Question

Question 04. Explain with your words what are the three levels of the strategy in an organization. 706 Explain what is the focus of the strategy at each level. (Rubrics: . 02mark for each component. Three components. Total 06 marks) Answer:

Answer 1

Ans. Strategies not only help an organization achieve its long-term and/or short-term goals and objectives through effective plans (including resource planning) but also help it lead the competition and overcome uncertainties. The 3 levels of strategy in business organization are given below.

Corporate Strategy and its Focus Areas

A corporate strategy is a general strategy which outlines the different business activities that the organization wants to indulge and engage in. It is the planning of the firm for entering a market and winning it inspite of the competition. The long-term strategy concerns the top level of management, is of decisive/legislative nature and the focus here is to select the business areas where the company should be competing and can be successful. The strategy deals with and applied across all departments of an organization with an aim to maximize growth and profitability. Some of the important corporate level strategies may include stability, expansion and retrenchment strategies.

Business Strategy and its Focus Areas

The business level strategy is next and subsequent level of strategy formulation and implementation, where the focus of strategy formulated is to convert the corporate vision into real results. Hence it is one step down from the level of a corporate strategy. The business strategies are more specific than the corporate strategies. They are framed by middle-level management for strengthening the overall performance of the enterprise in the requisite areas. These strategies are executive or governing in nature and involve the selection of certain plans through which the objectives can be fulfilled. These strategies are more short term in nature when compared to corporate level strategies, and apply to a particular business unit. For instance, if a firm sells both cookies as well as cookies-making equipment, it will have two different business strategies for selling these products, for the two business units which have different markets. But the firm will have a single corporate level strategy for all its activities and businesses areas including cookies as well as cookies making equipment. Some of the important business strategy may include focus, cost leadership and differentiation strategies and these are most often conceptualized and implemented to help a firm compete successfully in a certain target market.

Functional Strategy and its Focus Areas

The focus area of a functional level strategy is to identify the strength, capabilities and positives of an organization that can help it achieve the objectives of a business level strategy. Hence the strategy can be the last level of strategy formation and implementation. These short-term strategies are the day-to-day plans and procedures that help an organization follow the paths that could help it reach the larger goals and objectives. Daily plans may be as important for the success of an organization as the long-term corporate plans, as minor contributions can only provide for big returns when they cumulate over a period of time. While functional strategies aim and have a focus to achieve objectives of much smaller worth, they are implemented keeping in mind the larger goals. All departments of an organization, including finance, HR, marketing, operations and others have to carry out certain functions each day, and the management has to ensure that the things are moving in the right direction, through periodic and regular review of the activities of these departments. A functional strategy will relate to a functional area like marketing or finance specifically, and the attainment of all the functional objectives (short term in nature) will lead to the realization of a business strategy.