Level of Strategy

Level of Strategy

Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a "mission statement".

Business Strategy - is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.

Operational Strategy - is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.

Choosing an Organizational Form

Choosing an Organizational Form

In general, the functional form is apt to be the organizational form of choice for projects where the major focus must be on the in-depth application of a technology rather than, on minimizing cost, meeting a specific schedule, or achieving speedy response to change. Also, the functional form is preferred for projects that will require large capital investments in equipment or buildings of a type normally used by the function.

If the firm engages in a large number of similar projects (e.g., construction projects), the pure project form of organization is preferred. The same form would generally be used for one-time, highly specific, unique tasks that require careful control and are not appropriate for a single functional area—the development of a new product line, for instance.

When the project requires the integration of inputs from several functional areas and involves reasonably sophisticated technology, but does not require all the technical specialists to work for the project on a full-time basis, the matrix organization is the only satisfactory solution. This is particularly true when several such projects must share technical experts. But matrix organizations are complex and present a difficult challenge for the PM.

Types of Project Organization

Types of Project Organization

There are three major organizational forms to house projects in the parent organization.

1. Functional organization
2. Pure Project organization
3. Matrix organization

Functional organization 

Functional organizations are those that are subdivided into functional units, i.e. marketing unit, finance unit, HR unit etc. For Functionally organization projects, the project is assigned to the Functional unit that has the most interest in ensuing its success or can be most helpful in implementing it.

Pure Project Organization

Pure project organizations are those the project is separated from the rest of the parent system.  It becomes a self-contained unit with its own technical staff, its administration, tied to the parent firm by the tenuous strands of periodic progress reports and oversight.

Some parent organizations prescribe administrative, financial, personnel and control procedures in detail. Others allow the project total freedom within the final accountability.

The Matrix Organization

The matrix organization is a combination of the functional and project organization. A matrix organization can take on a wide variety of specific forms, depending on which of the two extremes (functional or pure project).

• The strong matrix resembles the pure project organization
• The weak matrix resembles functional organization.
• Balanced matrix lies in the middle of the two extremes.
• The matrix is not separated from its parent organization

Functions of Strategic Management

Functions of Strategic Management

Strategic Management performs the following functions:

1. It provides a dual approach to problem solving. Firstly, it exploits the most effective means to overcome difficulties and face competition. Secondly, it assists ill the deployment of scarce resources among critical activities.

2. It focuses attention upon changes ill the organizational set up, administration of organizational process affecting behavior and the development of effective leadership.

3. It offers a technique to manage changes. The management is totally prepared to anticipate, respond and influence to look at changes. It also offers a different way of thinking.

4. It furnishes the management with a perspective whereby, the latter gives equal importance to present and future opportunities.

5. It provides the management with a mechanism to cope with highly complex environment characterized by diversity of cultural, social, political and competitive forces.

 

 Five P’s of Strategy 

1. Strategy is a Plan
2. Strategy is a Ploy
3. Strategy is a Pattern
4. Strategy is a Position
5. Strategy is a Perspective