Levels of Strategy

Levels of Strategy
• Functional Level
• Business Level
• Global Level
• Corporate Level
 Functional level Strategy
Functional level Strategies are strategies directed at
improving the effectiveness of functional operations
within a company, such as manufacturing,
marketing, materials management, research and
development and human resources
Features of Functional Level
• Managers at the functional level are responsible for
transforming the vision into reality
• Functional level strategies consists of short-term strategies
with fixed annual objectives
• Functional level managers are concerned with problems
related to the efficiency and effectiveness of various functions
• The functional objectives are operational and can be quantified
• Risk involved in functional strategies is not very high as the
cost of failure is small
 Role of Functional Level Strategies

• Achieving efficiency
• Quality
• Innovation
• Customer Responsiveness
 1. Achieving Efficiency

• Efficiency is measured by the cost of inputs required to

produce given output
• The more efficient a company, the lower is the cost of
inputs required to produce a given output
 Considerations in Achieving Efficiency
• Economies of Scale
• Flexible Manufacturing
• Marketing strategy and efficiency
• Materials Management Strategy
• R&D Strategy and Efficiency
• HR Strategy and Efficiency
• Infrastructure and Efficiency
 2. Quality

• The main management concept utilized to enhance

quality is Total Quality Management (TQM)
• TQM is a management philosophy that focuses on
improving the quality of a company’s products and
services and stresses that all company operations should
be oriented towards this goal
 3. Innovation

• In many ways innovation is the single most important

building block of competitive advantage
• Successful innovation of products or processes gives a
company something unique that is competitors lack.
This uniqueness may allow a company to charge
premium price or lower its cost structure
 4. Customer Responsiveness
• To achieve customer responsiveness a company must
give customers what they want when they want it
• The more responsive a company is to the needs of its
customers, the greater the brand loyalty that the
company can command. In turn, strong brand loyalty
may allow a company to charge a premium price for its
products or enable it to sell more goods and services to
customers
 Business Level Strategy
• Managers at business level are responsible for giving shape to
the corporate manager’s vision
• Business level strategies involve decisions about the
competitive advantage of a single business unit
• The business level managers determine the basis of the
company’s competitive advantage in a particular product or
market area
• This strategy is concerned with using the cost-leadership,
differentiation and focus strategies to ensure an edge over
competition
 Business Level Strategy
Decisions
Business Level Strategy involving decisions about:
• Customer needs or what is to be satisfied
• Customer groups or who is to be satisfied
• Distinctive competencies or how customer needs are to be
satisfied
 Customer Needs

• Customer needs are anything that can be satisfied by

means of the characteristics of a product or service
• Product Differentiation
Product differentiation is the process of creating a
competitive advantage by designing products to satisfy
customer needs
Customer Groups and Market Segmentation

Market segmentation may be defined as the way a

company decides to group customers, based on important
differences in their needs or preferences, in order to gain a
competitive advantage
 Deciding on Distinctive Competencies

Distinctive competencies are the means by which a

company attempts to satisfy customer needs and groups
in order to obtain a competitive advantage
Ways for Attaining Competitive
Advantage
• Superior efficiency
• Quality
• Innovation
• Customer responsiveness
 Global Strategy
• Companies that pursue a global strategy focus on
increasing profitability by gaining the cost reductions
• Global companies prefer to market a standardized
product worldwide so that they can reap the maximum
benefits from the economies of scale
• They also tend to use their cost advantage to support
aggressive pricing in world market
 Corporate Level Strategy

Corporate Level Strategies include objectives, missions,

policies, etc. which decides broadly the direction in which
the firm has to proceed, and also decide the direction in
which other functional decisions are made.
 Features of Corporate Level
• The company gets direction from the managers at the
corporate level
• Corporate level strategies are aimed at optimum
utilization of the company competencies in the long
term
• Corporate level strategies must keep in mind the
interest of the stakeholders and the society
• These strategies are designed with the objectives of
the organization in mind
 Types of Corporate Level Strategies

• Strategies for stability

• Strategies for growth
• Strategies for retrenchment
 1. Strategies for Stability

They are strategies to sustain the present position of the

firm in the industry/business in terms of resources, in
terms of achievement of objectives
 2. Strategies for Growth

They are strategies for growth of firm in terms of adding

new objectives or strengthening resources and
organizational structure
 3. Strategies for Retrenchment

They are strategies for leaving behind of many objectives,

reducing the manpower, restricting the objectives,
consolidating on strengths and retrenching the
weaknesses
Thank You