The document outlines the strategy-making hierarchy within a diversified company, identifying four critical types of strategies: corporate, business, functional unit, and operational strategies. Each type involves different management levels and focuses on aspects like performance improvement, competitive advantage, and market entry. Understanding this hierarchy is essential for effectively crafting and executing a comprehensive strategy.

1. Crafting and
Executing
Strategy: The
managerial process
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2. Chapter 3. Crafting a strategy
to achieve the objectives
Lesson 2: The Strategy Making hierarchy

3. “Corporate strategy is strategy ay the
multi-business level concerning how to
improve company performance or gain
competitive advantage by managing a
set of businesses simultaneously.”
Tricker et al.

4. A company’s strategy making hierarchy.
In diversified company, developing a fully-fledged
strategy involves four distinct type of strategy
actions and initiatives.
Each of these involves different facets of the
company’s overall strategy and requires the
participation of different types of managers.
The
Strategy
Making
hierarchy

5. A company’s strategy making hierarchy.
The pieces of a company’s strategy from top to
bottom of the strategy hierarchy should be cohesive
and mutually reinforcing fitting together like a
puzzle.
The first of the four types is a company’s Corporate
Strategy is orchestrated by the CEO, MD or Business
Owner and other managers and establishes an
overall strategy for managing a set of businesses in
a diversified, multi-business company.
The
Strategy
Making
hierarchy

6. Corporate strategy.
A company’s Corporate Strategy, regardless of type
and size, concerns how to boost the combined
performance of the set of businesses (or business
units) the company has diversified into.
It also concerns the means of capturing cross-
business synergies and turning them into
competitive advantage.
The
Strategy
Making
hierarchy

7. Corporate strategy.
A corporate strategy addresses questions such as:
What businesses to hold;
Which new markets to enter; and
How to best enter new markets.
Strategies concerns these questions involve:
Acquisitions;
Formation of strategic alliances; or
Internal development.
The
Strategy
Making
hierarchy

8. Corporate strategy.
A corporate strategy addresses questions such as:
What businesses to hold;
Which new markets to enter; and
How to best enter new markets.
Strategies concerns these questions involve:
Acquisitions;
Formation of strategic alliances; or
Internal development.
The
Strategy
Making
hierarchy

9. Business strategy.
Business Strategy is concerned with building
competitive advantage in a single business unit of a
diversified company or in a single business
company.
Business strategy is the responsibility of the CEO,
MD or Business Owner.
Business strategy also requires management and
other influential key staff in developing the strategy.
The
Strategy
Making
hierarchy

10. Functional unit strategy.
Functional Unit Strategy concerns the actions and
approaches employed in managing particular functions
within a business, such as R&D, production, finance, human
resources, sales and customer service.
For example, a company’s marketing strategy represents
the managerial plan for running the sales and marketing
part of the business.
Lead responsibility for functional strategies within a
company is normally delegated to the heads of the
respective functions.
The
Strategy
Making
hierarchy

11. Operational strategy.
Operational Strategies concerns the relatively narrow strategic
initiatives and approaches for managing key operating units,
such as plants, distribution centers, and purchasing centers.
It also concerns strategic initiates within specific operating
activities with strategic significance such as quality control,
brand management, internet sales, and materials purchasing.
Even though operating strategy is at the bottom of the strategy
making hierarchy, its importance must not be downplayed.
If a major plant fails to deliver production volume unit cost, and quality
targets can damage the company’s reputation for quality products and
undercut the achievement of the company’s profit objectives.
The
Strategy
Making
hierarchy

12. Congratulations! You’ve completed lesson 2.
Recap: In this lesson you learned that in diversified company’s,
crafting a company’s fully-fledged strategy involves four distinct
types of strategic actions and initiatives – i.e. Corporate Strategy,
Business Strategy, Functional Unit Strategy and Operational
Strategy.
Awesome work!
Now click Complete and then Next for Lesson 3.