CSE 3004-N STRATEGIC AND CHANGE MANAGEMENT

Explain the three levels of business strategy within an organisation and

discuss how diversification can add value to the constituent businesses
of the organisational whole

The levels of business strategy can be classified into three levels which is
corporate level strategy, business level strategy and operational strategies
(figure 1). These levels can be estimating the scope of strategy and the
power it wields on various business and operational activities (Johnson, G.et
al, 2011).

Figure 1: level of business strategy, source from: Vadim Kotelnikov, (2014)

Corporate level strategy is analyze how to add value to the constituent

business for whole organization (Johnson, G.et al, 2011). In other hand,
corporate level strategy also takes a view at the overall scope of an
organisation. The corporate level strategy issues include geographical scope,
diversity of products or service, acquisitions of new business, and how
resources are allocated between the different elements of the organisation
(Johnson, G.et al, 2012). For Nike Inc., it believe that everybody can be an
athlete. Their gear helps promote comfort, style and mobility (Nike inc.com.
2014).
Business level strategy is regulate how an organization should compete in
each of its businesses (Johnson, G.et al, 2012). For Nike in Malaysia, it

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provide high quality goods and acceptable price for customers (Nike.com.my,
2014). Through business strategy typically overlaps with the organization’s
corporate strategy. For organizations with multiple businesses, however,
each division will have its own strategy that defines the products or services it
will offer and the customers it wants to reach.
Operational strategies is concerned about how the components of an
organization deliver effectively the corporate level and business level
strategies in term of resources, processes and people (Johnson, G.et al,
2011). For technology department of Nike, it would improve new technology
into the product such as Nike fuel.

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Diversification is a form of growth marketing strategy for an organsation

and it seeks to increase profitability through greater sales volume obtained
from new products and new markets (Johnson, G.et al, 2011). The virgin
group is a good example of diversification organization. Through
diversification can help virgin group add value to the constituent businesses.
As parental developers, Virgin Groups add value via:
The virgin’s management team have done well in identifying complacency
in the market. It is this expertise coupled with the strategy to offer more for
less that has help the Group plough through complacent business industries
Moreover, all of the business units under Virgin inherited the “Virgin”
name. The “virgin” name delivers its strategic intent and vision to be “fun”,
“innovative”, “daring” and “successful”. Through the brand enhancement and
the benefits of transferring virgin’s brand image across a diverse portfolio and
it can overcome barriers to entry.
Virgin brand and reputation has become a synonym to Richard Branson,
its founder, has more than 300 companies that carry the Virgin name. He
became public image and views of the organization and Branson became the
most important company’s advertising and promotion force. This related
diversification strategy works because all the companies share the brand,
marketing, public relations, and corporate knowledge.
Through joint venture with other organization also can add value to an
organization. For virgin group, it able to diversify and enter new markets by
establishing good partnerships. When virgin want to entry new market. But
organisation’s experience or recourses are not enough to enter market. It will
establishes joint ventures or outsources the services in order to fill the
experience gap.

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The diversification can add value and can also destroy the value of
organisation (Johnson, G.et al, 2012). Thus, the organisation should focus
not only on creating value-adding activities, but also avoiding value-destroying
activities.

Words count: 539 words

REFERENCES

Davidson, Mike. (1995) The Grand Strategist. Henry Holt & Company.
Johnson, G., Whittington, R. and Scholes, K. (2011) Exploring strategy: text
and cases. Prentice Hall.
Johnson, G., Whittington, R. and Scholes, K. (2012) Fundamental of strategy.
2nd edition. FT Prentice Hall.
Nike.com.my (2014) Available at: http://www.nike.com/my/en_gb/ [Accessed:
12 March 2014].
Nikeinc.com. (2014) Available at: http://nikeinc.com/ [Accessed: 12 March
2014].

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