The four levels of organizational strategy are typically defined as…
1. Corporate Strategy – This is the highest level of strategy and involves decisions and actions taken by top management to determine the overall direction of the organization. Corporate strategy deals with questions such as which industries or markets the organization should be involved in, what businesses it should pursue, and how to allocate resources among different business units. It sets the long-term objectives and goals for the organization as a whole.
2. Business Strategy – Business strategy focuses on how a company competes within a particular industry or market segment. It involves decisions about how to position the company relative to competitors, what products or services to offer, which customer segments to target, and how to differentiate the company’s offerings. Business strategy is concerned with achieving sustainable competitive advantage and creating value for customers.
3. Functional Strategy – Functional strategy deals with the activities and operations within specific functional areas of the organization, such as marketing, finance, operations, human resources, and research and development. Functional strategies support the achievement of business-level objectives by outlining how each function will contribute to the overall success of the organization. These strategies address issues such as resource allocation, process improvement, talent management, and functional capabilities.
4. Operational Strategy – Operational strategy is the lowest level of strategy and focuses on the day-to-day activities and processes that are necessary to execute the organization’s functional strategies. It involves decisions about production methods, distribution channels, inventory management, quality control, and other operational aspects of the business. Operational strategies aim to optimize efficiency, minimize costs, and deliver products or services to customers promptly.
These four levels of strategy are interconnected and should align with each other to ensure that the organization’s objectives are effectively pursued and achieved at all levels of the organization.
