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Business-Level and Corporate-Level Strategies
Tameka Talley
Business Administration Capstone
Professor Keller
12/08/2021
Business-Level and Corporate-Level Strategies
Introduction
Today, the business environment has become increasingly competitive. The growth, continuation, and survival of any business hinge greatly on the nature of strategies adopted. In light of the numerous changes occurring in the business world, from the advancement of technology to the augmented globalization phase, high-end business administrations are keen on adopting future frameworks that can be achieved by considering plans and policies that redefine the existing business-level and corporate-level strategies. The corporate-level policies, essentially, refer to a pattern of decisions in an organization or firm that reveal and determine the establishment’s goals, purposes, or objectives. Additionally, the corporate-level strategies produce the core plans and policies necessary to achieve the firm’s goals and define the scope of business the organization will pursue. On the other hand, business-level strategies can be described as the viable actions implemented by businesses aimed at creating a wedge in the company’s competitive position. This paper, therefore, places focus on CoStar Group to determine its business and corporate-level strategies and how they compare to those of other industry players.
Business Level Strategies
A company can leverage business-level strategies to give it a competitive edge over its competitors. To improve the viable position of the business unit, managers have to make a series of decisions on the company’s resource allocation processes relative to the product market (Abdulwase et al., 2020). The influence of business-level strategies on the organization’s success cannot be overstated enough. Founded in 1987, the CoStar Group has been on a mission to generate transparency and efficiency in commercial real estate fora (CoStar Group, 2021). From the onset, the company was keen on offering real estate corporations reliable, comprehensive, and objective data for selling and buying commercial real estate, lands, businesses, and apartments. Owing to the augmented internet use and the advancement of technology in commercial real estate, CoStar Group launched an internet marketplace to ease the delivery process. This move was strategic as it gave the company a competitive edge over other key industry players such as Realty Mogul and Hightower.
Improving and maintaining organizational performance and the business’s competitive advantage in the highly modest business environment requires that the commercial managers seek strategies and approaches that are attainable in the economic situation. Strategizing and formulating business models forms a vital part of the organization’s management process. CoStar Group has undoubtedly implemented numerous business strategies throughout its existence, given that many 30-year-old companies have since become complacent or historically plateaued. Instead of falling into complacency, CoStar Group has strived to improve its business fundamentals to safeguard the continued expansion of its footprint in the real estate sector. Using the state-of-the-art software platform, CoStar Group has risen from being a mere research and database company to a fully-fledged online marketplace for renting and buying commercial real estate spaces. The online business transaction model facilitated by the top-notch software has proved to be a consistent cash-producing machine for the company, with revenues continuing to augment every year as the company’s margins rise to incomparable heights.
CoStar Group has implemented several other business strategies besides establishing the online marketplace. One key business-level strategy utilized by the CoStar Group is the development of the CoStar Suite, which has proven to be effective for over 30 years. The CoStar Suite refers to a subscription-based information database that has been collecting, storing, and analyzing data pertinent to the real estate sector since the company was established. The CoStar Suite affords its vast clientele comprehensively comparable commercial real estate transactions, prospecting tools, property attributes, and market analytics for an easy decision-making process. Even though the licensing procedure for the CoStar Suite model operations and maintenance is pricey, CoStar Group has managed to stay on course and ultimately generated a captive market for itself. The sheer breadth of the data accumulated from the CoStar Suite is enormous, making the company now enjoy an incomparable pricing power thanks to the business strategy.
Also, CoStar Group has successfully utilized Information Services as a strategic business model to augment the company’s revenue. This business strategy has focused on evidencing software solutions to hotel administrators, property managers, and other relevant stakeholders for already preserved assets. The strategy has helped streamline CoStar Group’s operations portfolio and concentrate the company’s FP&A analysis. Utilizing the Information Services for a has equally enabled CoStar Group a platform to benchmark themselves in comparison to the broader real estate industry.
The most significant business-level strategy for CoStar Group that guarantees long-term success, however, is utilizing the state-of-the-art software platform to create an online marketplace for renting and buying real estate properties. This strategy has differentiated the company from its competitors through augmented advertising. The platform is continuously upgraded by a team of master capital allocators, making it even more efficient and reliable. Through the online marketplace, CoStar Group effectively services additional clients at an incremental fee that is kept at zero as the company acquires a broader base of subscribers. Consequently, this business-level strategy utilized by the CoStar Group safeguards the company’s competitive edge over its competitors and assures the success of the business in the long term.
Corporate-Level Strategies
Corporate strategies are critical in ensuring that the performance of the business materializes through an alignment of actions at the corporate objectives and the business unit level. Often corporate-level strategies are divided into quantitative financial stratagems and qualitative corporate strategies (Seifzadeh & Rowe, 2019). Financial corporate strategies primarily hinge on the accounting and financial evaluations of the organization irrespective of the procedures through which such performances have been attained. On the other hand, strategic corporate level controls place focus on the quality of the decision-making process and the influence of the choices made on the long-term success of the organization. Implementing qualitative corporate-level strategies, unlike quantitative policies, requires that the managers possess considerable expertise and knowledge in the field of operations. The knowledge and expertise are significant in carrying out an in-depth analysis of the strategic decisions and actions that impact the business. If such knowledge and expertise are bypassed in the corporate-level strategic decision process, the results’ quality cannot be guaranteed.
