Functional Strategy Flashcards
What is Functional Strategy?
Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It is concerned with developing and nurturing a distinctive competence to provide a company or business unit with a competitive advantage. Just as a multidivisional corporation has
several business units, each with its own business strategy, each business unit has its own set of departments, each with its own functional strategy.
Marketing Strategy
Marketing strategy deals with pricing, selling, and distributing a product. Using a market
development strategy, a company or business unit can (1) capture a larger share of an existing market for current products through market saturation and market penetration or (2) develop new uses and/or markets for current products.
Financial Strategy
Financial strategy examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action. It can also provide competitive advantage through a lower cost of funds and a flexible ability to raise capital to support a business strategy. Financial strategy usually attempts to maximize the financial value of a firm.
Research and Development Strategy
R&D strategy deals with product and process innovation and improvement. It also deals with the appropriate mix of different types of R&D (basic, product, or process)
and with the question of how new technology should be accessed—through internal development, external acquisition, or strategic alliances.
Operations Strategy
Operations strategy determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers. It should also deal with the optimum
level of technology the firm should use in its operations processes.
Purchasing Strategy
Purchasing strategy deals with obtaining the raw materials, parts, and supplies needed to perform the operations function.
Logistics Strategy
Logistics strategy deals with the flow of products into and out of the manufacturing process. Three trends related to this strategy are evident: centralization, outsourcing, and the use of the Internet.
Human Resource Management Strategy
HRM strategy, among many other things, addresses issues that range from whether a company or business unit should hire a large number of low-skilled employees who receive low pay, perform repetitive jobs, and will most likely quit after a short time (the fast-food restaurant strategy) to whether they should hire skilled
employees who receive relatively high pay and are cross-trained to participate in self-managing work teams.
Information Technology Strategy
Corporations have always used an information technology strategy to provide their business units with competitive advantage.
