Functional Level Strategy

Submitted to:- Prof. Mona sodhi

Submitted by :- loveleen kaur [ rollno -2321003]
Mohit [Rollno-2321005]
 Meaning of strategy

Levels of strategy

Meaning of functional level strategy

From where it has been derived

Areas concerned

Vertical and horizontal fit

Detailed explanation of area concerned

Integration of functional plans and strategies

Importance of functional strategies

Case study

Conclusion

Referances
 What is Strategy
In strategic management, strategy refers to a comprehensive plan of
action designed to achieve specific goals or objectives. It involves
making choices about the direction an organization will take and the
allocation of resources to pursue that direction effectively.
Deciding the
right things

Doing
the
right
things
 Meaning
• Functional level strategies are the actions and goals assigned to
various departments that support your business level strategy and
corporate level strategy.

• Functional strategies are the collective activities of day to day

decisions made by respective functional departments heads who are
responsible in creating and adding values to the product or services
 DERIVED FROM

Functional strategies are derived from business level strategies.

Suppose a firm adopts the cost leadership business strategy.

Now all activities and resources should be focused on
developing a Low-COST structure and REDUCING COST.
So that all the functional areas will contribute in their own
special ways.
Areas Concerned with Functional Level
Strategies

MARKETING PRODUCTION PERSONNEL

RESEARCH
FINANCE AND
DEVELOPMENT
 Marketing strategies & policies
Marketing strategies & policies are bifurcated into Three
major areas

Selection of
target market
segment
Decision on
appropriate
marketing mix

Product
positioning
Production strategies & policies
Plant Location

Plant layout the degree of automation

manufacturing process

Vertical integration

Plant maintenance

Inventory control

Continuous improvement in production

processes
Research and Development Strategies
and Policies
Objectives of Research and
Development departments
are:-

Market needs Quality

Cost reduction
improvement

Exploring an overcoming
opportunity in process problems
the market
 Human Resource Strategies and Policies
• For growth of company human capital is considerd as and most important
and valuable asset.
• Human resource should be treated with dignity and respect.
• Good HRD practice can influence financial and non financial indicators.
HR is not like finance or any
other physical asset or input
because it is unique that gives
competitive edge over rivals.

Imagine two companies in the

same industry, both offering
similar products or services.
Company A has a traditional
HR approach, while
Company B has invested
significantly in innovative HR
practices.
Constituents of good HRD are three C’s

Competencies

Commitment

Culture
 • Its is not related to a single individual but relates to a
pair of individuals.

Competencies • It also deals with various areas and functions –like

technology,organization,and
management ,behavioural ,conceptual.

• Developing commitment has a lot to do with

motivation and work habit.
• Various HR system, processes and activities
Commitment contributes to the development of
commitment among employees.

• A strong culture can have a lasting effect and provide

sustainence to the organization.
• It is culture that gives a sense of pride and identity to

Culture individuals and teams.

• It enhances predictability ,reduces transactional costs
and contributes to commitment.
Human Resource strategies deal with
good many aspects of HR functions
covering
 Employee recruitment
 Selection
 Training
 Placement
 Treatment
 Retainment
 Motivation
 Empowerment
 Rotation down sizing
 Industrial relations
 Financial Strategies and Polices
 Finance is the life blood of any organisation, and the ultimate objective of the
organisation is profit maximisation and value maximisation.
 Whatever may be the strategy (low cost, differentiation, or focus strategy) the final
goal is to maximise shareholders wealth. Finance strategy provides indirect support to
primary and supporting activities in the value chain.
 Financial and accounting strategies of an organisation are concerned with anticipating
the required funds at least possible cost, effective allocation, and management of
funds. The finance and accounting strategy play a strategic role within organisation as
they control one of the most important resources needed to implement strategy.
• The primary role of financial strategy is to provide the required
funds of optimum capital structure, and effective allocation of
capital among corporate level, business level and functional
level operations. In other words, determination of appropriate
debt equity is vital to successful strategy implementation
 Primary Activities of Finance Strategy
Maintaining
Effective allocation Determining the
balance between
of capital among base for valuing
internal and
different projects closing stock
external funds

