2. Levels of Strategy

7/29/2019 2. Levels of Strategy

1/19

LEVELS OFSTRATEGY


2/19

The most importantthing is to set goals.

Training is a waste oftime if you don't have

goals." Samantha Riley


3/19

Levels of Strategy

Managers have a universal goal of makingtheir organizations bigger and more

profitable

Underlying Assumption


4/19

1. Introduction Enterprise strategy can be formulated and

implemented at three different levels:- Corporate level.- Business unit level- Functional or departmental level

At the corporate level, organization isresponsible for creating value through itsbusinesses. The company does so by managing

portfolio of businesses, ensuring that thebusinesses are successful over the long term,developing business units & sometimesensuring that each business is compatible with

others in its portfolio.


5/19

1. Introduction The strategy may be about competing and

surviving as a firm, one can argue thatproducts, not corporations compete andproducts are developed by business units. The

role of the corporation is to manage itsbusiness units and products so that each iscompetitive and each contributes to corporatepurposes.

While the corporation must manage its portfolioof businesses to grow and survive, the successof a diversified firm depends upon its ability tomanage each of its product lines.


6/19

2. Levels of Strategy There are Three Hierarchical Levels of Strategy

and they are as follows: -- Corporate Strategy i.e. What businessshould you be in? Looks at the whole range of

business opportunities.- Business Strategy i.e. Battle plans, tacticsused to fight the competition in the industrythat your company currently participates in- Functional Strategy i.e. Operationalmethods and value adding activities thatcompany choose for its business.


7/19

CorporateLevel

Strategy


8/19


9/19

A) Corporate Level Strategy Corporate level strategy fundamentally is

concerned with selection of businesses in whichcompany should compete & with developmentand coordination of that portfolio of businesses.

Corporate level strategy is concerned with:- Reach i.e. defining the issues that arecorporate responsibilities. These might include

identifying the overall vision, mission, & goalsof corporation, the type of businesscorporation should be involved, and the way inwhich businesses will be integrated andmanaged.


10/19

A) Corporate Level Strategy- Competitive Contact i.e. defining where in your

corporation competition is to be localized.

- Managing Activities & BusinessInterrelationship i.e. corporate strategy seeks todevelop synergies by sharing and coordinating staff

and other resources across business units, investingfinancial resources across business units, and usingbusiness units to compliment other corporatebusiness activities.

- Management Practices i.e. corporations decidehow business units are to be governed: throughdirect corporate intervention (centralization) or

through autonomous government (decentralization).


11/19

A) Corporate Level Strategy Thus to sump up: - Corporate level strategy is

concerned with:- Reach.- Enterprise wide cross business process

management.- Competitive Contact.- Managing Activity & Business Interrelationship- Management Practices


12/19

BusinessStrategy


13/19


14/19

B) Business StrategyA strategic business unit may be any profit

center that can be planned independently fromthe other business units of your corporation. Atthe business unit level, the strategic issues areabout both practical coordination of operating

units and about developing and sustaining acompetitive advantage for the products andservices that are produced. At the businesslevel, the strategy formulation phase deals

with:- Positioning the business against rivals.- anticipating changes in demand &technologies and adjusting the strategy toaccommodate them.


15/19

B) Business Strategy- Influencing the nature of competition throughstrategic actions.

Thus, to sum up: - At the business unit level, thestrategy formulation & implementation dealswith:- Positioning and differentiating the business

and/or products against rivals.- Business level cross functional process mgmt.- Anticipating changes in technology, customerperception and adjusting strategy to

accommodate them.- Influencing the nature of competition throughstrategic actions such as virtual integration andthrough political actions

- Building strategic partnership & co

Innovatingwith other business units artners & customers


16/19

FunctionalStrategy


17/19


18/19

C) Functional Strategy The functional level of organization is the level

of the operating divisions and departments.The strategic issues at the functional level arerelated to functional business processes and

value chain. Functional level strategies in R&D,operations, manufacturing, marketing, finance,and human resources involve the developmentand coordination of resources through whichbusiness unit level strategies can be executedeffectively and efficiently.


19/19

C) Functional Strategy Functional units of organization are involved in

higher level strategies by providing input intothe business unit level and corporate levelstrategy, such as providing information on

customer feedback or on resources andcapabilities on which the higher level strategiescan be based. Once the higher level strategy orstrategic intent is developed, the functionalunits translate them into discrete action plansthat each department or division mustaccomplish for the strategy to succeed.

2. Levels of Strategy

Documents

Transcript of 2. Levels of Strategy