Functional Level Strategy

by Sree Rama Rao on December 12, 2011

Functional Level Strategy

The success of an organization largely depends on strategic management. Different level of strategic management plays different roles. During the 1970’s many organizations adopted top-down strategic planning for the survival of an organization.

Once higher level strategies are developed, the next task of the management is to formulate and implement strategies for each functional area. Strategies are formulated on three different levels:

  • Corporate level
  • Business unit level
  • Functional level

To run an organization successfully it is essential to plan a strategy at each level but to gain maximum benefit of planning it is important to align the plans at every level. Without alignment department functions will contradict each other’s purpose and the overall corporate strategy will become less effective.

No matter how well corporate level strategies are designed and formulated but if the execution of corporate level strategy fails in meeting the expected standard all the effort will go in vain. The success of strategy is largely determined at the functional level.  Functional level checks the reality of corporate level and business level strategy and brings the desired result by turning strategies and planning into realities.

The functional level of your organization is the level of the operating divisions and departments. It is the responsibility of the strategist to provide direction to functional managers regarding the execution of plan and strategies for the successful implementation. The role of functional strategy is very crucial for the existence of an organization. Functional strategy provides support to overall business strategy and secondly it spells out as to how functional managers will proceed to achieve the set goals and objectives. Departments like marketing, finance, production and HR are based on the functional capabilities of an organization.

Within functional strategies there might be several sub-level areas. Functional strategies are planned keeping in mind the higher level strategies. In terms of level of strategy formulation functional strategy falls below business-level strategies.

The development plan of functional strategies is conceived and designed by top-level management. Strategist manager plans executable functional strategies. Functional strategies support the overall business and corporate level business.

Functional strategies are formulated by specialists in each area. It outlines the action plan and sets the milestones that are needed to achieve before reaching to the final goal of corporate strategy.  Functional strategies work as a backbone of the organization. It provides the basic information on resources and capabilities on which the higher level strategy is designed. It involves coordinating the various functions and operations needed to design, manufacture, deliver, and support the product or service of each business within the corporate portfolio. Functional level strategy executes the plan developed at a higher level for the growth and advancement of an organization.

Functional strategies are primarily concerned with:

  • Efficiently utilizing specialists within the functional area.
  • Integrating activities within the functional area (e.g., coordinating advertising, promotion, and marketing research in marketing; or purchasing, inventory control, and shipping in production/operations).
  • Assuring that functional strategies mesh with business-level strategies and the overall corporate-level strategy.

The success of functional strategy is highly affected by the time factor. For example advertising of a new product is launched 60 days prior to shipment of the first product. Functional strategies have a shorter time span than business-level or corporate –level strategies.

The task of functional unit of any organization is to formulate higher level strategies by providing input into the business unit level and corporate level strategy. Processing the available information and using it for higher level strategy formulation. Once the higher level strategies are developed, the function unit starts making executable action plans for each department.

The strategic planner knows the relevance and significance of planning at different levels and how it helps the organization in achieving its objectives. The purpose of strategies and planning are to guide organizations in achieving its goals.

Such as providing information on customer feedback or on resources and capabilities on which the higher level strategies can be based. Once the higher level strategy or strategic intent is developed, the functional units translate them into discrete action plans that each department or division must accomplish for the strategy to succeed. A good strategist draws a strategy using all the available resources and gets maximum benefits from its resources.





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