Different levels of strategy (corporate, business, functional)
In this lesson, we’ll explore the three levels of strategy:
- Corporate Strategy
- Competitive Strategy
- Functional Strategy
1. Corporate Strategy
Corporate strategy focuses on the big picture. It’s about defining the scope of the organization and deciding which industries to compete in. It also involves making decisions about mergers and acquisitions, resource allocation, and overall organizational goals.
Think of it as the CEO’s strategic roadmap for the entire company.
Amazon’s recent acquisition of iRobot, the maker of the Roomba robotic vacuum, is a corporate strategy decision aimed at expanding its presence in the smart home market and leveraging iRobot’s technology and customer base.
2. Competitive Strategy
Competitive strategy focuses on how to compete within a specific industry or market. It’s about gaining a competitive advantage by making choices about differentiation, cost leadership, innovation, and customer value.
Think of it as the business unit manager’s strategic playbook for their specific market.
Tesla’s competitive strategy is focused on differentiation through innovation in electric vehicle technology, battery technology, and autonomous driving features.
3. Functional Strategy
Functional strategy focuses on how to support the competitive strategy within specific functional areas. This includes areas like marketing, operations, finance, and human resources. It’s about aligning the activities of different departments to achieve the overall strategic goals.
Think of it as the department heads’ strategic action plan to contribute to the company’s success.
To support its differentiation strategy, Tesla’s marketing department focuses on highlighting the unique features and benefits of its electric vehicles, while its operations department focuses on ensuring efficient production and delivery of its vehicles.
The three levels of strategy are interconnected and must be aligned to achieve a cohesive and effective overall strategy. Corporate strategy sets the overall direction, competitive strategy defines how to compete in specific markets, and functional strategy supports the competitive strategy through coordinated actions across different departments.
