LEVELS OF STRATEGIC DECISIONS

The environments in which businesses exist are constantly changing. By environment I mean both internal and external. What can one do about it? The short answer is come up with a strategy that ensures that the business is distinct and has a competitive advantage. Strategy, in its simplest form, means the things that an organization does to adapt to changes over time. The levels of strategic decisions in an organization will vary depending on:

1. Resources available
2. Products or services on offer
3. Stakeholders’ objectives and constraints

Generally the levels of strategic decisions in an organization can be narrowed down to 3 depending on how long the organization has been in existence and these are:

1. Corporate level strategy
2. Business level strategy
3. Functional level strategy

FUNCTION LEVEL STRATEGY

The strategies made at this level are intended mostly to perfect the value chain. Let’s assume you start a business. You will have to worry about production of goods or services, sales levels, customer care aspects etc. But as the business grows you may then hire people to handles some of these stuff.

Those people you hire will perform these “functional operations” designed to ensure your business is running smoothly. The people themselves will, within your organization, belong to “functional departments” e.g sales department. All the strategies at this point are intended for the perfection of these functional departments, for instance, a strategy to increase recognition or more YouTube views etc

Functional level strategies tend to be short terms in most cases.

BUSINESS LEVEL STRATEGIES

Having various departments or people who perform various functions in your business is one thing, but for people or departments to work in such a way that the business moves as one living creature is another. To achieve such unity you need to come up with business level strategies which will involve bringing all the functional units together so that they function as a business.

The strategies here will relate to:

• Choosing the users you intend to serve with your products or services

An example could be choosing to go after a small niche with customized products; the Ferraris and Lamborghinis are really good at this. You could also go for mass production of standardized products and gain from economies of scale. Another example could be aim for low cost of production or ensure your products and services are unique.

• How to obtain inputs through effective support chain and utilize the said inputs in a way that adds value
• Developing an organizational architecture or structure that allows for information flows

Note: This level of strategic decision in an organization is very critical because it determines how a business competes in its chosen market.

CORPORATE LEVEL STRATEGY

As your business grows you could choose, like many organizations, to diversify. This is where corporate level strategies are created. This will call for the gathering of a portfolio of more or less related business. Remember a corporation refers to a firm with a diverse portfolio of business units.

Corporate level strategies relate to decisions like  which business to enter or exit in your portfolio and how resources can be shared across the business.

At whichever levels of strategic decisions in an organization the success will depend on the ability of the strategy to make the organization distinct and renew its competitive stance (or advantage)in the environment it exists in.