Levels of Strategy

Corporate level,
Business level
andFunctional
level

Corporate Level Strategy

The top level of strategic decision-making is the formulation of corporate level strategy.
These strategies are also termed as grand strategies as they impact the whole organization.
These strategies deal with defining the objective of the firm, allocation & acquisition of
resources as well as coordination of strategies of different SBUs the organization may have.

Big organization sometimes also involves management consultants or corporate in this task
to get an external viewpoint. These strategies are always futuristic and innovative in nature.
Strategic decisions are normally value-oriented, conceptual and less specific if we compare
them with business/SBU or functional level.
Business-Level Strategy/SBU Level Strategy

Many big organizations like Tata, Reliance etc. have different businesses and they have
different set of customers or product and services and all cannot have the same or similar
strategies. At business level are guided by the corporate strategies of the organization. The
corporate-level strategies guide the SBU in defining its scope of operations as per the
resources assigns to it bytop management.

Functional-Level Strategy

It is related to one specific functional area such as marketing, finance human resource or
production etc. and consists of different day-to-day activities involved in that functional area.
The functional strategy involves providing objectives of that functional area and allocation
of resources for its operations within that functional area. The objectives of these strategies
is to be in alignment of Corporate and SBU objectives.

PESTEL Framework

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the
macro- environmental (external marketing environment) factors that have an impact on an
organization, company or industry.

A PESTEL analysis is an acronym for a tool used to identify the macro (external) forces facing
an organization. The letters are Political, Economic, Social, Technological, Environmental
and Legal.
Macro Models and Industry Models
Below are some of the key models utilised in the environmental analysis
PESTEL Analysis
PESTEL research provides a bird’s eye view of business activities and macro concerns that
significantly impact the health of a specific industry or sector. Entrepreneurs and strategy
creators can better comprehend their market using this environment research. Additionally,
it helps safeguard the organization’s future status.
Political aspects :
The political environment explains how governmental actions affect business operations.
Politicalconcerns must be overseen by businesses since they frequently get out of control.
Political environment are looked at:
1. Tariffs and tax laws maintain the country’s stability,
2. Rules & Regulations for Entrance,
Economic factors :
The kind and volume of economic activity a firm engages in or runs its operations are
discussed.It’s critical to consider factors like GDP, unemployment rate, exchange rate,
and others.
1. The rate of exchange for different currencies,
2. Both monetary and fiscal policies,
3. Accessibility to Credit, Unemployment Rate,
4. Income of Potential Clients,
5. Inflation Rate,
6. Inflation Percentage.
Social influences :
Businesses must be particularly aware of the norms, values, customs, cultures, linguistic
abilities,tastes, and preferences of the individuals who inhabit this environment.
1. Education Level of Visitors.
2. Money Distributed.
3. Domestic structure.
4. Individual social interactions.
5. Demographic considerations.
6. Gender Effects on Culture.
Technical aspects :
Examples
1. Platform for contemporary technology.
2. technological advancement.
Environmental factors :
Some of the main environmental influences are as follows:
1. How people see and interact with their surroundings.
2. Power consumption guidelines.
3. Laws Regarding Waste Disposal.
4. Environmental and meteorological conditions.
5. Local information
Legal aspects
But here are some legal things to think about:
1. Health and safety regulations.
2. Patent infringement.
3. Rules for Products and Services.
4. Occupational Guidelines.
5. Competitive Regulations.
Gap Analysis

The company uses gap analysis to compare the present performance with the planned or
expected performance. A gap analysis may also be referred to as a needs analysis, needs
assessment or need-gap analysis.

A gap analysis process helps organizations determine how to achieve their business goals.
For example, SWOT analysis is used as part of gap analysis. A SWOT analysis is very useful
tool for assessing the performance gaps in a company.
Steps to a Gap analysis

There are four important steps to a gap analysis :

(i) Defining organizational goals,

(ii) Benchmarking the present performance levels,
(iii) Analyzing the gap,
(iv) Compiling a gap report.

