Strategic Approaches: Identifying Levels, Kinds, and Illustrations of Accomplishment
In the world of business, strategy is the cornerstone of a company's success. It serves as a roadmap, outlining the path to achieving desired outcomes and providing a clear sense of purpose. This article delves into the three primary levels of strategy: corporate, business, and functional, each playing a distinct role in shaping a company's overall direction.
Corporate Strategy
Operating at the highest level, corporate strategy is concerned with the entire organization’s long-term growth, overall scope, and profitability. It involves decisions about which industries or markets the company should be in, mergers and acquisitions, diversification, and resource allocation across business units. Corporate strategy sets the vision and overarching goals that guide all business activities [3].
Business Strategy
At the level of individual business units or product lines, business strategy determines how a specific unit competes in its market. This involves choices about product positioning, pricing, customer targeting, and differentiation. Business strategy is typically shorter-term and tactical compared to corporate strategy, and it must align with and support the broader corporate objectives [1][3].
Functional Strategy
The most granular level, functional strategy concerns specific operational departments such as marketing, finance, operations, or HR. Functional strategies are detailed plans and initiatives designed to optimize the performance of these departments. They support both business and corporate strategies by enabling efficient execution of their objectives through department-level tactics [1][5].
Interrelationships
The hierarchical but interconnected structure of these strategy levels ensures that day-to-day activities at the functional level drive the competitive success of business units, which in turn fulfill the company’s corporate vision and growth ambitions. Corporate strategy defines the overall direction and priorities for the company as a whole, setting a context within which business units operate and compete. Business strategies develop competitive approaches within their specific markets that contribute to achieving corporate goals. Functional strategies implement the necessary activities and processes at the departmental level that make business and corporate strategies actionable and effective in practice [1][3].
A Layered Strategy Framework
In summary, the three levels of strategy—corporate, business, and functional—ensure a company’s direction is clear from top-level ambitions down to operational execution [1][3][5]. Here's a table outlining the scope, focus, time horizon, and role of each strategy level:
| Strategy Level | Scope | Focus | Time Horizon | Role | |--------------------|--------------------------------|----------------------------------------------|---------------------|----------------------------------| | Corporate Strategy | Entire corporation | Long-term growth, diversification, resource allocation | Long-term (years) | Sets overall company direction and vision | | Business Strategy | Individual business units | Competitive positioning, market tactics | Medium to short-term | Guides how business units compete in markets | | Functional Strategy| Departments (marketing, finance, etc.) | Departmental tactics and execution | Short-term | Optimizes functional performance to support business and corporate goals |
By mastering the art of strategy and understanding these three levels, aspiring investor-entrepreneurs can build successful ventures. Furthermore, studying successful companies like Apple, Amazon, and Toyota can provide valuable insights into effective integrated strategies. Strategy is a dynamic process that requires ongoing evaluation and adjustment to remain relevant and effective. Beyond Porter's strategies, other factors influencing business-level strategy include competitive analysis, customer value proposition, and resource-based view.
