Hierarchical Levels of Strategy Strategy can be formulated on three different levels:

Corporate level Business unit level Functional or departmental level

CORPORATE LEVEL STRATEGIES

Corporate-level strategies address the entire strategic scope of the enterprise. It is the "big picture" view of the organization and includes deciding in which product or service markets to compete and in which geographic regions to operate. For multi-business firms, the resource allocation process like cash, staffing, equipment and other resources are distributed is established at the corporate level. Market definition is also in the domain of corporate-level strategists, the responsibility for diversification, or the addition of new products or services to the existing product/service line-up, also falls within the realm of corporate-level strategy. Similarly, whether to compete directly with other firms or to selectively establish sstrategic alliancesfalls within the purview corporate-level strategy. Critical questions answered by corporate-level strategists tinclude: What should be the scope of operations-what businesses should the firm be in? How should the firm allocate its resources among existing businesses? What level of diversification should the firm pursue;- which businesses represent the company's future? Are there additional businesses the firm should enter or are there businesses that should be targeted for termination or divestment? How diversified should the corporation's business be? How should the firm be structured? Are the responsibilities or each business unit clearly identified and is accountability established? Should the firm enter into strategic alliancescooperative, mutually-beneficial relationships with other firms?

CORPORATE GRAND STRATEGIES Corporate-level strategists have a tremendous amount of leeway as well as responsibility. Corporate-level strategy decisions are classified into three grand strategies. These grand

strategies involve efforts to expand business operations (growth strategies), decrease the scope of business operations (retrenchment strategies), or maintain the status quo (stability strategies). Analysis: Corporate strategies represent the long-term direction for the organization. The top management has the primary decision making responsibility in developing corporate strategies and these managers are directly responsible to shareholders. They are paralyzed without accurate and upto-date information from managers at the business-level. Corporations are responsible for creating value through their businesses which they do so by managing their portfolio of businesses, ensuring that the businesses are successful over the long-term, developing business units, and ensuring that each business is compatible with others in the portfolio. Example: The Tata group has a wide range of business from cars,software to Insurance .The main strategic responsibilities of Tatas CEO Ratan N.Tata is to i. ii. iii. iv. v. Overall strategic objectives Deciding whether the firm should divest itself from any of its business Allocating resources among different business Decisions on any new acquisitions or mergers for any particular unit Corporate strategies and policies for business which fall under the brand umbrella Tata vi. vii. viii. Managing corporate portfolio of business Maximize corporate responsibility Give a sense of direction to the Corporation

Business Unit Level Strategy (SBU)

Strategic decisions made at the business level reflect various means that have been adopted to achieve the mission, goals, and objectives of a single business, or division, of the firm. A strategic business unit may be a division or a product line that can be planned independently from the other business units of the firm. Analysis: At the business level, the strategy formulation phase deals with:

positioning the business against rivals anticipating changes in demand and technologies and adjusting the strategy to accommodate them

influencing the nature of competition through strategic actions such as vertical integration Developing and sustaining a competitive advantage for the goods and services that are produced.

According to Michael Porter three generic strategies-cost leadership, differentiation, and focus can be implemented at the business unit level to create a competitive advantage and defend against the adverse effects of the five forces. Taking again Tata group as an example and in particular Tata consultancy services. The responsibility of the Managing Director,N.Chandrasekharan will be to i. ii. iii. iv. v. vi. Translate the general statement of intent from the CEO into strategies for TCS Formulate strategy for TCS Take strategic decisions regarding the companys market foray Develop strategies against competitors Assess and take appropriate action on the progress of the company in the market Lookout for suitable acquisitions which will help enhance the competitiveness of the company

Functional Level Strategy

The functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain. Analysis: Functional units of an organization are involved in higher level strategies by providing input into the business unit level and corporate level strategy, such as providing information on resources and capabilities on which the higher level strategies can be based. Once the higher-level strategy is developed, the functional units translate it into discrete action-plans that each department or division must accomplish for the strategy to succeed. For example in the above two cases where the CEO gave direction to the conglomerate as a whole and the managing director of TCS set to implement his companys strategy on the lines of the corporate policy, it will actually be the Functional level managers such as in Human resource, product development, customer service etc who actually carry on the task of implementing this strategy.As above it could be in production, service ,finance or any integral functional unit in the company.The manager in product development in TCS will have his work cut out as follows

i. ii. iii. iv. v. vi. vii. viii. ix.

Implement the general strategic outline provided by the managing director Plan,communicate and implement the strategic outline provided by the MD Determine which products are to be followed up with,products which are to be done with Identifying the right,viable products for R&D Ensure quality conforming to the standards of the organization Ensure smooth running of the product development unit On the look out for new technologies to acquire Staying tuned with the competitiors R&D work Give feedbackto the corporate & business level managers about the sucees of their policies or drawbacks since they are in the frontline of the battle.

Societal strategies
A societal strategy is how the company perceives itself in its role towards the society, in terms of a particular vision / mission statement that it strives to fulfill corporate level strategies are then derived from the societal strategy.

Levels of Strategy

MISSION / VISION LEVEL

CORPORATE LEVEL

FUNCTIONAL LEVEL

STRATEGIES [CORPORATE]

SBU1

SBU2

SBU3 (SBU LEVEL)

FUNCTIONAL

LEVEL STRATEGIES

OPERATIONAL LEVEL