Strategic Management

Unit - IV
Formulation of Corporate, Business, and
Functional Strategies
Learning Outcomes

After completing this lecture you should be able to:

• Realize how corporate-level strategies set the direction

for the organization
• Appreciate the role of business-level strategies in
building competitive advantage.
• Recognize the significance of functional strategies in
attaining efficiency of operations.
Corporate Level Strategies
• Corporate strategy defines the scope of the industries and
markets within which the organization competes to achieve
its purpose.
• It provides answers to the key question of where to
compete
 Should we expand, cut back, or continue our
operations unchanged?
 Should we concentrate our activities within our current
industry, or should we diversify into other industries?
 If we want to grow and expand, should we do so
through internal development or through external
acquisitions, mergers, or strategic alliances?
Corporate Level Strategies
Corporate Level Strategies
Corporate Level Strategies
Corporate Level Strategies
Ansoff Matrix
Corporate Level Strategies
Corporate Level Strategies
Corporate Level Strategies
Corporate Level Strategies
Business Level Strategies
Functional Level Strategies
Marketing
 Market development
 Product development (Includes – Brand extension)
 “Push” and “Pull” marketing strategies
 Distribution strategies
 direct
 indirect
 Pricing strategies
 penetration
 skimming
Functional Level Strategies
Finance
 financial implications of corporate and business-level
strategic options
 competitive advantage through a lower cost of funds
 attempts to maximize the financial value of a firm
 Internal sources of funds
 debt or equity
 Functional Level Strategies
Production & Operations strategy
 how and where a product or service is to be manufactured
 the level of vertical integration in the production process
 the deployment of physical resources
 relationships with suppliers
 Advanced manufacturing technology (AMT)
 the use of CAD/CAM, flexible manufacturing systems
 automatically guided vehicles, robotics
 just-in-time techniques
 mass-production system
 modular manufacturing
Functional Level Strategies
Research and Development (R&D)
R&D policies can enhance strategy implementation efforts
through:
 Product / Process Innovation
 Basic / Applied Research
 Develop Robotics or Manual - type processes
 Spend a High / Average / Low amount of money on R & D
 Perform R & D within the firm or out source
 Transferring complex technology
 Adjusting processes to local raw material
 Adapting processes to local markets
 Altering products to particular Tastes & preferences
Functional Level Strategies
Research and Development (R&D)

Leader / Pioneer

Follower / Imitator

Low-cost Producer
Functional Level Strategies

Human Resources
• work teams
• 360-degree appraisal
• diverse workforce
• organisation culture
• social / political structure
Functional Level Strategies
Logistics
• deals with the flow of products into and out of the manufacturing
process.
• Three trends related to this strategy are evident:
 centralization
 outsourcing
 use of the Internet
• Effective logistic strategy involve understanding of the following.
 Sources of raw material and components.
 Number of manufacturing locations
 Products that are made at each manufacturing location
 Modes of transportation used
 Nature of distribution facilities
 Nature of materials handling equipment under possession
 Methods ofinventory and need to own transport vehicles