Understanding the Hierarchy of Business Strategy with PMI Approach

The Hierarchy of Business Strategy is a concept in project management that defines the various levels of strategies within an organization. These levels are interconnected and interdependent, with each level building on the one below it. The PMI (Project Management Institute) approach to business strategy is a framework that organizations can use to align their projects and programs with their overall business objectives.

At the top of the hierarchy is the Corporate Strategy, which outlines the organization’s overall goals and objectives. Corporate Strategy is developed by top management and is often long-term in nature. It sets the direction for the organization and provides guidance for the development of the lower level strategies.

The Business Unit Strategy sits below the Corporate Strategy and defines how the organization will compete in the market. It focuses on the specific business unit or product and defines the key objectives and goals for that unit. Business Unit Strategy is also developed by top management, but with input from the middle management team.

The Functional Strategy sits below the Business Unit Strategy and defines how the organization’s resources will be utilized to support the Business Unit Strategy. It focuses on the specific functions within the organization, such as marketing, HR, or operations. Functional Strategy is developed by middle management and provides guidance to the lower level teams.

Finally, at the bottom of the hierarchy are the Operational Strategies. These are the day-to-day strategies that govern the operations of the organization. Operational Strategies focus on specific tasks and processes and are developed by lower-level teams.

The PMI approach provides a framework for organizations to align their projects and programs with the various levels of the Hierarchy of Business Strategy. It involves identifying the strategic objectives at each level and ensuring that projects and programs are developed to support these objectives. By aligning their projects with their overall business objectives, organizations can ensure that they are meeting their strategic goals and objectives and maximizing the value of their resources.

For example, a company that produces software products may have a Corporate Strategy of expanding into new markets. Their Business Unit Strategy may focus on developing new products for specific market segments, and their Functional Strategy may focus on increasing their marketing efforts in these markets. At the Operational level, they may have projects focused on developing specific features for their products or improving their customer support.

In conclusion, understanding the Hierarchy of Business Strategy and how it relates to the PMI approach is critical for organizations that want to achieve their strategic goals and objectives. By aligning their projects and programs with their overall business objectives, organizations can ensure that they are maximizing their resources and optimizing their project outcomes.