MS 11 IGNOU MBA Solved Assignment - What is the purpose of strategy? Explain. What are the different levels of strategy in an organization? Explain these levels with the help of an illustration.

What is the purpose of strategy? Explain. What are the different levels of strategy in an organization? Explain these levels with the help of an illustration.

Ans

• Don’t be afraid. Engage in strategic conversations on what your organization’s purpose is.

• Purpose is a necessary element of any worthwhile strategy. Define it. Communicate it. Act on it in all you do.

• Rise up to the challenge of purpose. The Millennial Generation expects it and everyone before and after will embrace it.

• Within a corporation, strategy determines how a business's actions are directed. Different areas or levels within an organization's structure, such as its business and operational areas, require individual strategies that direct processes within each area. According to Gaeblers Resources for Entrepreneurs, a corporate strategy operates at the uppermost level of an organization. It coordinates processes between the different levels that make up an organization and wields the greatest amount of influence. In effect, the purposes and goals laid out in a corporate strategy define each department level's purpose in terms of overall goal outcomes.

• Without a clear plan in place, organizations can quickly lose sight of goals and objectives and ultimately weaken their impact in the marketplace. A corporate strategy provides the focus and direction needed to accomplish organizational goals in a timely fashion, according to Chartered Quality Institute. Its overall effect enables a business to allocate department resources, coordinate systems and processes within and between departments and ultimately produce the desired outcomes as outlined in the corporate strategy. Once desired outcomes are reached, a business can incorporate additional goals, such as new product lines or expansions into new markets, into the corporate planning process.

• Cohesiveness

• A corporate strategy forms the basis for an organization's structure in terms of how well individual areas or departments work together as a coordinated whole, according to Gaebler Resources for Entrepreneurs. And while corporate-level planning provides the framework for an organization, it should also function as an integral aspect of each department's strategic plan. Corporate strategies are based on a company's mission and vision statements, which define its purpose, values and direction. In effect, department strategies lay out department-specific goals and objectives that correspond with the primary directives contained in the corporate strategy.

• As different organizations and businesses serve different purposes, a corporate strategy should suit an organization's overall purpose in terms of how it delivers its products to the marketplace, according to CodedVision Consulting. In effect, a corporate strategy allocates available resources to achieve a desired outcome. Desired outcomes can take the form of mass production runs or custom-made designs. In each case, the corporate strategy matches the type of business it's designed for. In some cases, the type of strategic approach needed will coincide with where an organization falls within its corporate lifecycle. For example, a corporate strategy developed for a start-up company would require a completely different approach than the strategy used by an established company.

Real Organizations Have Purpose

Purpose is not fluff. It is the content of our strategy’s character. It is what makes organizations strong because it inspires people to engage in their work and achieve meaning in what they do. Purpose defines the personality and story of an organization and, in turn, the policies and processes that flow from it.

Key points:

Levels of Strategy

Focus & Direction

Implementation

Strategy may operate at different levels of an organization -corporate level, business level, and functional level.

Corporate Level Strategy

Corporate level strategy occupies the highest level of strategic decision-making and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance. Top management of the organization makes such decisions. The nature of strategic decisions tends to be value-oriented, conceptual and less concrete than decisions at the business or functional level.

Business-Level Strategy.

Business-level strategy is – applicable in those organizations, which have different businesses-and each business is treated as strategic business unit (SBU). The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. Since each product/market segment has a distinct environment, a SBU is created for each such segment. For example, Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of petrochemical products. For each product group, the nature of market in terms of customers, competition, and marketing channel differs.

There-fore, it requires different strategies for its different product groups. Thus, where SBU concept is applied, each SBU sets its own strategies to make the best use of its resources (its strategic advantages) given the environment it faces. At such a level, strategy is a comprehensive plan providing objectives for SBUs, allocation of re-sources among functional areas and coordination between them for making optimal contribution to the achievement of corporate-level objectives. Such strategies operate within the overall strategies of the organization. The corporate strategy sets the long-term objectives of the firm and the broad constraints and policies within which a SBU operates. The corporate level will help the SBU define its scope of operations and also limit or enhance the SBUs operations by the resources the corporate level assigns to it. There is a difference between corporate-level and business-level strategies.

For example, Andrews says that in an organization of any size or diversity, corporate strategy usually applies to the whole enterprise, while business strategy, less comprehensive, defines the choice of product or service and market of individual business within the firm. In other words, business strategy relates to the ‘how’ and corporate strategy to the ‘what’. Corporate strategy defines the business in which a company will compete preferably in a way that focuses resources to convert distinctive competence into competitive advantage.’

Corporate strategy is not the sum total of business strategies of the corporation but it deals with different subject matter. While the corporation is concerned with and has impact on business strategy, the former is concerned with the shape and balancing of growth and renewal rather than in market execution.

Functional-Level Strategy.

Functional strategy, as is suggested by the title, relates to a single functional operation and the activities involved therein. Decisions at this level within the organization are often described as tactical. Such decisions are guided and constrained by some overall strategic considerations. Functional strategy deals with relatively restricted plan providing objectives for specific function, allocation of resources among different operations within that functional area and coordi-nation between them for optimal contribution to the achievement of the SBU and corporate-level objectives. Below the functional-level strategy, there may be operations level strategies as each function may be dividend into several sub functions. For example, marketing strategy, a functional strategy, can be subdivided into promotion, sales, distribution, pricing strategies with each sub function strategy contributing to functional strategy.