What Is Business Strategy And Why Is It Important?

There are three main levels of Business strategy but overall Business strategy operates over the long-term work to give the organisation advantage through the configuration of its resources within a challenging and changing environment. Hence Business strategy, if done correctly, will allow the organisation to meet the needs of markets and to fulfil stakeholder expectations.

There are three main levels of strategy in any organisation;

  1. Corporate – looks at the overall purpose and scope of the organisation and how value will be added. Stakeholders sit at the heart of this process in terms of managing their expectations and delivering against them. At this level corporate resource decisions are made.
  2. Business – competing in particular markets, gaining and maintaining competitive advantage and the design and implementation of a strong and responsive marketing strategy. In a small organisation this would be combined with corporate strategy but in a bigger organisation this section would be the responsibility of a strategic business unit.
  3. Functional or Operational – how the component parts of the organisation fit together to deliver the higher-level objectives. Examples would be the work of different business departments e.g. Finance and Sales.

There are clear advantages and disadvantages in the use of strategy in its broadest sense.

Advantages include the identification of risks, the process forces managers to think and plan ahead, formal targets give a level of control and a strong sense of direction and it unites the efforts of individual business units that might otherwise be in competition with each other.

Disadvantages include the view that strategic planning may not always deliver advantage, it can become too formal and rigid to actually be of value, it ignores the issues around organisational politics and stresses between departments, it assumes managers are committed ad motivated and that they have a good base of knowledge to draw upon and it is unable to deal immediately and effectively with seismic shifts in the operating environment.

Advertisements