In the world of business, strategy can mean several things. Most successful businesses don’t just take strategy as a buzzword. They make it mean something.

To drive a business forward, having a clear strategy is worth its weight in gold. There are three levels of strategy that businesses can refer to. In this article, we’ll explore how a functional, corporate, and business strategy can impact organisations.

The Different Levels of Strategy

1. The Corporate Level
2. The Business Unit Level
3. The Functional Level

It’s important to have a solid understanding of the three levels of strategy. With a full grasp of the three levels, a company or organisation can break its strategy into the correct levels and align goals from the top of the organisation (corporate level) to the bottom (functional level). If a company approaches its strategy using the three levels, leaders will have a better understanding of how their strategic activities can impact the company’s high-level strategy.

Level 1: Corporate Level

This level is the highest and broadest level of strategy in business. To put it simply,corporate-level strategy defines an organisation’s main purpose, directing all its downstream decision-making.

It is particularly important for organisations that have multiple lines of business to create and understand their corporate-level strategy. For example, if one arm of a business manufactures a product and another sells that product, there should be a separate business strategy unit for each and a single corporate-level strategy that describes how they interact for the good of the organisation and why the two arms are important.

When working on a corporate-level strategy, the following should be considered:

Confirming Organisation’s overall Vision and Mission

The overall vision and mission are the two elements that define an organisation, and they should be set at the corporate level.

The vision statement describes the desired future state of an organisation at a certain point in time while the mission statement describes what a company does and how it is different from other organisations within the same competitive space.

Creating Corporate Objectives

An organisation’s objectives describe the high-level goals that will help the organisation achieve its vision and mission.

Level 2: Business Unit Level

Designed and evaluated by senior leadership, this strategy is to be used for different areas of a business. The business unit strategy’s complexity depends on how many businesses are involved and how a company is structured. It’s important for companies to create a strategy for each business unit to see which units need improvement and which ones are excelling.

An organisation’s corporate and business strategy is essential to drive it forward. With a strategy at the business unit level, an organisation can weigh the costs and benefits of each business unit and decide where it should spend its resources. It may even divest or sell some of its units to focus on the areas that are most important to achieving the corporate strategy, but it all depends on the progress towards the goals and analysis of the market.

Here are the main takeaways when creating a strategy at the business unit:

Reviewing the competitive market

A company or organisation should differentiate itself from its competitors. One of the best ways to determine if this was done adequately is to review the competitive environment. From there, an organisation should define its strategy based on what sets it apart from the competition.

Creating initiatives and objectives that support the corporate and business unit level.

Creating a business unit strategy entails creating initiatives and objectives that support the unit and simultaneously contribute to the organisation as a whole. A good approach to this is looking at the corporate level through a learning and growth lens. For example, a company’s main priority is to provide valuable skills training for its employees. The business units will be able to determine what activities they’ll need to do to support this priority.

Level 3: Functional Level

For this strategy, the elements involved are the departments and their day-to-day activities to support corporate initiatives. While the business unit strategy is defined by senior leadership, the functional-level strategy is produced by department heads who can help ensure that the departments execute the defined strategic elements. These individuals also make sure that the components laid out at the functional level can support both the department and corporate level strategies.

These are the main things to consider when working on functional strategies:

Aligning with the goals at the corporate level

The corporate goals set by the most senior members of an organisation are the ones that drive decision-making. When creating a strategy at the functional level, it’s imperative to align the goals with the corporate objectives. Doing so allows an organisation or company to see how the work contributes to the company’s overall success.

Understanding the most detailed measures

The measures and projects at every level of an organisation’s strategy should be extremely detailed at the functional level. The functional strategy entails checking on what a company is doing towards meeting a particular objective.

In Summary

For a company or organisation to grow, it’s wise to identify the corporate and business strategy as well as the strategy at the functional level.

A Sydney-based strategy management consulting firm, CK Partners is run by one goal: to assist senior business executives and Boards of businesses to resolve complex issues ranging from mergers and acquisitions to competitive market strategy and growth. Read more about our strategy consulting services here.