LEVELS OF STRATEGY

there are three levels of a strategies for a business organization. Namely corporate strategy, tactical strategy, and operational strategy. This are based on various levels of decision making corporate strategies for top level, tactical strategies for middle level, and operational strategies for lower level.

Corporate Strategy

• This embraces the overall scope of the organisation, its operation in structural or financial terms, and the allocation of its resources throughout its various business or divisions.
• This level involves senior management in determining the key activities of the company in terms of the nature and extent of the product markets in which it will operate.

At this level the strategic planner has to look ahead and decide which businesses the company will be involved in for the future. For example, at the corporate level a transport company will need to decide which markets it will operate in:

1. Will they consider only road transport and, if so, will it be in the public or commercial areas?

2. Will they also want to be involved in rail transport and, if so, will they want to be innovative and consider light rail or monorail methods of travel?

3. They may also need to consider diversification and integration with other operators. Strategic decisions with regard to finance will concern the overall financial structure of the

company, including the nature and number of strategic business units (SBUs) which will be established. Finally, strategic planning at the corporate level has to take account of the expectations of the company's shareholders and others who have an interest in it such as financial houses, employees, etc. These are the company's stakeholders.

Business Strategy

• This deals with the competitive position of the specific SBUs or divisions with respect to those products or services which should be developed and the markets towards which they should be aimed.
• Decisions taken at this level include deciding between cost leadership, differentiation, and focus.
• Having decided upon the core competitive strategy, decisions then have to be made as to whether the particular strategy selected will be pursued alone or, for example, in partnership within a strategic alliance.

Operational Strategy

• This third level of strategy is concerned with specific functions within the organisation, such as marketing or finance, and the contribution which these make to the other strategic levels.

For example, operational strategies for marketing would include strategies for segmentation and targeting and strategic decisions for each of the elements of the marketing mix, i.e. product, price, place and promotion.

• There is considerable overlap between the three different levels of strategy, although they are effectively a hierarchy.
• Corporate strategies first help to delineate and then to constrain business unit strategies, which in their turn help to delineate operational strategies, so they all need to be consistent with one another.
• Operational strategies must be relied upon to deliver the corporate and business level strategies.
• This vital integration between the three strategy levels is dependent upon effective communication between management at the different levels within the organization