Levels of Strategic Decisions

The main hierarchical levels of strategy planning are the below 3:

1. Corporate level
2. Business level 
3. Functional level 

The company gets its direction from the managers at the corporate level. They act as captains guiding the organization and helping it stand up to the challenges of the dynamic business environment. Managers at the business level are responsible for giving shape to the corporate managers’ vision. At the third level, that is, the functional level, are the managers who transform the vision into reality . The contribution made by the managers at all three levels is important.

Corporate-level strategic are aimed at optimum utilization of the company’s competencies in the long term. Decisions made by the managers at corporate level keep in mind the interests of the stakeholders and the society. These strategies ’ mainly concern the choice of operational areas for the company’s business. At this level. strategies are designed with the objectives of the organization in mind. These strategies directly influence the way harmony is maintained in business and the way the business is managed on the whole will be integrated and managed. It also impacts the way resources are managed and shared and also the manner in which financial resources are invested m the various units.

Business-level strategies involve decisions about the competitive advantage of a single business unit. At this level, the managers form functional objectives and individual strategies for the business divisions on the basis of the general statements of corporate strategic planners. The business-level managers determine the basis of the company’s competitive advantage in a particular product or market area. Their goal is to select the most profitable segment and enter it. They also aim to grow in the segment that has the highest potential for growth. In short, this strategy is concerned with the cost-leadership, differentiation and focus strategies to ensure an edge over competition.

Functional-level strategies consist of short-term strategies with fixed annual objectives in research and development; finance and accounting; marketing; and human resource. Functional-level managers are concerned with problems related to the efficiency and effectiveness of production, success of particular products and services in increasing their market share and quality of customer service. The functional objectives are operational and can be quantified. Depending on the requirements and functioning of the business, the functional objectives can be changed or modified. Risk involved in functional strategies is not very high as the cost of failure is small.