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Three Levels of Strategy

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13 views

Three Levels of Strategy

Uploaded by

khant nyar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Three levels of strategy

Strategy can be defined as the effective path to achieving organizational goals and objectives
in the best possible way. Strategy is at the foundation of every decision that has to be made
within an organization. In organizations, there exist three levels of strategy namely corporate
level, business level, and functional level. All levels of strategies have a significant role in
achieving the overall targets of the organization. In a simple sense, the functional level
strategy helps business level strategy and business level to corporate level strategy and
corporate to achieve vision and mission. They all are linked and managers need to carefully
set strategies at each level. If the strategy is poorly chosen and formulated by top
management, it has a major impact on the effectiveness of employees in every department
within the organization.

Corporate level strategy

Corporate level strategy is the uppermost level of strategy made by top-level management
which sets the overall direction of the organization. It refers to the overarching strategy of the
diversified firm. It addresses the question of “in which businesses should we compete?”. The
corporate level strategy attempts to obtain synergy among employees, product lines, business
units, and other components of the organization believing that the whole is greater than the
aggregate of individuals. Therefore, the corporate strategy works based on what the
organization wants to achieve overall and sets strategies following the overall goals and
objectives. Corporate level strategies are set deriving ideas from vision and mission
statements and also help a corporation to get competitive advantage over its competitors.

Business level strategy

Business level strategy refers to the aggregated strategies of a single business firm or a
strategic business unit (SBU) in a diversified corporation. It is designed to use the best use of
organizational competencies to gain a long-term competitive advantage over competitors.
Business strategy deals with the question of how do we compete? It aims to how to best
successfully compete with competitors so that competitive advantage will be gained. It steers
a strategic business unit (SBU) in the direction of competitive advantage. Every distinct SBU
requires different strategies such as cost leadership strategy, differentiation strategy and
focus strategy in order to get a competitive advantage against competitors.
Functional level strategy

The functional level strategy also called operational level strategy is developed to run
effectively the day-to-day activities of the organization. The functional level strategies aim to
deal with the question of how do we support the business-level strategy? A number of
functions are carried out regularly to effectively run the business as different functional
departments such as production department, HR department, marketing department, customer
service department, etc. So functional level strategies include marketing strategies, new
product development strategies, human resource strategies, financial strategies, legal
strategies, supply-chain strategies and information technology management strategies.
However, the emphasis of functional level strategy is on short- and medium-term plans and is
limited to the domain of each department’s functional responsibility.

In conclusion, all these three levels of strategy are crucial to set appropriately considering the
organizational capability and desired goals. While developing strategic decisions or different
strategies, it is important to remember that each level of strategy helps other levels otherwise
desired goals will be difficult to achieve.
Let’s use Samsung as an example. Samsung is a conglomerate consisting of multiple strategic
business units (SBU’s) with a diverse set of products. Samsung sells smartphones, cameras,
TVs, microwaves, refrigerators, laundry machines, and even chemicals and insurances.
Samsung use vertical integration as corporate level strategy for long-term development. By
gaining control over numerous points along the value chain, including the production of
crucial components like screens and semiconductors, Samsung has strategically pursued
vertical integration. The most crucial business-level strategy for Samsung’s long-term
success is differentiation. By emphasizing innovation, introducing cutting-edge technology,
and providing a wide range of products across many industries, Samsung has continually
followed a differentiation strategy. At functional level, Samsung use financial strategy,
human resource strategy, product development strategy and research and development
strategy.

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