Interrelationships Among Functional Departments
To better understand the role of functional strategies, they must be differentiated from business strategies.
Three basic characteristics differentiate functional and business strategies:
- Time horizon covered
- The time horizon of a functional strategy is usually comparatively short. Functional strategies identify and coordinate short- term actions, usually undertaken in a year or less.
- A functional strategy is more specific than business strategy. The business strategy provides general direction. Functional strategies give specific guidance to managers responsible for accomplishing annual objectives.
- Participation in the development
- Different people participate in strategy development at the functional and business levels. Development of functional strategy is typically delegated by the business-level manager to principal subordinates charged with running the operating areas of the business. Business strategy is the responsibility of the general manager of a business unit.
Firms vary in the organization and responsibilities of their functional areas, but the major functional areas are purchasing and materials management, production/operations, marketing, finance, human resources, research and development, and information systems management.
Moreover, overall strategic success requires that all functional activities be tightly integrated with a business unit's generic strategy. This is shown in Table 10-1.
The entries in the left column represent the generic strategy that a given business unit is following. The horizontal entries to the right indicate the particular strategy that should be used by each of the business unit's functional areas.