Mba Fa Iv Sem 405 Levels of Strategy

TOPIC NAME: LEVELS OF STRATEGY
 The word “strategy” is derived from the Greek word

“stratçgos”; stratus (meaning army) and “ago”
(meaning leading/moving).
 Strategy is an action that managers take to attain one or
more of the organization’s goals. Strategy can also be
defined as “A general direction set for the company and
its various components to achieve a desired state in the
future. Strategy results from the detailed strategic
planning process”.
 A strategy is all about integrating organizational activities and utilizing
and allocating the scarce resources within the organizational
environment so as to meet the present objectives. While planning a
strategy it is essential to consider that decisions are not taken in a
vacuum and that any act taken by a firm is likely to be met by a
reaction from those affected, competitors, customers, employees or
suppliers.
 Strategy can also be defined as knowledge of the goals, the uncertainty
of events and the need to take into consideration the likely or actual
behavior of others. Strategy is the blueprint of decisions in an
organization that shows its objectives and goals, reduces the key
policies, and plans for achieving these goals, and defines the business
the company is to carry on, the type of economic and human
organization it wants to be, and the contribution it plans to make to its
shareholders, customers and society at large.
 Strategy can be formulated at three levels, namely, the corporate level,
the business level, and the functional level. At the corporate level,
strategy is formulated for your organization as a whole. Corporate
strategy deals with decisions related to various business areas in which
the firm operates and competes. At the business unit level, strategy is
formulated to convert the corporate vision into reality. At the functional
level, strategy is formulated to realize the business unit level goals and
objectives using the strengths and capabilities of your organization.
There is a clear hierarchy in levels of strategy, with corporate level
strategy at the top, business level strategy being derived from the
corporate level, and the functional level strategy being formulated out
of the business level strategy.
 In a single business scenario, the corporate and business level
responsibilities are clubbed together and undertaken by a single group,
that is, the top management, whereas in a multi business scenario, there
are three fully operative levels.
1. Corporate Level:
 Corporate level strategy defines the business areas in which your
firm will operate. It deals with aligning the resource deployments
across a diverse set of business areas, related or unrelated.
Strategy formulation at this level involves integrating and
managing the diverse businesses and realizing synergy at the
corporate level. The top management team is responsible for
formulating the corporate strategy. The corporate strategy reflects
the path toward attaining the vision of your organization. For
example, your firm may have four distinct lines of business
operations, namely, automobiles, steel, tea, and telecom. The
corporate level strategy will outline whether the organization
should compete in or withdraw from each of these lines of
businesses, and in which business unit, investments should be
increased, in line with the vision of your ﬁrm.
2. Business Level:
 Business level strategies are formulated for specific
strategic business units and relate to a distinct product-
market area. It involves defining the competitive position of
a strategic business unit. The business level strategy
formulation is based upon the generic strategies of overall
cost leadership, differentiation, and focus. For example,
your firm may choose overall cost leadership as a strategy
to be pursued in its steel business, differentiation in its tea
business, and focus in its automobile business. The business
level strategies are decided upon by the heads of strategic
business units and their teams in light of the specific nature
of the industry in which they operate.
3. Functional Level:
 Functional level strategies relate to the different functional areas which a
strategic business unit has, such as marketing, production and operations,
finance, and human resources. These strategies are formulated by the
functional heads along with their teams and are aligned with the business level
strategies. The strategies at the functional level involve setting up short-term
functional objectives, the attainment of which will lead to the realization of the
business level strategy.
 For example, the marketing strategy for a tea business which is following the
differentiation strategy may translate into launching and selling a wide variety
of tea variants through company-owned retail outlets. This may result in the
distribution objective of opening 25 retail outlets in a city; and producing 15
varieties of tea may be the objective for the production department. The
realization of the functional strategies in the form of quantifiable and
measurable objectives will result in the achievement of business level strategies
as well.
 Corporate Level Strategy:
◦ Defines the business areas in which your firm will operate.
◦ Involves integrating and managing the diverse businesses and
realizing synergy at the corporate level.
◦ Top management team is responsible.
 Business Level Strategy:
◦ Involves defining the competitive position of a strategic business
unit.
◦ Decided upon by the heads of strategic business units and their
teams.
 Functional Level Strategy:
◦ Formulated by the functional heads along with their teams.
◦ Involve setting up short-term functional objectives.

Mba Fa Iv Sem 405 Levels of Strategy

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TOPIC NAME: LEVELS OF STRATEGY

 The word “strategy” is derived from the Greek word

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