Describe the Three Levels of Strategy for a Single Business Company

At its most fundamental level, strategy is a management plan geared towards achieving a set of business goals. For single business companies, there are three levels of strategy that together form a map to achieving sustained success. These are corporate strategy – big-picture management decisions that effect the entire organization; divisional strategy – decisions limited to achieving the goals of specific business units; and functional strategy – decisions relating to marketing, finance and operational performance.

Single business companies by their nature are vulnerable to market fluctuations, competitor action and evolving consumer expectations as they compete for market share. Corporate strategy examines the company’s current market position and seeks to optimize operations, profitability and growth by weighing the risks and rewards of diversifying into new markets and establishing additional revenue streams against the projected benefits and limitations of remaining focused on a single market.

Sometimes called business strategy or business unit strategy, the second level of single business strategy is concerned with directing the divisions within the organization. For example, your sales strategy may evaluate the activities of your competitors in conjunction with market demand to set a strategic price point. Likewise, your research and development strategy may be aimed at increasing product differentiation. It’s important, however, that divisional strategies work in concert with the overall corporate strategy in order to achieve organizational goals.

Some business units wield a significant effect on your overall corporate strategy. These often are grouped together under the banner of functional strategy. Marketing, for example, holds influence over how various divisional strategies are applied. A strong marketing strategy may reveal important insights into specific customer needs in your segment. These insights will in turn inform other divisional strategies such as product development, advertising and customer service as they endeavor to apply divisional strategies geared towards fulfilling customer needs.

Good planning is everything when it comes to composing effective business strategies. Resist basing your planning decisions on untested assumptions and avoid using unnecessary jargon to cloud uncertainty – simple, clear and to-the-point is always best. Don’t be afraid to break away from standard strategy templates when your unique business needs require a more creative solution, and encourage, rather than quash, internal debate about the direction the organization should be headed and the best way to get there.