company adds its value by full utilization of its human capital and efficient allocation of economic resources. The key idea in this strategy is cost reduction and diversification of both products and markets. According to Cunningham and Harney (2012), an organization in the telecommunication industry such as Nokia can effectively employ this strategy by attempting to develop structures, and processes at the corporate level that will support the business and other operations across the organization. The idea behind any corporate-level strategy is to deploy resources to achieve the maximum value out of them.
In order to acquire a big share of the market, a company has to employ a strategy that allows diversification of both products and markets. Diversification works to reduce losses due to poor market performance and unavailability of resources to produce a desired product. In employing diversification, the company bears in mind a reducing-value strategy. This strategy acknowledges that too much diversification of either products or markets may result in benefits to the top management alone or losses to the general corporation. Studies by Cunningham and Harney (2012) explain this strategy by terming it as minimum corporate parenting style. According to their study, this strategy centers on ensuring the survival of the firm. The strategy does this by ensuring that constraints such as legal, governance, tax and health and safety issues are complied with by the organization. Value reducing, therefore, refocuses the business markets and products and helps it define target demography. It also puts mechanisms in place to prevent unnecessary or harmful growth.
Nokia Corporation operates in a highly competitive environment. Such an environment necessitates the company to be flexible in its strategies in order to adapt to the fast changing environment. Many competitors produce and distribute products that serve the same purpose as Nokia’s products. Such companies include Intel Corporation, Blackberry, Apple Inc. among others. Each corporation employs unique strategies that ensure its relevance in the market, but Nokia’s competitive advantage falls on its ability to produce a wide range of products that suits the needs of different markets in the world. This ability ensures the company penetrates in markets that its competitors cannot penetrate. This further gives the company a competitive advantage in terms of lowering its prices to level below the prices of its competitors.
Diversification strategies and wide production of products in the telecommunication industry makes the company adaptable to both…