Strategy

- a plan of action or policy designed to achieve a major or overall aim.

Corporate strategy usually has a broader industry focus including competitors and markets.

Corporate strategy and functional strategy exist at different levels within an organizational hierarchy. Corporate strategy refers to the business philosophy, direction and techniques used to guide your entire organization toward its mission and objectives. Functional strategy has a similar purpose but at the functional level of an organization.

What Is the Difference Between Corporate Strategy & Functional

Strategy?

Covers the strategies scope of the organization as a whole. For the most organization the corporate strategies plan is the only strategies plan requirements.

Corporate level strategies

In the first case theorganization may bemultidivisional in nature to theextent that in principle or evenin law, separate parts of theenterprise could operate asviable entities in their own right.

Strategy Level

corporate level

business unit level

functional or departmental level.

Strategy can be formulated on three different levels:

Corporate Level Strategy

Corporate level strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses.

Reach - defining the issues that are corporate responsibilities; these might include identifying the overall goals of the corporation, the types of businesses in which the corporation should be involved, and the way in which businesses will be integrated and managed.

Competitive Contact - defining where in the corporation competition is to be localized.

Corporate level strategy is concerned with:

Managing Activities and Business Interrelationships -Corporate strategy seeks to develop synergies by sharing and

coordinating staff and other resources across business units, investing financial resources across business units, and using business units to complement other corporate business activities.

Management Practices - Corporations decide how business units are to be governed: through direct corporate intervention (centralization) or through more or less autonomous government (decentralization) that relies on persuasion and rewards.

Business Unit Level Strategy

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.

Functional Level Strategy

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 R&D involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively.

A value-creating strategy is one in which the business seeks to edge out its competitors by gaining more market share. These strategies seek to add real and perceived value to the business' products and services by exploiting economies of scope -- the resources and capabilities of the business that can be shared across the entire organization to reduce costs and increase efficiency.

Value-Creating Strategy

A business can employ a value-neutral strategy when the organization isn't so much concerned with allocating resources and manpower as it is with securing its current place within the market. In essence, value-neutral strategy helps shore up the business' operations plan. Initiating regulatory oversight, creating synergy between departments, working to reduce risk and securing a steady cash flow are value-neutral approaches

Value-Neutral Strategy

Businesses also sometimes engage in value-reducing strategies. This happens on an organization-wide level when the stakeholders or customers perceive that the business is getting too big for its britches or that only the top-level executives are benefiting from diversification. In this case, value-reducing strategy refocuses the business' market, helps it define a target demographic and puts mechanisms in place to prevent unnecessary or harmful growth.

Value-Reducing Strategy

While it sometimes is evident which type of corporate level strategy an organization should adopt, it is less clear at other times, particularly when the market is unsteady or the business cannot afford to waste resources trying new products and services that may not be profitable. Asking yourself a few strategy-level questions can help in the decision:

Deciding on a Strategy