Strategy: Meaning, Pyramids, & Relevant KPIs

Corporate Level Strategy

This is the highest pyramid of strategy within an organization. It is concerned with the top management’s overall strategic plan and direction for the organization. At this level, a set of actions are undertaken to enhance the organization’s market potential. Generally, corporate strategy is designed to accomplish synergy across strategic business units, such that, each business unit would have a common characteristics, corporate values, culture, brand, and processes.

However, when developing corporate strategy, the chief executive officer (CEO) should lead the process while other senior management team participate effectively. To achieve a beneficial outcome, the CEO should, inter alia:

• Get the inputs or contributions from the board
• Communicate effectively
• Create a competitive working environment that motivate and allow team to develop creative and innovative ideas to solve business problems, and succeed independently
• Design and monitor performance
• Ensure effective implementation of the strategic plans companywide
• Review and measure actual results with the plans.

In developing corporate strategy, focus is on the company’s long-term goals and objectives including:

• Setting the company’s mission, vision, and values
• Determining how the company can increase its market value through merger & acquisitions (M&A) or other forms of business combination
• Carrying out viable investment opportunities or divest from non-profitable venture
• Developing strategy that seeks to increase company’s value through diversification into new products and markets
• Working to maintain current position in the market, especially during the period of uncertainty or when the business is experiencing static growth.

Business Level Strategy

At this level, strategy is designed principally to create companywide value to achieve competitive advantage. It focuses on how a firm can compete favourably in the market to achieve its intended goals of creating values for the owners, customers, suppliers, employees, and other stakeholder group.

Business level strategy involves allocation of limited scarce resources among competing functional level to achieve the overall corporate objectives. These resources, including people, technology, financial, tangible, and intangible assets, are limited in supply and must, therefore, be allocated judiciously to achieve optimal results.

Usually, business level strategy is designed principally to consider the elements that will have far-reaching effect on the business success, including:

• market segmentation
• product differentiation
• pricing
• technological innovations
• marketing campaigns
• risk management, etc.

For this purpose, the deep understanding of the business and the industry dynamics are requisite recipe to achieve the intended goals and outshine competition.

Functional Level Strategy

Also known as departmental strategy, are designed to improve the effectiveness of operations within an organization, focusing on resource utilization and efficiency. It involves the contributions of all various functions or departments including finance, marketing, manufacturing, human resources, logistics, etc. within an organization to the business and corporate strategies. Each functional units must align their separate objectives with the overall corporate objectives to achieve goal congruence.