Levels of Strategy [Business Management – Business Analysis ICAI ICAP ACCA ICAEW & Online Course]



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Business Analysis
Business management
Levels of strategy
It is usual to analyse strategy into a hierarchy of different levels. Johnson, Scholes and Whittington identify three levels of strategy:
 corporate strategy;
 business strategy; and
 functional strategy.
The elements of corporate strategy are as follows:
 Deciding the purpose of the entity.
 Deciding the scope of the activities of the entity.
 Matching the chosen business activities to the external environment of the entity and also to its available resources.
 Matching the purpose and activities of the organisation to the expectations of its owners.
 Matching the purpose and activities of the organisation to the expectations of other stakeholders in the organisation.
Business strategy or competitive strategy
It is concerned with how each business activity within the entity contributes towards the achievement of the corporate strategy.
According to Porter, a successful competitive strategy must be based on either:
 cost leadership, or
 differentiation.
Functional strategy
Functional strategy relates to particular functions within an organisation, such as manufacturing, distribution, marketing and selling, research and development, accounting, IT and so on.
The purpose of functional strategy should be to support the business strategies and corporate strategy of the organisation.

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