Module 5-Levels of Strategy-Patima Lagnason

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MODULE 5

LEVELS OF STRATEGY
By: Patima L. Lagnason

1. Discuss the nature and scope of global strategy

When we talk about global strategic management we are referring to the manner in which
organizations expand their geographic footprint and move into other markets. It also
encompasses the typical challenges or roadblocks they face, the steps they need to take
and some broad components that need to be a part of any good global strategy.
Good business strategy certification covers such aspects like the need for specific
resources, the level of existing capability, the extent of competition in the market that an
organization is entering and also the kind of strengths it has.
Key components of global strategic market are as follows:
*Competition-The global strategy should always incorporate the presence of competition
and how to manage around that.
*Talent-This covers talent that will be needed for the strategy to be actually implemented
and the plan to source it as well as retain it.
*Pricing-Many organizations underestimate the role of pricing within the overall global
strategy. However, this can become the key differentiator in a price-sensitive market.
*Product-The competitive advantages of the product and its strengths or USP have to be
discussed when the strategy formulation takes place.
*Market Share-This covers the existing and the one that the organization is aiming for,
either in a new year or new market or even in a new product segment.

Types of Global Strategy are as follows:

1. Standardization-A standardization strategy is a strategy that a company develops to


expand its operations into the global market. In a standardization strategy, you sell the
same products in every location. A standardization strategy is characterized by keeping
control centralized rather than delegating decisions to local markets. Some of the benefits
of a standardization strategy include the ability to develop products more quickly and
easily coordinate activities across locations.

Example: Imagine that you want to create a standardization strategy for your luxury purse
company. In this case, you would create a strategy to sell essentially the same purses in
every location. This would allow you to keep your products consistent across locations.

2. International-An international strategy involves importing and exporting products.


Using an international strategy can allow you to work with foreign suppliers and sell to
customers around the world while keeping your physical premises within your home
country. Typically, international strategies still focus mainly on the company's home
market while doing some business overseas.

Example:
Using the same scenario, imagine that you decided to create an international strategy for
your luxury purse company instead. Your international strategy would still focus on your
home country, but you would do some business overseas. For example, your physical
production would still occur in your home country, but you could export some purses
overseas.

3. Multinational- When you use a multinational strategy, you can cater your products to
each individual local market. You can also have physical business locations and staff
based in various locations. The key benefit of using a multinational strategy is the ability
to cater your business to individual locations.

Example:
Consider that your luxury purse company wanted to create a multinational strategy. In a
multinational strategy, you could create different luxury purses for each location that you
sell in. This would allow you to cater your business to its different markets.Ex

2. Explain the corporate level strategic alternatives.

Corporate level strategy can be defined as the long term goals and objectives of the
organization that can create an impact on all the business units operating under
one umbrella organization. If the company is a large group of companies with several
sub-organizations under the mother company, the corporate level strategies is made for
the long-term benefit of all the sub-organization.

Corporate strategy defines the businesses and the market segments that the company
will operate and customers they are targeting to acquire. The corporate-level strategies
are planned by the top-level management in the group of companies. They created
corporate-level strategies that are then passed down to the organizations under the main
umbrella for the purpose of generating their own strategies aligned with the parent
company.

The corporate-level strategy provides a set of strategic alternatives from which the
management of the organization chooses to continue and achieve in long run through the
operations of the companies in several market sectors and possibly in several industries.
1. Stability Strategies-If the firm continues to serve the public in the same product, service,
market and function sectors as defined in business definition
*No Change Strategies
*Pause/Proceed with caution strategies
*Profit Strategies
2. Expansion Strategies
*Concentration
*Integration
*Diversification
*Cooperation
*Internationalization
3. Retrenchment Strategy
*Turnaround
*Divestment
*Liquidation
4. Combination Strategies
*Simultaneous
*Sequential
*Combination of Both