SWOT Analysis

A framework is to understand and analyze a company’s Strengths, Weaknesses,

Opportunities andThreats. It is a tool that can help you to analyze what your company does
best now and to devise a successful strategy for the future.
Strenghts
Advantages does your business provide.
You can access exclusive or affordable resources that are unavailable to others
Clients in your industry do believe you excel at.
Traits make you appear to “win business.”
Weaknesses
What could you alter?
What are you need to avoid?
What weaknesses will your economy most likely perceive you to have?
What factors cause the decline of your business?
Opportunities
Promising prospects, you see
Intriguing trends are you aware of
Threats
What difficulties do you face?
What are your competitors doing?
Is your career in danger as a result of technological advancement?
Have you experienced problems with bad debt or cash flow?
Industry versus Product Life Cycle
1. Industry Life Cycle:
The industry life cycle includes these four key phases:
(a) Introduction:
(b) Growth:
(c) Maturity:
(d) Decline:

2. Product Life Cycle

Instead of emphasizing the industry, the Product Life Cycle (PLC) model concentrates
on thevarious stages of a single goods or services.
(a) Introduction:
(b) Growth:
(c) Maturity:
(d) Decline:

Static versus Dynamic Competitive Advantage

1. Static Competitive Advantage: A company’s present advantages over rivals are
referred to as its static competitive advantage. These benefits are based on the
company’s current assets, skills, competitive positioning or product/service
attributes.

It includes :-
(a) Cost Advantage:
(b) Differentiated Product/Service
(c) Strong Brand Reputation:
(d) Access to Important Distribution Channels:

2. Dynamic Competitive Advantage : This term describes a company’s capacity to

continuously innovate, adapt, and stay one step ahead of the competition. It focuses
on the company’s ability to adapt successfully to shifting consumer tastes, market
conditions, technology developments and business interruption,

It includes :

(a) Continuous Innovation:

(b) Agility and Adaptability:
(c) Learning and Knowledge Management:
(d) Collaborative Networks:

This necessitates taking a pro-active approach to proactively scanning the external

environment, keeping an eye on industry trends, investing in research and development,
developing people and promoting a culture of constant innovation. Organizations can
succeed long-term and surpass their rivals by combining static and dynamic competitive
advantages.
Value Chain Analysis

Value chain analysis is a tactical procedure that can boost profit margins and give
businesses of allsizes a competitive edge. Businesses use this analysis to pinpoint
opportunities to raise the value of particular production and sales operations.

Profit is produced when the whole cost of making your product is less than the price you
charge for it, and that premise makes sense. However, it’s typical to encounter businesses
that don’t monitor every step of product development and lose out on chances to boost profit
margins.
Primary activities and supported (or secondary) activities are divided into separate
categories onthe VCA chart. While secondary activities support primary activities, primary
activities are centred on producing commodities and services.
Primary Activities

1. Inbound logistics,
2. Operations,
3. Outbound Logistics,
4. Sales and marketing,
5. Service

Apple’s Support Activities

1. Research and Technology Development

2. Human Resource Management
Strategic analysis and management are crucial to corporate growth. They involve
examininginternal and external elements that affect an organization’s performance,
making educated decisions, and developing successful strategies to gain competitive
advantage.
 Strategic analysis uses models and frameworks to make decisions. The BCG Matrix, GE-
McKinsey Matrix, and PLC analysis are portfolio models. These models help companies
review their portfolios, determine growth prospects and manage resources. Static and
dynamic competitive advantage is also important in strategic analysis.

Through comprehensive analysis, smart portfolio management, and new tactics, firms
can beatcompetitors and achieve long-term success.

Generic Strategies

Generic Strategies or Porter’s Generic Strategies

Established by Michael Porter to gain a competitive advantage in their particular

sectors.There are three standard tactics:

1. Cost Leadership Strategy: This strategy strives to produce and distribute goods at the
lowestpossible cost while maintaining acceptable quality,

2. Differentiation Strategy: This strategy entails delivering clients goods or services that are
viewedas superior in terms of quality, features, design or brand image to establish a unique
and different value proposition for them.

3. Focus Strategy : This tactic entails focusing on a certain market niche or subset and
customizingitems or services to fit the group’s specific demands and preferences.

The focus strategy has two sub-types:

a. Cost-focused Strategy: It is providing goods or services to a certain market

niche at a lower price than rivals,

b. Differentiation Focus Strategy: This involves targeting a certainmarket segment

withspecial and distinctive goods and services.

Organizations can use the framework provided by these generic strategies to assess their
market positioning and make strategic decisions. Before deciding on and adopting a
particular generic strategy, firms should carefully evaluate their internal capabilities, market
conditions and competitive dynamics competitive dynamics.

Page 7 of 38
Cost Focus Strategy

Cost focus strategy is a business strategy that entails focusing on a certain market
segment orniche and providing goods or services at a lower price than rivals in that
niche.

An illustration of a cost-focused strategy is the international supermarket chain Aldi. Aldi

concentrates on giving budget-conscious shoppers accessible shopping selections. They
have a simple layout for their stores and a small selection of private-label products.

Companies implementing a cost focus strategy can prosper by satisfying a niche market’s
unique needs and effectively competing against larger, more diverse competitors by focusing
on cost management, efficient operations, and giving value to their target market.

