Defining the strategic businesses

The primary purpose of corporate strategy is to build up and maintain competitive positions. Before these can be defined, however, there must be a strategic view of the current situation. This view is obtained by defining the strategic businesses.

A strategic business is a three dimensional construct which identifies a particular market, specific market offers and specific resources.

Market offer is to be understood in a wide sense, including not only the central products and services, but complementary services, price conditions and so on. The offer includes all the various measures within a marketing mix. It is important to understand that when identifying strategic businesses, it is not only differences in the basic products or services that must be taken into account, but also differentiated use of other elements of the marketing mix. This is, for example, the case for the VW group: it has not only VW, but also Seat and Skoda. And these three brands of vehicle have much more differentiation in the equipment of their cars, in pricing, in advertising, and so on, than in basic product features.