Exploring the Three Levels of Business Strategy: Which Level is Right for Your Company?

Exploring the Three Levels of Business Strategy: Which Level is Right for Your Company?

As businesses grow, they face different challenges that require strategic planning to overcome. That’s why it’s important to understand the different levels of business strategy and determine which level is right for your company. In this article, we’ll explore the three levels of business strategy and provide examples to help you make an informed decision.

First Level: Corporate Level Strategy
The corporate level strategy is the highest level of strategy in a company’s organizational structure. It involves making decisions that affect the entire organization and align with the company’s mission, vision, and core values. The corporate level strategy determines the portfolio of businesses a company will operate, financing arrangements, and resources allocation.

For instance, Alphabet, Google’s parent company, has a corporate level strategy that involves diversifying into different industries, such as healthcare, biotechnology, and self-driving cars. This allows them to grow the business while exploring new opportunities that align with their core mission of organizing the world’s information.

Second Level: Business Level Strategy
The business level strategy involves making decisions that determine how a company will compete in a specific market segment. It’s concerned with the company’s value proposition, competitive advantage, market position, and operations. The business level strategy is more focused on a particular business unit’s operations and how to grow that business in a sustainable way.

For example, Apple’s business level strategy is to differentiate its products through design, innovation, and customer experience. This allows them to charge premium prices and maintain a loyal customer base, despite facing intense competition in the technology industry.

Third Level: Functional Level Strategy
The functional level strategy focuses on the specific activities and operations that support the business level strategy. It determines how each department within the organization will contribute to achieving the business level strategy. The functional level strategy includes marketing, research and development, production, and human resources.

For instance, Amazon’s functional level strategy involves providing excellent customer service, fast delivery, and a vast selection of products. This is achieved through efficient supply chain management, innovative technologies, and a highly engaged workforce.

Choosing the Right Level of Strategy for Your Company
To determine which level of strategy is right for your company, you need to consider several factors, such as your goals, resources, competitive position, and industry dynamics. It’s essential to align your strategy with your company’s mission, vision, and core values.

Corporate level strategy is ideal if you’re planning to diversify into new industries or want to allocate resources across your portfolio of businesses. Business level strategy is suitable if you’re looking to gain a competitive advantage in a particular market segment. Functional level strategy is ideal if you want to improve the efficiency and effectiveness of your operations.

Conclusion
In conclusion, understanding the three levels of business strategy is crucial in making informed decisions that align with your company’s goals and objectives. The corporate level strategy determines the portfolio of businesses a company will operate, the business level strategy determines how a company will compete in a specific market segment, and the functional level strategy determines how each department will support the business level strategy. By choosing the right level of strategy, your company can grow and thrive in a competitive business environment.