Corporate Development Vs. Business Development | 4 mins read

Corporate Development Vs. Business Development- How Do They Stack Up

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Hanh Truong

By Hanh Truong

Introduction to Corporate Development Vs. Business Development

Corporate development and business development initiatives share the same foundation, in that they help companies grow. Leaders of organizations will oftentimes curate and execute these plans to improve their financial standing and operational performance. They can also be employed to give brands a competitive advantage, boost sales, and promote expansion. Despite being powered by similar goals, however, the two concepts are different in distinct ways.

Corporate Development Vs. Business Development

Business development is broader, compared to corporate development. This concept encompasses various activities and processes that help make a business better. Developers will focus on researching new market opportunities, expansion, and outreach. These tasks are oftentimes shared with all departments within a company, including finance, manufacturing, and marketing.

On the other hand, corporate development, also known as corp dev, is the growth or restructuring of a business. Teams within this sector emphasize organizational success through strategic partnerships, mergers, and acquisitions. They may also guide brands to deals and divestitures, which is the practice of selling off business interests or investments, to enhance value. Other key differentiating factors include the following.

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Structure

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The corporate development department can be structured in 3 different ways - centralized, hybrid, or decentralized. Businesses can adopt a model that works best with their operations, workforce, and resources. The following are key components of each structure.

  • Centralized - This corp dev model enables the business team to have a full overview of the organization. With this perspective, developers can identify growth opportunities and potential threats. They can then either make the first move to attain the opportunity or take action to mitigate risks.
  • Hybrid - A hybrid model is considered lean, meaning the corporate development team consists of few representatives. Therefore, they will often have to turn to external resources for consulting or specialty services. This is especially crucial whenever the brand is considering partnering with other companies.
  • Decentralized - Decentralized structures in corporate development mean that there is no core team or department. Instead, the business forms a development team on a case-by-case basis. Sometimes, the groups will be made up of existing employees from other departments in the organization, depending on their skillset. For example, if a business is looking to merge with a start-up, the corp dev team would consist of specialists from the accounting and branding department.

Functions

Generally, corporate development departments focus on mergers and acquisitions. But this can vary for companies based on their size, purpose, initiatives, and resources. Some of the most common corporate development projects include the following.

  • Assess and budget for new strategies, such as mergers, acquisitions, and divestitures
  • Forecast need and markets to ensure proper asset allocations and budgets
  • Track company performance and productivity
  • Address governmental and industry regulations
  • Track capital
  • Identify and manage assets and capital
  • Hold or present meetings with shareholders
  • Attend financial conferences and gatherings with investors
  • Draft and communicate corporate development strategy to shareholders
  • Assist with product development
  • Manage market penetration
  • Set key performance indicators (KPIs)
  • Manage company portfolio

Strategies

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There are specific strategies that most corporate development teams in a company will pursue. This includes acquisitions, alliances, and mergers. The following are common strategies, in detail.

  • Mergers and Acquisitions - This practice is when a large-scale business acquires a smaller company. The smaller firm will generally have a specific skillset, labor force, knowledge, consumer base, profit, or competitive edge that the bigger business can benefit from.
  • Partnerships - Partnerships are when brands collaborate with other businesses to avoid price wars while still maintaining a competitive advantage. This is considered less extensive and costly, compared to acquisitions.
  • Strategic Alliances - By forming alliances with other brands, a company can prevent risks and leverage its resources. It also helps with tapping into new consumer markets. Strategic alliances are known for their efficiency in cost since investments and threats are shared.

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Key Performance Indicators

Corporate development teams in an organization depend on the establishment of key performance indicators. These measurable metrics enable team representatives to effectively track strategy progress and company performance. The best KPIs that corp dev teams will closely monitor include the following.

  • Return on Investment (ROI)
  • Revenue Growth
  • Customer Retention
  • Dilution/Accretion Analysis
  • Employee Turnover

Key Takeaways to Corporate Development Vs. Business Development

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  • Corporate development and business development are two distinct concepts.
  • Corporate development refers to the strategic growth and restructuring of a business.
  • Business development encompasses different activities that can improve company operations.
  • Some key factors that set these two initiatives apart include structure, function, and strategies.

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