a)

Strategic management is the ongoing planning, monitoring, analysis and assessment of all

necessities an organization needs to meet its goals and objectives. Changes in business
environments will require organizations to constantly assess their strategies for success.
Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”.

The foundation of every action that is made or taken in an organization is Strategy. Once top
management goes ahead to make an important decision in the organization, this will affect all the
underlying departments involved thus the employee’s effectiveness is pretty much affected in all
departments.
There are three forms or types of strategies and these are; Corporate Level Strategy, Business
Unit Level Strategy and lastly Functional/ Departmental Level Strategy.

Corporate Level Strategy: Corporate strategy is a type of strategy in strategic management. It

draws up at the top level by the senior management of a diversified company however,
management must not only consider how to gain a competitive advantage in each of the line of
businesses the firm is operating in, but also which businesses they should be in in the first place.
It is about selecting an optimal set of businesses and determining how they should be integrated
into a corporate whole: a portfolio. Typically, major investment and divestment decisions are
made at this level by top management. Mergers and Acquisitions (M&A) is also an important
part of corporate strategy. This level of strategy is only necessary when the company operates in
two or more business areas through different business units with different business-level
strategies that need to be aligned to form an internally consistent corporate-level strategy. That is
why corporate strategy is often not seen in small-medium enterprises (SME’s), but in
multinational enterprises (MNE’s) or conglomerates
In Summary Corporate strategy;
 Defines the business areas in which your firm will operate.
 Involves integrating and managing the diverse businesses and realizing synergy at the
corporate level.
 Top management team is responsible

Business Level Strategy: Business strategy is formulated at the business-unit level. It is

popularly known as the ‘business-unit strategy.Business level strategies are formulated for
specific strategic business units and relate to a distinct product-market area. It involves defining
the competitive position of a strategic business unit. The business level strategy formulation is
based upon the generic strategies of overall cost leadership, differentiation, and focus. The
Business-level strategy is what most people are familiar with and is about the question “How do
we compete?”, “How do we gain (a sustainable) competitive advantage over rivals?”. In order to
answer these questions, it is important to first have a good understanding of a business and its
external environment. At this level, we can use internal analysis frameworks like the Value
Chain Analysis and the VRIO Model and external analysis frameworks like Porter’s Five
Forces and PESTEL Analysis. When good strategic analysis has been done, top management can
move on to strategy formulation by using frameworks as the Value Disciplines, Blue Ocean
Strategy and Porter’s Generic Strategies. In the end, the business-level strategy is aimed at
gaining a competitive advantage by offering true value for customers while being a unique and
hard-to-imitate player within the competitive landscape.
Business Level Strategy:
 Involves defining the competitive position of a strategic business unit.
 Decided upon by the heads of strategic business units and their teams.

Functional Level Strategy: A functional strategy refers to an approach that points up a

particular functional area of an organization, in order to achieve some of the objectives of a
business unit by maximizing resource productivity. Some books also refer to functional strategy
names departmental strategy since each business function frequently devolves with a section.
Examples of functional strategy comprise production strategy, marketing strategy, human
resource strategy, and financial strategy.
At the level of operating divisions and departments, functional strategies focus on business
processes and value chains. J. D. Hunger & T. L. Wheelen. Functional level strategies relate to
the different functional areas which a strategic business unit has, such as marketing, production
and operations, finance, and human resources.
Functional-level strategy is concerned with the question “How do we support the business-level
strategy within functional departments, such as Marketing, HR, Production and R&D?
The functional strategy is concerned with developing the right stuff to provide a business unit
with a competitive advantage. Each business unit has its own set of departments, and every
department has a functional strategy. Functional strategies adapt to support a competitive
strategy. For example, a company following a low-cost competitive strategy needs a production
strategy. It insists on reducing cost operation and also a human resource strategy.
Furthermore, It insists on retaining the lowest possible number of employees. These employees
are highly qualified to work for the organization. Other functional strategies such as marketing
strategy, advertising strategy, and financial strategy must also be formulated to support
the business-level competitive strategy.
The organizational plans become more and more detailed. Likewise, it becomes specific when
managers move from corporate business to functional-level strategies.

