Levels of Strategy Formulation

Levels of Strategy Formulation

Strategy formulation is the process by which an organization chooses the most appropriate courses of action to achieve its defined goals. This process is essential to an organization’s success because it provides a framework for the actions that will lead to the anticipated results. Strategic plans should be communicated to all employees so that they are aware of the organization’s objectives, mission, and purpose.

The four levels of strategies adopted by the business organization are –

Comparisons among the four levels of strategies adopted by the business organization are as follows:

Corporate level strategy: Corporate strategy is the overall managerial game plan for a diversified company. It extends companywide. It concerns how a diversified company intends to establish business positions in different industries. This level outlines what you want to achieve: growth, stability, acquisition or retrenchment.

Business level strategy: Business level strategy refers to the managerial game plan for a single business. It concerns the actions and the approaches to producing successful performance in one specific line of business. It plays a role in those organizations which have smaller units of business and each is considered as the strategic business unit (SBU).

Functional level Strategy: Functional strategy refers to the managerial game plan for a particular functional activity business process or key department within a business. For example, a company’s marketing strategy represents the managerial game plan for running the marketing part of the business. It defines daily actions including allocation of resources to deliver corporate and business level strategies.

Operating strategy: Operating strategy concerns, the even narrower strategic initiatives and approaches for Managing key operating units and for handling daily operating tasks i.e. advertising campaign, material purchasing, inventory control, shipping etc.

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