Business Strategy 2: Three Hierarchical Levels of Strategy

This continues our series outlining business strategy

Understanding how business strategy differs from operational planning, allows you to draft “the methods you chose to bring about the desired future of your business”. You develop strategy for three different levels of the business: the corporate level, the business unit level, and the departmental/functional level. Quick MBA provides an excellent lesson to help you understand more.

Corporate Level Strategy

“Corporate Strategy”, says Vadim Kotelnikov, defines “the Business you should be in”

“Corporate level strategy fundamentally is concerned with the selection of businesses in with the company should compete and with the development and coordination of that portfolio of businesses” says Quick MBA.

“Corporate level strategy is concerned with:

• Reach
• Competitive contact
• Managing activities and business interrelationships
• Management practices”

Business Unit Strategy

Kotelnikov continues “Business strategy [outlines] the tactics to beat the competition”

Quick MBA adds “A strategic business unit may be a division, product line, or other profit center that can be planned independently from the other business units of the firm.

At the business unit level, the strategic issues are less about the coordination of operating units and more about developing and sustaining a competitive advantage for the goods and services that are produced. At the business level, the strategy formulation phase deals with:

• Positioning the business against rivals
• Anticipating changes in demand and technologies and adjusting the strategy to accommodate them
• Influencing the nature of competition through strategic actions such as vertical integration and through political actions such as lobbying

Functional/Departmental Strategy

“Functional Strategy explains the operational methods to implement the tactics” concludes Vadim Kotelnikov.

“The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain. Functional level strategies in marketing, finance, operations, human resources, and the R&D involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively.” writes Quick MBA.

Saturday we will outline a strategic planning cycle to help you move the business forward