January 16, 2017

Levels of Strategy

Strategy may operate at different levels of an organization -corporate level, business level, and functional level. The strategy changes based on the levels of strategy.

Corporate Level Strategy

Corporate level strategy occupies the highest level of strategic decision-making and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance. Top management of the organization makes such decisions. The nature of strategic decisions tends to be value-oriented, conceptual and less concrete than decisions at the business or functional level.

Levels of strategy

Business-Level Strategy.

Business-level strategy is – applicable in those organizations, which have different businesses-and each business is treated as strategic business unit (SBU). The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. Since each product/market segment has a distinct environment, a SBU is created for each such segment. For example, Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of petrochemical products. For each product group, the nature of market in terms of customers, competition, and marketing channel differs.

There-fore, it requires different strategies for its different product groups. Thus, where SBU concept is applied, each SBU sets its own strategies to make the best use of its resources (its strategic advantages) given the environment it faces. At such a level, strategy is a comprehensive plan providing objectives for SBUs, allocation of re-sources among functional areas and coordination between them for making optimal contribution to the achievement of corporate-level objectives. Such strategies operate within the overall strategies of the organization. The corporate strategy sets the long-term objectives of the firm and the broad constraints and policies within which a SBU operates. The corporate level will help the SBU define its scope of operations and also limit or enhance the SBUs operations by the resources the corporate level assigns to it. There is a difference between corporate-level and business-level strategies.

For example, Andrews says that in an organization of any size or diversity, corporate strategy usually applies to the whole enterprise, while business strategy, less comprehensive, defines the choice of product or service and market of individual business within the firm. In other words, business strategy relates to the ‘how’ and corporate strategy to the ‘what’. Corporate strategy defines the business in which a company will compete preferably in a way that focuses resources to convert distinctive competence into competitive advantage.’

Corporate strategy is not the sum total of business strategies of the corporation but it deals with different subject matter. While the corporation is concerned with and has impact on business strategy, the former is concerned with the shape and balancing of growth and renewal rather than in market execution.

Functional-Level Strategy.

Functional strategy, as is suggested by the title, relates to a single functional operation and the activities involved therein. Decisions at this level within the organization are often described as tactical. Such decisions are guided and constrained by some overall strategic considerations. Functional strategy deals with relatively restricted plan providing objectives for specific function, allocation of resources among different operations within that functional area and coordi-nation between them for optimal contribution to the achievement of the SBU and corporate-level objectives. Below the functional-level strategy, there may be operations level strategies as each function may be dividend into several sub functions. For example, marketing strategy, a functional strategy, can be subdivided into promotion, sales, distribution, pricing strategies with each sub function strategy contributing to functional strategy.

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About Hitesh Bhasin

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  1. hello sir,
    I m priya i m doing my bachelors in business management so please send me information about business level strategy of reliance communication and also bcg matrix for it ๐Ÿ™‚

    • Nomkhosi Sibisi says:

      —–I am doing Strategic Planning course I would like you to send me more helpful resources that can assist me understand better the strategic planning

  2. Saleem Raza Bhatti says:

    Really UR article is very informative for the researcher and business students.

    Best Regards Bhatti.

  3. Saleem Raza Bhatti says:

    Very very rich information on the web so nice.

    Best regards
    Saleem Raza Bhatti.ACMI

  4. queensley says:

    Wow this is awesome it has really help me a lot on my research work. More on Levels of strategy please. Bravo.

  5. madhuri kanaskar says:

    hello sir
    I am madhuri kanaskar please give me information of our industry in reliance level of strategy. total all three level of strategy please give a information

  6. bittu sharma says:

    what type of leveal of stretegy

  7. Im pursuing my MBA. Please help me answer this: Examine the key characteristics and the relationship among the Four (4) levels of strategy. the course is Marketing management. Please help me answer the question.

    • I need the characteristics and relationship between Corporate, Strategic Business Unit, Functional and Product/Unit Level Strategy. I need you to assist me.

  8. Dear Sir Or all,

    I m pursuing MBA in marketing (last semester) , but i saw there are lots of job profile in marketing so i don’t no for which job profile should i apply as i am not form this background ?

    Job profile like : corporate strategy, business strategy, Business analysis, Business intelligence, marketing , Projects & business development, Market analysis, market research

    My background : Working as a design Engineer in reliance corporate park (oil & Gas sector) & Done B.tech( Control system Engineering)

    So plz help me to choose best job profile.


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