CoStar Group, too, has been forced to make several corporate-level strategies to safeguard the continuity of the company’s growth process. To cement its corporate-level grounding, CoStar has managed to the company goals to the real estate initiatives in five key areas that include conducting strategic planning, opening new stores, managing real estate operations, optimizing its business portfolio, and measuring the results at multiple levels and from varied perspectives across the company for continuity of purpose. Effectively monitoring store operations and performance require adequate planning. CoStar undertook strategic planning as one of its key corporate-level control measures to drive strategy execution from a real estate viewpoint. The strategic planning process has allowed the company to offer visibility to its shareholders regarding critical data that fuel the business. Also, the strategic planning process has enabled a quick decision-making process that is confident and supports the strategic goals.
Through the strategic planning corporate strategy, CoStar has established store policies founded on performance delivery and real estate alternatives. The model has resulted in a performance monitoring process that focuses on goals and tracks in all the centers, regions, brands, markets, and stores. This strategy, coupled with the business software analytics module, helps clients amass sufficient business intelligence, market consolidation, competitor information, store performance, and other indicators that empower the users at all levels of the business. CoStar Group also opted to venture into new stores as a real estate corporate level strategy to support the company’s business strategies directly. By opening new stores, the company has augmented its capacity to drive extra sources of revenue and additional store profit margins, expanded its market base, and increased its coverage in the prevailing markets. Leveraging its access to complete real estate business intelligence provided by the state-of-the-art software application, CoStar Group has better managed the process of new store acquisition in the right markets and with the appropriate deal terms.
However, the key corporate-level strategy that has effectively set CoStar Group apart from its competitors is optimizing the company’s portfolio. This strategy has enabled the company to monitor its progress on a store-by-store and market-by-market basis. Ultimately, CoStar Group has maximized its profit margins, created an actionable business model for each store, and actively managed and monitored strategy execution by optimizing the company’s portfolio. However, the optimization process of the firm’s range was not an easy task to accomplish. The process requires an understanding of the lease agreement options, productivity data, store data, and the demographics that constitute retailer success in under-performing stores. The optimization procedure made identifying performing stores easy to achieve and allowed for an equitable allocation of capital and resources.
Competitive Environment
The real estate industry is flooded with various key companies such as Realty-Mogul and Boom Town, which stir considerable competition for CoStar Group. Even though Realty-Mogul also has an online platform that allows customers and investors to browse property documents and conduct due diligence on properties they wish to purchase, the platform does not compare to CoStar Group, which boasts of several years of business intelligence regarding the real estate fora. Also, CoStar Group has effectively optimized its portfolio to allow for a tailored user experience and effective monitoring of the stores under its operations, making it even more superior to its competitors. On the other hand, BoomTown provides a customer relationship engagement process through real estate agents. However, Boom Town’s strategy does not compare to that of CoStar Group, which utilizes qualified business allocators to run its online marketplace, hence being more advantaged.
Market Cycles
Stock market cycles refer to the patterns and trends that constitute the business environment. Short-range marketplace cycles refer to the corporate and business-level strategies whose entry and exit duration are within a few days to a few weeks, while long-term market cycles refer to strategies whose implementation duration range from 28 months to 10 years. CoStar Group, which has been in existence for more than two decades, has managed to stay afloat in both the short- and long-term market cycles through the business and corporate level strategies initiated. Optimizing the business portfolio, for instance, promises returns even in the long-term making the strategy all the more viable. Similarly, the use of the state-of-the-art online marketplace software run by professional business allocators allows for the accumulation of data from a wide expanse in the real estate sector. Th company can utilize the data for decades and decades to come making the strategy viable in the long-term market cycle.
References
Abdulwase, R., Ahmed, F., & Nasr, F. (2020). The role of business strategy is to create a competitive advantage in the organization. Open Access J Sci, 4(4), 135-138. https://www.researchgate.net/profile/Faroq-Ahmed/publication/344944641_The_role_of_business_strategy_to_create_a_competitive_advantage_in_the_organization/links/5f9a2af5299bf1b53e4edc60/The-role-of-business-strategy-to-create-a-competitive-advantage-in-the-organization.pdf/
CoStar Group. (2021). The Leader in Commercial Real Estate Information and Online Marketplaces. Costargroup.com. (2021). https://www.costargroup.com/
Seifzadeh, P., & Rowe, W. G. (2019). The role of corporate controls and business-level strategy in business unit performance. Journal of Strategy and Management. https://www.researchgate.net/publication/333158053_The_role_of_corporate_controls_and_business-level_strategy_in_business_unit_performance