A finance professional plays a crucial role in the development and execution of strategies. A strategy can be developed at three levels – Corporate, Business and Functional. Each level of strategy plays a pivotal role in laying a solid foundation and a clear plan for any organization. Whether you’re steering a startup or managing a multinational, understanding the layers of strategy is crucial. Here’s how they fit together –
| LEVEL OF STRATEGY —> | CORPORATE | BUSINESS | FUNCTIONAL |
| Focus | Concerned with the overall scope and the direction of the entire organization | Deals with how a particular business unit or division competes within its industry or market segment | Concentrates on how each functional area of the organization (HR, Marketing, IT, etc.) contributes to achieving the overall business objectives |
| Objective | Aims to maximize long-term profitability and shareholder value | Aims to achieve a competitive advantage and create value for customers | Aims to support execution of business and corporate strategies within specific functional areas |
| Scope | Involves decisions about diversification, mergers and acquisitions, strategic partnerships, and resource allocation across different businesses or units | Concerned with specific products, services or markets | Involves decisions and actions within individual departments to enhance efficiency and effectiveness |
| Key elements | Portfolio management, growth strategies, resource allocation, and managing synergies between businesses | Market positioning, differentiation, pricing, product development and marketing tactics | Operational processes, talent management, technology adoption, and performance metrics |
| Example | Deciding to enter new markets through expansion or acquisitions to diversify the company’s revenue streams | Developing unique features for a product to stand out in the market | Implementing cost-cutting measures in the production department to improve overall profitability |
The job of the leaders and managers is to ensure that all the levels of strategy are aligned.
Leave a comment