Raising capital at
Valuation of firm
low cost
 Integration of Functional Plans and
Strategies
Integration of
Therefore ,strategic different policies
The outcome of the
manager has to pull and strategies
organization is best
together ,integrate , involves a
seen when all the
balance and time meaningful
strategies which are
these light of sacrifice in the
been discussed
corporate mission interest of the other
before are integrate
goals and functional areas or
in the best manner.
objectives. areas to bring out
the best.
 In order to integrate the functional
plans ,polices and startegies ,the strategist
has two alternatives :-

Formation of committee . Enterprise resource planning.

 Acts as a
Improved the
instrument of Brings effective
pace of decision
delegation of coordination
making
authority

Simplify the Serves as a

Brings growth
control of means of
with stability
activities achievement
 CASE STUDY ON
FUNCTIONAL LEVEL
STRATEGY
 Functional Implementation at MRF
Limited

MRF or MRF Tyres, is an Indian multinational tyre manufacturing

company and the largest manufacturer of tyres in India. It is
headquartered in Chennai, Tamil Nadu, India. The
word MRF comes from the company's initial days when it was
called as Madras Rubber Factory. The company manufactures
rubber products including tyres, treads, tubes and conveyor belts,
paints and toys.

MRF had an installed tyre manufacturing capacity of 80.78 million

tyres and tubes manufacturing capacity of 47.37 million units as on
march 31,2021 ,spread over nine plants across India
Major Competitors of MRF
• MRF is considered to be the market leader in the INDIAN TYRE industry
• The strategies adopted by the company have been consistent over the year
and are of stable expansion and minor diversifications into toys and
specialty paints ,making it a sharply –focused company.
• In 1967, it became the first Indian company to export tyres to USA. In
1973, MRF started manufacturing Nylon tyres for the first time. The
company entered into with a technical know-how collaboration with B. F.
Goodrich in 1978.
Functional plans and policies
adopted by MRF
Financial Area :-
• MRF follows a conservative financial policy.
• It is undercapitalized with a low equity base.
• It depends to the maximum extent,on internal funds and avoids
substantial stake by financial institutions.
• The cost management and payout policy of the company is stringent.
• High inventories act as a buffer against fluctuations in raw
material ,especially natural rubber prices
Marketing Area
• MRF believes in listening to the customer,understanding consumer
behaviour for product designing ,entering new markets and building
a price –insensitive brand.
• Improvement in product quality are brought about through in house
as well as foreign technology.
• The company follows a product policy where it believes that each
product should create its own profit.
 Advertisment Ideas used by
company

TV Customer
Mailers
advertism counsellin
and POP
ent g
Operational Areas

• High standards are maintained in process control and product

testing
• The RND policy is aimed at modifying and adapting tier technology
to confirm to the requirements of Indian roads conditions
• RND labs at the units and the and the lab for natural rubber at
Kottayam are co-ordinated centrally
Personnel area
• There are product manager for each category of tyres
• Empowerment of department heads is in courage
• The effort of the company has been to change its perception to bring
a low profile organisation to that having a new image and corporate
identity
• Cross functional terms from different units contribute to suggestions
leading to cost efficiency and productivity improvements
Information management area

• It is being extended to cost measures and controls as well as

maintenance functions. It has also adopted an information security
network framework and has security policies in place to prevent
unauthorised access and use.
Functional strategies are the collective activities of day to day decisions made by respective functional
department heads who are responsible in creating and adding values to the product or a service
The functional strategies vary from company to company
Some companies might have focused on marketing and operations while there may be other who feel
that there should be balance among various functional areas.

These activities are carried out by the efficient utilisation of available resources and capabilities and
integrating the activities with in the functional areas
  Azhar Kazmi
 G.Sudarsana Reddy
 Kalyani publishers