Understanding the Business Strategy Hierarchy through PMI Framework
Business strategy is the backbone of any successful organization, and it begins with a clear understanding of the business strategy hierarchy. The PMI Framework is a useful tool that can help you understand the various levels of business strategy and how they relate to each other. In this article, we will explore the different levels of business strategy hierarchy and how they can be applied in your organization.
The PMI Framework divides business strategy into three levels: corporate strategy, business unit strategy, and operational strategy. Each level plays a crucial role in achieving the overall business objectives.
Corporate Strategy
Corporate strategy involves the high-level decisions that define the direction and scope of the entire organization. This level of strategy is concerned with issues such as mergers and acquisitions, diversification, and resource allocation. Corporate strategy focuses on the long-term goals of the organization and how to achieve them.
A prime example of a corporation that has successfully implemented corporate strategy is Amazon. Over the years, Amazon has taken strategic decisions to expand its business beyond just being an online marketplace, and it has become one of the world’s most valuable companies.
Business Unit Strategy
Business unit strategy focuses on a specific business unit or product line within the organization. This level of strategy is concerned with how to compete effectively in a particular market and how to achieve the objectives set within the corporate strategy.
An example of a successful business unit strategy is the case of Procter & Gamble’s (P&G) Tide detergent. P&G identified the need for a detergent that was easy to use and was compatible with the new washing machines that were becoming popular at the time. Tide was developed, launched, and marketed as a solution to this problem, and over the years, it has become a household name.
Operational Strategy
Operational strategy is concerned with how to execute the business unit strategy. It involves decisions around production processes, supply chain management, and human resource management. Operational strategy is the foundation upon which the business unit strategy and corporate strategy are built.
An example of operational strategy in action is the success story of fast-food giant, McDonald’s. McDonald’s has perfected its operational strategy over time, leading to efficient production processes, consistent quality of its products, and a seamless customer experience.
Conclusion
Understanding the business strategy hierarchy is crucial for the success of any organization. The PMI Framework is a useful tool that can help organizations understand the different levels of business strategy and how they relate to each other. Corporate strategy, business unit strategy, and operational strategy all play a crucial role in achieving the overall business objectives. Employing the right strategy at each level can help organizations navigate the ever-changing business landscape and stay ahead of the competition.
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