Strategic Management: Formulation and Implementation

Levels And Types Of Strategy

Organizations are complex entities. Every organization must address several levels, types, or areas of strategic management. Moreover, for firm competing in more than one business area or market, a strategy of integration and interrelationships between these areas must be developed.

Various authors have described these areas, types, or levels of strategies differently, but the essential issues can be addressed using three levels: a corporate-level strategy, a business-unit strategy, and functional/operational strategies.

Corporate strategy
Corporate strategy defines what business or businesses the firm is in or should be in, how each business should be conducted, and how it relates to society. This strategy is for the company and all of its business as a whole. Corporate strategies are established at the highest levels in the organization; they generally involve a long-range time horizon and focus on the entire organization. At the corporate level the concern revolves around the definition of business in which the corporation wishes to participate and the acquisition and allocation of resources to these business units. (Christensen, Andrew and Bower, 1987; Andrews, 1971).
Business strategy
Business strategy defines how each individual business will attempt to achieve its mission within its chosen field of endeavour. This strategy referred to each separate business unit (SBU) or strategic planning unit (SPU). At this level strategy two critical issues are specified: (1) the scope or boundaries of each business and the operational links with corporate strategy, and (2) the basis on which the business unit will achieve and maintain a competitive advantage within its industry (Wheelwright, 1984).
Functional strategy
Functional strategy focuses on supporting the corporate and business strategies. This strategy is the a strategy for each specific functional unit within a business. Functional strategies primarily are concerned with the activities of the functional areas of a business (i.e., operations, finance, marketing, personnel, etc.) will seaport the desired competitive business level strategy and complement each other.

Some authors also distinguish: operating strategy and industry strategy. For example, Thompson and Strickland explain that,

"operating strategy refers to the even narrower and more detailed approaches and moves devised by departmental-subunit managers and geographic-unit managers to achieve the strategy-supporting performance objectives established in their areas of responsibility"

At the industry (or government) policy level, the strategic concern revolve around issues such as: incentives for investment, import and export trade barriers,duties and quotes, the balance between imports and exports, inflation, health and safe standards, employments, and so forth.