Hierarchy of Business Strategies

Business strategies are utilized by company leaders to set the course of action for an organization. Typically, upper management selects strategies to line up with the business’ long-term goals. In this way, strategies are tools that provide the how-to guidelines for an organization to achieve those long-term goals.  The corporate, the business, and the functional strategy level are common divisions within today’s enterprises. Under the corporate strategy label, decisions about governance are discussed.  Corporate is also charged with strategies including the mission statement, vision, and value network.

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Small business units are the divisions within the corporation. They can act semi-autonomously, including engaging in activities including managing a division-level budget, hiring decisions, and appropriate pricing decisions. Competitive advantage of goods and services is the main concern at this level. Most of the energy at this level is spent on activities like gaining advantage, forecasting demand and positioning the business within the market.

Functional strategies focus on developing short-term plans within each department. These strategies incorporate the larger corporate goals to include marketing strategies, financial and legal strategies, and information technology management strategies. They are a link between the corporate entity and the small business unit.

Other simpler hybrid strategic structures are being developed that lessen divisions in corporations. The so called ‘dynamic strategy’ advocates a seamless incorporated strategy that deemphasizes Small Business Units and the current hierarchy of departments.

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© 2010 Nathan Jurczyk News