In a company that develops a single activity or business, in the context as well as a simple and stable environment, it could accept the existence of a single level of strategy. But perhaps today, if less common. In a turbulent environment will require the identification of two levels of strategy, because the development of resources and expertise about successful and thorough search of competitive advantage and synergy is much more imperative given the increasing hardship and instability of the environment, and strategies Functional obviously essential, and should be framed within the strategic coordination of the activity.
When is a diversified company, it is conceived as a set of activities or businesses, in addition to the two previous levels is necessary to add a higher level of strategy that encompasses the various business strategies and the problem of a successful combination of different activities. Let us see now the characteristics of the three possible levels of business strategy.
Overall strategy or business strategy. ” At this level the company is considering in relation to its surroundings, considering what activities you want to participate and what is the most appropriate combination of these. At this level of strategy become more important on the first and second components, as this is limiting the scope of activity and allocation of capacities among the various businesses that make up the scope.
At the second level is the “business strategy”. This is necessary in multi-activity firms. If firms are sufficiently diversified, they tend to identify, rather than mere business, what is called strategic business units. Each unit is a set of strategic issues and business, homogeneous from the strategic point of view, or for which it is possible to formulate a common strategy and in turn different from the strategy appropriate for other activities and / or strategic business units. The strategy of each unit is itself autonomous, but not independent because it is integrated into the strategy
company.
At this level it comes to determining how best to develop the activity or activities under the work unit, or in a competitive environment, how to compete better in this or that business. The problem concerns, therefore, particularly the second and third components. The fourth component emphasizes the synergy that produces the successful integration of the different functional areas within each activity.
The third level is the “functional strategy”. In this level the question is how to use and apply the resources and skills within each functional area of each activity (production, marketing, finance, etc) or each work unit, so to maximize the productivity of those resources. The key components are the second and fourth, the latter corresponding to the synergistic effect that results from successful coordination and integration of different policies and actions designed within each functional area.
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Tags: functional area, levels of business, Levels of Strategy, various businesses