Functional-level strategy
Functional-level strategy is concerned with the question “How do we support the business-level
strategy within functional departments, such as Marketing, HR, Production and R&D?”. These
strategies are often aimed at improving the effectiveness of a company’s operations within
departments. Within these department, workers often refer to their ‘Marketing Strategy’, ‘Human
Resource Strategy’ or ‘R&D Strategy’. The goal is to align these strategies as much as possible
with the greater business strategy. If the business strategy is for example aimed at offering
products to students and young adults, the marketing department should target these people as
accurately as possible through their marketing campaigns by choosing the right (social) media
channels. Technically, these decisions are very operational in nature and are therefore NOT part
of strategy. As a consequence, it is better to call them tactics instead of strategies.

Functional Level Strategy:

 Formulated by the functional heads along with their teams.
 Involve setting up short-term functional objectives.
b)
The strategy adopted by a firm, for the purpose of evaluation as to its
effectiveness, should be judged against the following criteria and allied
aspects:- 1. Functional Evidence 2. Realism and Practicality 3.
Consistency in Direction 4. Assumptions Validity 5. Contingencies
Recognition 6. Appropriateness.

Criteria # 1. Functional Evidence:

(i) What are the performance indicators—quantitative and qualitative
—identified for scrutiny?

(ii) How are these examined to gain an estimation of

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a. The company’s current position in relation to its competitors’

performance?

b. The company’s current position with respect to its own strategic

plan?

c. The company’s performance trends? Any early warning indicators

providing visibility over unfavourable performance trends that have
yet to impact overall financial results?

d. Degree to which short and long-term goals and objectives are being
met?

Criteria # 2. Realism and Practicality:

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(i) Is strategy realistic with respect to the company’s ability to carry it

out?

(ii) Is strategy built on proven strengths?

(iii) Does it recognise any real or potential weaknesses or deficiencies

in strategy formulation stage?
(iv) Have the resources required to implement the strategy, including
capital/human/ physical/technological, have been identified? Has
assessment been made of their availability?

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(v) Does the strategy incorporate reallocation scheme of resource

requirements? If so, what are the criteria set?

Criteria # 3. Consistency in Direction:

(i) Are the three elements—objectives and goals, policies, and major
programmes— clearly defined?

(ii) Are they internally consistent from the twin aspects of—integration
of plans, and plans implementation?

[For example, review of plans for analytic consistency, review of plans

to pinpoint strategic issues, methodology for resource allocation,
trade-offs between short and long- term results, feedback on
objectives and strategy, management selection linked to strategic task,
linkage of strategic priorities with budgets, etc.]

Criteria # 4. Assumptions Validity:

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(i) Have all important trends and impacts been identified and critically
estimated?

(ii) Are the assumptions consistent with external data? If not, are
inconsistencies ascertained and justified?

(iii) Are all data consistent and integrated with all planning activities?
Does everyone make decisions on the basis of same data base?

(iv) Are critical assumptions (viz., economic, environment, technology,

competition, etc.) appropriately revised?

Criteria # 5. Contingencies Recognition:

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(i) Have the key contingencies been recognised as each decision is

subject to some probability (right or wrong)?

(ii) How the impact of one or more contingent events on strategic

assumptions been assessed?

(iii) Are alternative scenarios developed on the basis of the

contingency plan in relation to strategic assumptions?

Criteria # 6. Appropriateness:

(i) Is the strategy consistent with management styles, values, and risk
preferences?

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(ii) Is the organisation structured to attain strategic objectives?

(iii) Do management systems and processes (that is planning,

budgeting and reporting systems, etc.) support overall strategies
direction and key programmes?

(iv) Is there an appropriate balance between preparing for the future

and maximising the present?

(v) Is there a consensus within the company as to strategy?