BUSINESS AND

FUNCTIONAL
LEVEL
STRATEGIES
ESCORIAL, SHEIVA MARIE
MONTILLA, DARLENE
PLATON, DIANE

Strategic
Business
Unit
Williamson, Jenkins, et al. (2004)
defined as a unit that produces
products or services for which there
is identifiable group of customers.
Can be also defined geographically
or according to the nature of their
operations.

Understanding the
Business and Its
Environment

Direct
competitors

Management/Employ
ees
Stakeholder
groups

Business and
ethical standards

Stakehold
ers/owners

The
business
organizati
on
Other factors
and
considerations

Indirect
competitors

Government

Global/Regional
forces

Religious, cultural
and other
traditions

Understanding Strategy
and the Organization
Performance

Products

Synergy and fit

Customers
Competitive
advantage
Stakeholders

Structure
THE
ORGANIZATIO
N

Parenting
Process
Markets

Environments
Resources and
Capabilities

Business Level Strategy

Focused and meant for the single
business concern
Serves as a guide of a single business
firm itself as it wades to the
competitive world of the business
Combines the strategies used by the
various functional units of the
business organization to make itself
competitive in the industry it belongs

Business Level Strategy

Operational plan of action of a single
and independent business that uses
the companys resources and
competencies to gain a competitive
advantage over its rivals in the
market or industry

Difference
Business Level Strategy
Orchestrates the various functional units
to make itself competitive and profitable
on-going concern.
Occurs at the business unit emphasizing
the improvement of the competitive
position of the firms products or
services in the specific industry or
market segment served by the business
unit

Difference
Business Level Strategy
Seeks to synchronize various functional
units and their respective functional
strategies into a consistent and well
coordinated efforts to achieve the vision
of the business organization
Concerns with the question of how
should the company compete in the
chosen business

Difference
Corporate Level Strategy
Orchestrates how the other members of
the business group would conduct their
business
Synchronize various business units
comprising of individual or chartered
organizations
Concerns with the question as to what
business or business areas do we want
to be in.

Hierarchy of Strategy
CORPORATE
STRATEGY
BUSINESS
(DIVISION LEVEL
STRAATEGY)

FUNCTIONAL
STRATEGY

Level of Strategy-making in a
Diversified Company
Corporate-level
Managers

Business-level
Managers

Corporat
e
strategy
Two-way Influence
Business Strategies
Two-way Influence

Functional
Managers

Functional Strategies
Two-way Influence

Operating
Managers

Operating Strategies

In developing a business level strategy and in

order to stay competitive or outdo the firms
competitors, substantial efforts should be made
to develop strategies taking note of the
following areas of concern:
a. specific responses to changing conditions
b. scope of geographic coverage of the
business strategy
c. explore collaborative alliance or
partnerships as necessary
d. the financial strategy to support the overall
business strategy
e. the specific functional strategies to be
undertaken
f. concern for research and development

8 Risks of Single Business

Concerns
Putting all the eggs in one industry basket
Missing profitable business opportunities on
account of lack resources and skills to do so
Unforeseen changes can undermine a single
firms prospects
Changing customer needs
Technological innovation
If market becomes unattractive, the firms
prospects can quickly dim
Options to grab other opportunities are limited
Entry of substitutes

9 Competitive Strengths of Business

Level Strategy

Less ambiguity about who we are

Energies of firm can be directed to a
single business path and keeping
strategy responsive to industry
change
Less chance resources will be
stretched thinly over too many
competing activities
Resources can be focused on building
competencies and capabilities that

9 Competitive Strengths of Business

Level Strategy
Higher probability innovative ideas will
emerge
Top executives can maintain hands-on
contact with core business
Important competencies more likely to
emerge
Ability to parlay experience and reputation
into sustainable competitive advantage
Prominent leadership position

Example of a Functional
Organization Chart
PRESIDENT
EXECUTIVE VICEPRESIDENT
VICEPRESIDEN
TMARKETIN
G
MARKETING
MANAGER

VICEPRESIDENTMANUFACTURI
NG
MANUFACTURI
NG MANAGER

VICEPRESIDENTADMINISTRATI
ON

VICEPRESIDENT
-FINANCE

ADMINISTRAT
IVE MANAGER

FINANCE
MAANGER

Functional Responsibilities VS
Functional Strategies
Functional Responsibilities
Refers to those task, function or activities that
a given operating unit is duty-bound to do by
the very nature of its functional category

Functional Strategies
Approach taken by a functional area or unit to
achieve its objectives and duties by way of
maximizing the use of its resources and in
light of strategic direction as well as
prevailing market competitions

Role of Functional Strategies

Must provide support activities
considered strategically important to
the stated corporate or business
level objectives
Must harmonized the strategies of
the various departments into a
cohesive and consistent set of
strategies running in series or
parallel activities

Interrelationship among
Functions
Production/
Operations
Management

Purchasing
and Materials
Management

Research and
Development

Finance
Human
Resource
Management

Marketin
g

Management
Information
System

All Functional Strategy must

contribute to a shared vision
Productio
n
Vision
Mision

Marketi
ng

Finance

Functional Strategies
Characteristics:
It is a game plan for a strategicallyrelevant function, activity, or
business process
It provides details how key activities
will be managed
Its provides a supportive role to the
business level strategy
It specifies how functional objectives
are to be achieved

 Functional Strategies
highlight the role of every
department or unit in terms
of:
Role and scope of activities of
each department or unit
It provides the direction which
department needs to pursue
It defines the contribution to
firms overall mission

Operating Strategies
More specific and operational
compared to functional strategies as
the tasks are usually done at ground
level with more precise details
Concerns of Operating Strategies:
a. narrower strategies for managing
grassroots activities and strategicallyrelevant operating units
b. add detail to business and functional
strategies

Strategic Business-Level
Options
1. Product Development Option
a research and development
option that seeks to develop new
product or service resulting to a
variety of products or services the
company
can
offer
thereby
accessing other market segments
or sectors

Strategic Business-Level
Options
2. Market Development
Seeks to explore additional
market share by developing
other
markets
in
other
geographical areas using the
same line of products or
services.

Strategic Business-Level
Options

3. Market Penetration
Pursuing concentrated and vigorous
efforts to push a product or service
using a variety of marketing strategies
or
tools
generally
focused
on
promotional efforts. It concerns with
dealing with existing products or
services but it requires substantial
marketing efforts to push harder the
product to expand sales in the same
market segment or to serve and

Situations favoring product development:

When an organization has successful products
that are in the maturity stage of the product life
cycle
When an organization competes in an industry
that is characterized by rapid technological
developments
When major competitors offer better quality
products at comparable prices
When an organization competes in a high growth
industry
When an organization has especially strong
research and development capabilities

Situations favoring market development:

When new channels of distribution are
available that are reliable, inexpensive,
and of good quality
When an organization is very successful at
what it does
When new untapped or unsaturated
markets exist
When an organization has the needed
capital and human resources to manage
expanded operations
When an organization has excess
production capacity

Situations favoring market penetration:

When current markets are not saturated with a
particular product or service
When the usage rate of present customers could
be increased significantly
When the market shares of major competitors
have been declining while total industry sales
have been increasing
When the correlation between dollar sales and
dollar marketing expenditures historically has
been high
When increased economies of scale provide
major competitive advantages