3. Discuss the Nature and Scope of Business Unit Level Strategy


Business-level strategy: This strategy focuses on how corporate aspirations will be
implemented within individual company settings.
The Business-level strategy is what most people are familiar with and is about the
question “How do we compete?”, “How do we gain (a sustainable) competitive
advantage over rivals?”. In order to answer these questions it is important to first have
a good understanding of a business and its external environment. At this level, we can
use internal analysis frameworks like the Value Chain Analysis and the VRIO
Model and external analysis frameworks like Porter’s Five Forces and PESTEL
Analysis. When good strategic analysis has been done, top management can move
on to strategy formulation by using frameworks as the Value Disciplines, Blue Ocean
Strategy and Porter’s Generic Strategies. In the end, the business-level strategy is
aimed at gaining a competitive advantage by offering true value for customers while
being a unique and hard-to-imitate player within the competitive landscape.
To implement a successful business-level strategy that will benefit your business, your
goals must be identified and carried out in each area of your company. To do this, you
need to have a detailed plan set in place. The following list will identify seven steps
you can take to create a profitable business-level strategy within your company.
a. Identify Target Market and Customers
b. Find out what their needs are
c. Discuss how to cater their needs
d. Make comparisons with competitor’s strategies
e. Set Common Goals to be set by the company as a whole
f. Set unique department goals
g. Complete routine checks at each company level

Examples of Business Level Strategies:


*Cost Leadership Strategy- Cost leadership strategy forces a business to look at the
costs that are related to the manufacturing process, shipping and delivery of a product
to a customer that will affect the price point at which they can sell their product to still
return a profit. The goal of this strategy is to find the most cost-effective way to market
and sell a product to customers, undercutting competitors with higher price points.
*Low Cost Strategy- The low-cost strategy focuses on selling to a particular market
or business rather than the general public. This strategy is used in much the same
way as cost leadership, but it undercuts competitors so that businesses will see them
as a more attractive and cost-effective option to buy from.
*Differentation Strategy- The differentiation strategy uses product quality rather than
price, to improve a company's prospects when weighed against competitors. For
companies that want consumers to buy their products due to quality instead of price
point, they should be implementing standards to improve the value and functionality
of their products.
*Integrated Strategy- The integrated strategy uses the principle components of low-
cost and differentiation strategies to create a product that is of mid-level quality. A
company would use this strategy to attract customers who want the next best level of
quality for a lower price than high-quality items.

4. Explain the different level of Functional level Strategy

Functional Level Strategy can be described as the day-to-day strategy designed to


help implement strategies at the corporate and business levels. Such strategies are
formulated according to top-level management guidelines.
This strategy is about decision making at the operational level, considered strategic
decisions, for different functional areas like manufacturing, marketing, research and
development, finance, personnel, etc.
Because such decisions are aligned with the business strategy, strategists provide the
functional level managers with adequate guidance and recommendations for the
effective execution of the company's strategies and policies.
Example of Functional Level Strategy:
Marketing
Marketing includes the whole process of identifying customer needs and creating
value for customers to capture value from them in return. The goal is to build and
strengthen long-term relationships with customers.
Marketing strategies include steps to improve products, set prices, distribute and
promote them, etc.
To implement marketing strategy, you can study your competitors using SWOT
analysis (Strength, Weakness, Opportunities & Threats). You need to plan for different
channels of marketing—whether it’s social media or direct marketing.
Example:
Quality: Offer helpful deliverables
Efficiency: Target the right group of customers for the next marketing campaign
Delivery: React to the seasonal needs timely

Finance
This includes the steps to manage your business finance—from raising capital and
seeding funds, budgeting, and investing to acquiring assets and evaluating business
net worth, etc.
Example:
Quality: Minimize errors when inputting information and providing them to other
departments
Efficiency: Automate the accounting process
Delivery: Provide real-time access to data

Human resources
These strategies include recruitment, selection, hiring, training, development, team
building, employee engagement and retention.
Quality: Offer monthly training sessions
Efficiency: Minimize the costs of hiring and onboarding
Delivery: Find effective sources to hire and train employees timely to meet business
demands

Production
Production strategies focus on enhancing product quality and reduce production costs
through managing manufacturing and operating system, as well as logistics and
supply.
Example:
Quality: Improve the quality of the production process
Efficiency: Minimize time wasted in inefficient procedures
Delivery: Minimize delays in production
Quality: Find suppliers that provide reliable and high-quality supply
Efficiency: Establish relationships with suppliers and negotiate the best prices
Delivery: Stock enough and avoid redundancy.
Research and development
Research and Development (R&D) strategies cover steps to improve existing products
and develop new ones.
R&D strategies are often related to Cost Leadership and Differentiation strategies. If
your company intends to occupy a certain segment, you must find out the right product
for that segment and how to beat existing competitors, whether with a unique
difference or with a cheaper price.
Example:
Quality: Design products that bring innovative changes to customer experience
Efficiency: Simplify the research & development processes
Delivery: reduce time to market by implementing parallel design techniques

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