Levels of Strategy

• Let us begin with corporate level strategy which has the largest domain. By definition, corporate level strategy concerns itself with the whole corporation as a unit and consequently, aims to answer the purpose or the mission of the organization.

• The three management levels are related with the success of the strategic management. The top managers have to take the decisions and for that the logical analysis of strategic environment is made. At the middle level management, the activities are divided according to the various products or geographical areas in context to the strategic decisions. Each part is known as Business Unit and for its success the general manager provides the required resources and facilities. While at the lower level management, the effective managers implement the strategic and transactional decision of top and middle level managers. In this way the role of all the three levels become important for the success of strategies

• Three levels for Strategic decisions:The success of the strategic manage¬ment depends on the speedy and timely taking of decisions. For this the process of strategic decisions is followed as under.

• (A) Corporate level strategic decisions.(B) Business unit level practical decisions(C) Functional level operating decisions

• Corporate level strategy makers analyze the commonalities of various business units and work to add value to the whole system besides individual growth of participating business units. In other words, corporate level strategy takes a view at the overall scope of an organization and how to enhance stakeholder value. Issues concerning the introduction of new products or expansion into new markets or segments are all a part of this strategic level.

• Assessing the value of a business unit in the overall portfolio of activities is also a corporate level decision alongside optimal resource allocation for units.

• Corporate level strategy forms the trunk of the strategic decision tree and the management has to be fully aware of its implications as well as the sensitivity of all succeeding strategies, no matter at what level

• It is of prime importance that corporate level strategy is fully aligned with the overall vision of the organization and the values and expectations of stakeholders. Any deviation can result in serious repercussions for the management as also the stakeholders.

• Strategic decisions of corporate levelAt the top of the corporate level, promoters, members of the board of directors, chief executive and administrative officers are working. They are responsible for the financial per-formance of the corporation as a whole and for achieving the non-financial goals of the firm for i.e. corporate image and social responsibility. While taking these decisions the interest of the equity shareholders of the company must be considered as they are the real owners of the company. The equity shareholders bear the full risk of the business and as a result their interests must be protected

• Besides this the company which is unable to bear the social responsibility cannot exist for a longer period. Considering this reality such a strategy is being formed at the top level according to which the customers can get the good quality of products at the reasonable rates and along with it the owners also can get the proper return in context to their capital investment. For this the long term strategic decisions are taken by considering the mission and for that the rules and regulations are also formed.

• By considering the decisions of the corporate levels, the level of the business unit and operative strategies are formed.

• Business level strategies are essentially positioning strategies whereby businesses tend to secure for themselves an identity and position in the market. The aim here is to increase the business value for the corporate and stakeholders by increasing the brand awareness and value perceived by the customers. If we understand products or a services offered by a business unit as a deck of cards, then we can safely decipher that businesses do not have many suits to play with.

• . Business unit level practical decisionsWhen the business activities of the company are divided on the regional market, product standards by keeping the profit in the centre, then each of this department is known as Business Unit. e.g. Videocon Company’s Television Division, Washing Machine Division etc. Similarly B PL. Company’s Television Division, Telephone Division, Stereo Division etc.

• For all these decisions one person with all the powers is appointed who is known as General Manager. The strategic decisions taken at the corporate level are to be considered for the effective implementation of it for which the managers have to take the necessary practical decisions. The authority for this is decided by the corporate level and it is given to all the divisional managers. This type of unit is known as Strategic Business Unit. The managers of all these SBUs organize the activities of their unit by considering the time period of 5 to 8 years so that they can get maximum return on their capital investment

• Single Business Unit Level: When the company is dealing in a single type of single product or dealing in only one area, then it is known as a “Single Business Unit”. In these circumstances, the manager of one business unit of middle level collectively takes the practical decisions along with the corporate strategy of high level. This is possible only because there is one unit. In these circumstances, there is no possibility of any disharmony between the practical decisions taken at corporate strategy and business unit level.

• Multiple Business Units Level: When the company is arranging on its business activities in context to more than one region or product, then the business activities are divided according to the geographical area, or product. In these circumstances the various divided units are known as Different Business Units’ and a separate general manager is appointed for each one. Even though all the units are working separately, the main corporate strategy decided at the top level is being followed.

• The third level of strategy is the operational level which primarily is concerned with successfully implementing the strategic decisions made at Corporate and business unit level through optimal utilization of resources and competencies of the business unit. This level of strategy is extremely significant in shaping the success of other strategies as it translates strategic decisions into strategic actions by directly impacting the design of operational processes and networks, human and other resources etc.

• Functional level operating decisions:Top managers prepare the strategic plans. At the middle level the resources are supplied and facilities are arranged for the success of the strategies in context to the divisional units and finally the lower level, which is known as the functional level, is implementing those strategic plans. For this functional decisions are taken for various activities. Functional activities include various activities such as production, marketing, personnel management, financial management, office management, research and development etc.

• To make all these activities effective the functional managers and their assistants are being appointed. For the effective implementation of the strategies at the operational level, the activities must be examined properly. For this the supervisors are being appointed to keep the control over all the functional activities. Normally all the functional managers prepare annual budgets for their departmental activities. By considering the changes occurred at the corporate level and business unit level, the necessary changes must be made also in annual budgets prepared at the functional level similar to it and its continuous evaluation must be made.

• In the corporate form, at the top level after the analysis of business environment the long term strategic planning is done to achieve the mission of the company and proper decisions are being taken at the middle level in context to the business unit and at the lower level in context to the functional activities. Among all these three levels the extent to which the inter relation is maintained properly, to that extent the strategic plans are being success

• A thorough understanding of the three levels of strategy makes their strong co-dependence and non-hierarchical nature evidently clear. All strategies have to be in complete harmonization with each other since the success of one is inseparably linked to the other. So instead of being in a top-down order, the inter-linking can be visualized as a triangle with the three corners representing the three levels. The impact of one node on the other is judged by the flexibility of their relationship which further depends upon the success of the adopted business framework.