Sources of Cost Advantage

1. Economies of scale:
2. Production efficiency:
3. Access to affordable inputs:
4. Outsourcing:
5. Technology:
6. Location:
7. Supply chain management optimization:

Types of Differentiation Strategies

1. Product Differentiation:
2. Brand Differentiation:
3. Service Differentiation:
4. Channel Differentiation:
5. Price Differentiation:
6. Experiential Differentiation:
7. Process Differentiation:

Broad Differentiation versus Focus

Broad Differentiation Strategy :

The goal of a broad differentiation strategy is to set a company’s goods and services
apart from those of rivals in the entire market. The aim is a distinctive value offer that
appeals to a
broad spectrum of clients.
For instance, Apple Inc. successfully implements a comprehensive differentiation strategy
with its premium and creative goods like the iPhone, MacBook, and Apple Watch. Apple’s
products stand out from rivals thanks to their sophisticated features, slick design, user-
friendly interfaces, and device interoperability.
Focus Differentiation Strategy:
With this strategy, the company focuses on differentiating inside a specified niche or market
sector designated as its target market. The emphasis is on providing superior customer
service toa certain consumer group’s demands and preferences.

In order to choose between a focus differentiation strategy that targets a narrow niche and
a broad differentiation approach that targets a large market, firms must evaluate their
Page 8 of 38
internal capabilities, resources and market dynamics.

Blue Ocean Strategies.

The Blue Ocean Strategy is a tactical strategy that tries to eliminate competition and
create uncontested market space.

There are numerous crucial steps in the analysis:

1. Industrial Analysis:
2. Value Curve Analysis
3. Identify Blue Ocean Opportunities
4. Value Innovation
5. Strategic Moves
6. Continuous Analysis and Adaptation

Organizations that use the Blue Ocean Strategy in their strategic analysis can find
untappedmarkets, set themselves apart from rivals, and generate new demand.

Product and Market Diversification Strategies

Corporations may use diversification techniques to grow their business and reduce risks
in twodifferent ways: through product diversity and through market diversification.

In-depth examination of each tactic follows:

Product Diversification Strategy

It is the process of bringing new goods or services into the markets that an organization
alreadyserves in order to increase the range of products it offers.

a). Related Product Diversification:

b). Unrelated Product Diversification:
c). New-to-the-World Product Diversification:

Market Diversification Strategy

Market diversification entails distributing existing goods or services into new markets.

Market diversification generally comes in three types:

(a) Geographic market diversification,

(b) Demographic Market Diversification,
(c) Psychographic Market Diversification,
When assessing the viability and potential success of plans for product and market
diversification, businesses must take into account their own competencies, resources and
market conditions.

Page 9 of 38
 Portfolio Models

Portfolio models, often referred to as portfolio analyses or portfolio planning, are strategic
business tools used to evaluate and manage a company’s portfolio of goods, services,
business divisions, or investments.
Portfolio models are used in strategic analysis to acquire perceptions into the general health
and composition of the portfolio, pinpoint areas of strength or weakness, and provide
decision-makingguidance for strategic planning.
The following list of popular portfolio models for strategic analysis includes:
1. BCG Matrix (Boston Consulting Group Matrix):
Based on a company’s products or business units’ relative market shares and market growth
rates, the BCG Matrix divides the market into four quadrants. Stars, Cash Cows, Question
Marks, and Dogs are among the quadrants.
a) Stars: High-growth items or company divisions with a sizable market share.
b) Cash Cows: Established goods or business divisions having a commanding market
share ina sector with little growth.
c) Question Marks: Goods or business segments that are expanding quickly but with
little market penetration.
d) Dogs: Items or business divisions with a little market share and slow growth.
2. GE-McKinsey Matrix:

The GE-McKinsey Matrix evaluates business units or products based on their appeal and
position in the marketplace. It considers various elements, including market attractiveness,
competitiveness, industry attractiveness and business unit performance.

3. Product Life Cycle Analysis (PLC):

The Product Life Cycle model analyses the various phases a product
experiencesthroughout its lifespan, including introduction, growth,
maturity, and decline.
4. Ansoff Matrix: By assessing how markets and products are related, the Ansoff
Matrixfocuses on growth strategies. Four tactical choices are offered:
( a ) Market Penetration:
( b ) Market Development:
( c ) Product Development
( d ) Diversification
5. McKinsey 75 Framework: Strategy, Structure, Systems, Shared Values, Skills, Style and Staff
are the seven interconnected organizational components that the McKinsey 7S Framework
investigates. In order to determine the organization’s overall performance and competitive
advantage, this model analyses how these components align and interact.

Page 10 of 38