In our second post on unwrapping what strategy really is, we take a look into the different levels of strategy. Time and time again, organizations we work with get hung up on what the essence of what strategy really is.
To lay the ground work on creating a good strategy, it is important to understand what it is first and foremost. As a leader, one must first ask the question, “how will we succeed?” in order to lay the ground work for creating a great strategy. Your strategies are the general methods you intend to use to reach your vision. No matter what the level, a strategy answers the question “how.” Your intended outcome is to have the general, umbrella methods you intend to use to reach your vision established. There are six total “strategy” questions all good leaders must answer.
- Why do we exist?
- How will we behave?
- Where are we going?
- How will we succeed?
- What is most important right “now”
For now, we will focus on “how we will succeed.” With that in mind, nothing “strategy” would be complete without starting with the basis from Michael Porter. He writes, “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” It’s a good litmus test to ask, “Have we done a good job answering the question how we will succeed?” Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. We certainly can’t answer the question of how we will succeed if we don’t think we are being different and unique and delivering value, and then of course being specific and clear and making hard choices. That is the kernel of good strategy and our basis from the guru of strategy.
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It’s always smart to start with an example of what good looks like. This organization-wide strategy statement from Edward Jones is a great example. It reads, “To grow to 17,000 financial advisors by 2012 by offering trusted and convenient face-to-face financial advice to conservative individual investors who delegate their financial decisions through a national network of one-on-one financial advisor offices.”
In our next post we will get into the details on the levels, but for now here is a top level view. The three levels of strategy are:
- Corporate level strategy: This level answers the foundational question of what you want to achieve. Is it growth, stability, or retrenchment?
- Business unit level strategy: This level focuses on how you’re going to compete. Will it be through customer intimacy, product or service leadership, or lowest total cost? What’s the differentiation based on?
- Market level strategy: This strategy level focuses on how you’re going to grow. Will it be through market penetration, market development, product or service development, or diversification?
In our next post we will be going into detail on the three levels of strategy, so stay tuned!
FAQs
These three levels are: Corporate-level strategy, Business-level strategy and Functional-level strategy. Together, these three levels of strategy can be illustrated in a so called 'Strategy Pyramid' (Figure 1). Corporate strategy is different from Business strategy and Functional strategy.
What are the three levels of strategy? ›
These three levels are: Corporate-level strategy, Business-level strategy and Functional-level strategy. Together, these three levels of strategy can be illustrated in a so called 'Strategy Pyramid' (Figure 1). Corporate strategy is different from Business strategy and Functional strategy.
What are the three 3 main components or stages of strategic management? ›
The strategic-management process consists of three stages: strategy formulation, strategy implementation, and strategy evaluation.
What are the three 3 steps in the process of the strategy? ›
How to follow the three-step strategy process
- Establish a comprehensive set of goals. The first step in the three-step strategic process is to establish a set of goals. ...
- Analyze the situation and make plans. ...
- Execute, monitor and adjust as needed.
Strategy can be formulated at three levels - corporate, business, and functional. Corporate strategy defines the business areas and aligns resource deployment. Business strategy establishes the competitive position for each business unit.
What are the 3 basic strategies? ›
Strategies are like smart plans that guide businesses toward success. There are various types of strategies that work together. We have three major business strategies in business, i.e., Corporate, Business and Functional. Corporate strategy is the big plan for the whole company, deciding what industries to be in.
What are the three 3 different levels of strategic decisions? ›
Strategists often refer to three levels of strategy: corporate level strategy, business level strategy, and functional level strategy.
What are the 3 basic model of strategic management? ›
What Are The Various Models Of Strategic Management?
- SWOT Analysis Model. A basic model of strategic management, SWOT stands for Strengths, Weaknesses, Opportunities and Threats. ...
- PEST Model. ...
- Porter's Five Forces Model.
SWOT analysis:
- Strengths – strengths of an organization are the positive areas that help it to grow consistently. ...
- Weaknesses – where there are strengths, there are also weaknesses. ...
- Threats – there are various factors that affect an organization, but they are mostly predictable too.
The characteristics of strategic decisions are- 1. Long-term direction 2. Entire scope of organization activities 3. Seek to achieve advantage over competitors 4.
There are three major types of planning, which include operational, tactical and strategic planning. A fourth type of planning, known as contingency planning, is an alternative course of action, which can be implemented if and when an original plan fails to produce the anticipated result.
What is the 3 by 3 strategy? ›
Instead of trying to do a dozen things poorly, the 3x3 Rule encourages you to focus on just three tasks and excel at them. This shift in mindset leads to better results. To reap the benefits of the 3x3 Rule, you must apply it consistently.
What are the three process strategies? ›
(a) The process strategies are: (i) process focus (ii) repetitive focus and (iii) product focus. Each of these three strategies are discussed below: (i) Process Focus: Majority (about 75 per cent) of global production is devoted to low volume, high variety products in manufacturing facilities called job shops.
What are the three strategic steps? ›
Successful strategic management involves three steps: Planning, Execution and Monitoring Developments & Progress. With strategic management, actions speak louder than words.
What are the 3 stages of strategic management explain each? ›
Strategic management involves three main stages: strategy formulation, strategy implementation, and strategy evaluation and control. Strategy formulation is the process of establishing an organization's mission, objectives, and choosing strategies.
What are the three levels of strategy explained? ›
Corporate strategy focuses on the organization as a whole, while business unit strategy focuses on an individual business unit or market. Finally, team strategy identifies how a team will help the organization to meet its overall goals and objectives.
What are the 3 parts of strategic choice? ›
To stay on top, the author contends, today's company has to look carefully at three key strategic choices: mission, financial policy, and business unit process.
What are the three principles of strategy? ›
At its most basic level, a strategy is a hypothesis. To be a good strategy, it must precisely diagnose the problem being solved; set a guiding policy that will address that problem; and propose a set of coherent actions which will deliver that policy.
What are the three key elements of strategy? ›
Strategy is comprised of three parts: Vision, Goals, and Initiatives: Vision describes who the customers are, what customers need, and how you plan to deliver a unique offering.
What are the key levels strategy? ›
Key level strategy is the combination traditional supply demand and market structure, market cycle theory. Meanwhile, smart money concepts is a speical case of key level strategy when market showed a strong liquidity with a clearly foot-print to follow a strong flow.
