Topic 1 Levels of Strategy Flashcards
The focal point of strategy formulation is the CHOICE OF THE STRATEGY that the company deems would lead to the achievement of its goals and lead it to competitive advantage. It depends on:
- the vision, mission and objectives set by the company;
- the environmental scan performed with the list of strengths, weaknesses, opportunities and threats.
True or False
True
This term has been defined as a set of competitive moves created by management to achieve organizational goals.
Strategy
There are three levels of strategy:
Corporate level
Business level
Functional level
At this level, strategy is formulated for your organization as a whole.
Corporate level
Corporate strategy deals with decisions related to various business areas in which the firm operates and competes. As such it answers the question: Where do we compete or What businesses do we set up?
True or False
True
At the level, strategy is formulated to convert the corporate vision into reality.
Business unit level
This strategy answers the question: How do we compete in our chosen businesses?
Business strategy
At this level, strategy is formulated to realize the business unit level goals and objectives using the strengths and capabilities of your organization.
Functional level
There is a clear hierarchy in levels of strategy, with corporate level strategy at the top, business level strategy being derived from the corporate level, and the functional level strategy being formulated out of the business level strategy.
True or False
True
If a firm is a single business, that is, it operates in only one industry or business, the corporate and business level responsibilities are considered one and the same; and undertaken by a single group, that is, the top management.
True or False
True
Whereas in a diversified business firm (where there are many business units), corporate strategy is done at the top level and business strategy is done at the business unit levels.
True or False
True
Example of a single business firm would be McDonald’s Food Corporation which operates only in the food business.
An example of diversified business firm would include the SM group of companies which operates in realty (SM Development Corp), retail (SM City Malls); and education (National University).
This defines the business areas in which your firm will operate. It deals with aligning the resource deployments across a diverse set of business areas, related or unrelated.
Corporate Strategy
Corporate Strategy
Strategy formulation at this level involves integrating and managing the diverse businesses and realizing synergy at the corporate level.
True or False
True
The _____ ______ team is responsible for formulating the corporate strategy.
Top management
The _______ ______ reflects the path toward attaining the vision of your organization. For example, your firm may have four distinct lines of business operations, namely, processed meat, alcoholic drinks, softdrinks, and snacks.
corporate strategy
The corporate level strategy will outline whether the organization should compete in or withdraw from each of these lines of businesses, and in which business unit, investments should be increased, in line with the vision of your firm.
True or False
True
This is formulated for specific strategic business units and relate to a distinct product-market area.
Business strategy
It involves defining the competitive position of a strategic business unit.
The business level strategy formulation is based upon the generic strategies of __________ , __________, and _____
overall cost leadership, differentiation and focus
For example, your firm may choose overall cost leadership as a strategy to be pursued in its snack business, differentiation in its alcoholic beverages and softdrink businesses, and focus in its processed meat business.
Business strategy
The business level strategies are decided upon by the __________ and their ____ in light of the specific nature of the industry in which they operate.
heads of strategic business units and their teams
This relates to the different functional areas which a strategic business unit has, such as marketing, production and operations, finance, and human resources.
Functional Strategy
These strategies are formulated by the ______ _____ along with their _____ and are _____ with the business level strategies.
functional heads along with their teams
aligned
The strategies at the functional level involve setting up _______ _____ ______ _____, the attainment of which will lead to the realization of the business level strategy.
short-term functional objectives,
