What’s the Difference Between Corporate Planning & Business Development?
If you’re planning to expand your business, it’s vital to be meticulous about every detail of your business’ growth. Corporate planning and business development are two organizational processes directed toward organizational change. Whether it’s a start-up or an industry leader, any business can significantly benefit from both strategies for corporate advancement.
But, what is corporate planning? How is it different from business development? In medium-sized and even in some large companies that engage in only one or two closely related businesses, these two functions may have overlapping scopes. Since they overlap, people think they also share the exact mechanisms. In larger organizations composed of several related and unrelated business units, the difference between corporate planning and business development is very distinct.
Here’s a closer look at their differences and how they can benefit a wide range of businesses:
Corporate planning, sometimes called strategic planning, entails the continual process of using an organization’s available knowledge, insights, and wisdom to determine its long-term goals. It devises corporate strategies and defines the organizational structure best suited to achieving the said goals.
Successful corporate planning is a continuous process and not a one-time event. An organization will need to keep adapting to the ever-changing business environment to stay on track toward its goals.
Often, it is required for a company to re-evaluate its original goals. This should be based on how the strengths and weaknesses of the organization have developed with the opportunities and threats in the business environment.
One basic model used in devising corporate strategies is the Ansoff Matrix. This is a planning tool used by marketing leaders to identify business growth opportunities.
In this product/market expansion matrix, an organization can choose from or combine four basic growth strategies:
- Market penetration – Offer existing products more competitively in existing markets
- Market development – Offer existing products in new markets
- Product development – Develop new products for existing markets
- Diversification – Create new products for new markets
Why plan? All businesses need growth plans to stay organized and have goals to focus on, whether big or small. It gives the organization direction, guides employees, coordinates activities, and helps measure business progress.
What is business development? Whereas corporate planning is a process that is closely related to corporate strategy, business development is the process of implementing the functions and tasks that are defined by the business-level approach.
Business strategy is the framework for the actions that a business unit needs or wants to take internally or jointly with industry partners. It aims to create value for its customers and gain a competitive advantage in the industry it competes in.
One helpful model that business unit heads can start with is Porter’s Generic Strategies. Here as the three basic strategies:
- Cost leadership – Reduce the cost of production or service delivery to create the most profit. It establishes industry-average selling prices or gains market leadership by offering lower prices.
- Differentiation – To develop innovatively or improve their existing products and services that are unique or have better value than those of the competitors.
- Focus – Identify niche markets and concentrate on delivering the specific needs and wants of the said markets.
Porter’s Generic Strategy is a technique to strategize and gauge a company’s competitive advantage across its chosen industry. For small to medium single-industry business entities, the process of business development is often sufficient to help ensure short to long-term competitiveness.
Corporate planning and business development are intrinsic and interdependent processes for large and diversified companies. As a top-level activity, corporate planning lays out the goals, strategies, and structures for the sustainable growth of the parent organization and all the subsidiary business units.
The subsidiary business units, in turn, need proper business development planning and execution to ensure that the business unit’s goals – and of course, its performance – are directly supporting the corporate strategy.
Business development and corporate planning work simultaneously to ensure successful business strategy implementation. However, the planning process is rigorous and involves data gathering not just within the company but competitors as well.
Ensuring that every step is well calculated and is within legal business boundaries, planning may require the help of corporate lawyers and financial strategists. Business planning is a long-term process but is necessary to manage risks and ensure success.