The document discusses the three levels of strategy in organizations: corporate level, business level, and functional level. At the corporate level, strategies deal with questions about the scope and direction of the organization. There are three types of corporate strategies: growth, portfolio, and parenting. Business level strategies focus on achieving competitive advantage in each business unit. Functional level strategies are specific to each functional area like production, marketing, finance, and human resources. All strategies across levels must be internally consistent and supportive of the organization's overall objectives.

1. MR. RONIT RAJENDRA KHARADE
(ASSISTANT PROFESSOR & TPO)
LEVELS OF STRATEGY

2. Levels of Strategy
In the strategic management process, an organization can prepare
strategies at three different levels. The focus and requirement of each
strategy will differ depending upon the level at which these strategies are
formed. The three major levels of strategy formulation are corporate,
business and functional levels. However, the corporate-level strategy is
further classified as the growth, portfolio, and parenting strategy.
However, it is absolutely essential that these strategies are internally
consistent, mutually supportive and goal-oriented.

3. Corporate level Strategy
This is the top-most level of strategy-making in an organization.
Corporate strategies usually deal with basic questions such as how to
create a value for the entire organization. Here, the top-level managers
make wide-ranging decisions concerning the scope and direction of the
organization. Specifically speaking, organizations usually make
decisions about the market or industry in which they should compete,
product diversification, merger or amalgamation, and so on. Similarly,
through corporate strategies, an organization decides about building
organizational capabilities and core competencies that may be
significant for several businesses of the firm. Corporate-level strategy
has three components: (i) growth strategy, (ii) portfolio strategy and (iii
parenting strategy. We shall discuss each of these strategies briefly.

4. Growth Strategy
Growth strategy deals with the development and accomplishment of
growth objectives. It can be further classified into concentration strategy
and diversification strategy. Concentration strategy is adopted by an
organization when the business in the existing industry is safe,
profitable, and attractive for further expansion. Now, the organization
can implement the concentration strategy through a vertical or
horizontal integration.

5. In vertical integration, the organization develops strategies to expand
within the existing industry by taking over the functions performed
earlier by the suppliers and others while the horizontal integration
involves the acquisition of additional business activities that are similar
to the existing business activities. For instance, firms may acquire
competitors' business activities to reduce the threat from competition.
On the other hand, in the diversification strategy, firms grow by
expanding their operation into new markets, by introducing new
products in the current market or by adopting both strategies. The
growth strategies are often carried out through mergers, acquisitions,
and strategic alliances.

6. Portfolio Strategy
Portfolio strategy deals with determining the portfolio of business units
for the organization. This strategy aims at constantly revising the
portfolio of business units on the basis of the risk and return. It views
each business unit as an investment for the organization. As such, it
aims to get a good return out of each investment. The purpose of a
portfolio strategy to allocate resources to those products or services that
ensure a continuous success or to those products that fetch greater
returns but with a high risk. On the whole, the portfolio strategy strives
to ensure that the collective profitability of all the businesses in the
portfolio enable the organization to attain its performance objectives
successfully.

7. Parenting Strategy
The last component of the corporate-level strategy is the parenting
strategy, which aims to allocate resources among the different business
units of the organization with an optimum efficiency, It seeks to build
organizational capabilities across the business units of the organization.
The strategy may involve, among others, identifying key factors of the
organization, determining the priority in resource allocation, ensuring a
better utilization of resources and capabilities, and coordinating the
different activities in an efficient manner.

8. Business-level Strategy
The second type of strategy is the business level strategy. It deals with
questions like how to achieve a competitive advantage in each business
in which the organization is engaged. It is concerned with the
development of the strategy for a single business organization. In the
case of a diversified business organization, the business-level strategy
means formulating a strategy for any one of the strategic business units.
Each business unit is treated as an independent unit and profit centre. It
can develop its own business-level strategy in order to successfully
compete in the market for individual products or services.

9. It focuses mostly on creating and sustaining a competitive advantage for
products through one or more distinguishing factors like the price/cost
leadership and product differentiation." For instance, factors like advanced
technology, unique product features, superior HR skills, efficient
distribution capabilities, and superior customer service and convenience
can give competitive advantage to the unit. Finally, the essence of a
competitive strategy is about being different from competitors. The
strategy involves a deliberate decision to perform differently in the market
to deliver a unique mix of values." Two important components of business
strategies are entry tactics and market position tactics. Entry tactics deal
with the timing of entering the market with a new strategy. Besides
deciding the strategy, the business unit should also decide the timing of its
strategic move in the market. It can make a proactive move in the market
by being the first to introduce the

10. Functional-level Strategy
At the functional level, specific strategies are made for the functional
activities of the organization and are usually executable within a short
period of time. Functional-level strategy may encompass production,
marketing, purchase, finance, HR, research and development, and other
similar activities of the firm. Each functional area covers several tasks.
For instance, the HR function may include tasks like recruitment,
selection and training. Here, the functional-level strategy will address
issues like whether to carry out the task, say training, through in-house
resources or to outsource these.

11. Similar issues may arise in each one of the functional areas requiring an
appropriate strategy. However, there should not be any internal
inconsistency among the various functional strategies of the organization.
Besides, the functional strategies should effectively supplement and
support the corporate and business strategies of the organization. Finally,
it is essential to ensure that all the strategies of the organization contribute
effectively to the accomplishment of the overall objectives of the
organization.