SUBJECT: STRATEGIC MANAGEMENT

LEARNING ACTIVITY SHEET NO. 5

TOPIC: The Levels of Strategy and its approaches

The final perspective on the focus of strategy is the distinction between levels of strategy. There are 3
primary levels of strategy to be considered namely: corporate strategy, business strategy and
functional strategy.

Corporate strategy – is the course charted for the total organization. It attempts to specify what set of
businesses the organization intends to be in. hence, corporate strategy is primarily concerned with the
scope and resource deployment components of strategy. To illustrate corporate strategy, consider the
case of Eastman Kodak. Because of rapidly changing technologies and consumer tastes, Kodak has in
recent years begun to branch out into a variety of other areas. In addition to cameras and cameras
supplies, Kodak has expanded into consumer electronics, copiers and electronic office equipment and
floppy disks and has started to buy firms such as Eikonex Corporation a manufacturer of digital image
processing equipment and Garlic Technology a developer of advanced digital magnetic recording heads
for disk drives. The set of decisions regarding which new businesses to sell represents Kodak’s corporate
strategy. This strategy focuses specifically on the dominant approaches. Most attention will be directed
at what is called the business portfolio matrix approach to strategy. This approach to corporate strategy
began at General Electric and was eventually developed into a complete framework by the Boston
Consulting Group.

Business Strategy – whereas corporate strategy focuses on what businesses the company should be in,
formulating the business strategy involves determining how best to compete in a particular market or
industry. That is, it is concerned with the strategies for each unit or business within the corporation.
Thus, Kodak has a corporate strategy, but it also has a business strategy for each of its different
businesses. For example, the film division is presently concentrating or regaining market share it lost to
Fuji Photo Co. of Japan. One element of this effort has been outbid the Japanese firm for the official film
rights for the 1988 Olympic games in Seoul, South Korea. Business strategy then, is focused less on
scope and resource deployment than on competitive advantage and synergy. Managers and researchers
have also worked extensively at developing effective approaches to this business level strategy like the
adaptation model. This argues that the basic task of strategic management is to maintain effective
alignment with the organization’s environment while also managing internal interdependencies. That is
the business should attempt to match its mission and goals with opportunities and threats in the
environment like the problems of management that determine the adaptation process such as;
entrepreneurial, engineering and administrative problems.

Functional strategy – is one developed for a major functional area such as marketing or finance within a
particular business. Kodak for example, is marketing Kodak videotape made in Japan by TDK Electronics.
This is an example of a production strategy, since an alternative would have been to produce the
videotape domestically. At the general level, the formulation implementation cycle starts at the
corporate level, then follows systematically across the business and functional level. Of course, the
process, is considerably more complex and dynamic than the one that represent the general nature of
strategic planning. For many organizations, marketing strategy is the most functional because it usually
reflects the company’s overall strategy. Example 7-eleven convenience stores on corner sites, pushing
into gasoline retailing when the major oil companies were cutting back and being among the first to
introduce video games and fast foods in its stores. Each of these actions was designed to satisfy specific
consumer needs and was taken a step before the competitors. Promoting itself as a one stop
convenience outlet the company have a sales increase.

REVIEW QUESTIONS:

1. Identify barriers to effective planning and ways to overcome them.

2. Distinguish the three Levels of Strategy.

3. Discuss the organization and environments of a firm.

PREPARED BY: PROF MADELENE S ABSALON