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Levels of Strategy

Levels of Strategy

Author: James Howard

This lesson explains the basics of business strategy.

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Hello and welcome to this tutorial on levels of strategy. Now as always folks with these tutorials, please feel free to fast forward, pause, or rewind as many times as you need in order to get the most out of the time that you're going to spend here. Now let me ask you a question or two right off the bat. What's strategy?

When I say the word strategy, what do you think of? Do you think military strategy or do you think business strategy or perhaps, strategy as it relates to a baseball game? And how is it-- if it is-- different than planning?

Well, what we're going to be looking at in this lesson is going to be strategy. We're going to be talking about that. We're also going to be looking at different strategy types. The key terms for this lesson are going to be strategy, contingency planning, crisis management, change management, and corporate strategy.

So let's start off with defining what we mean by strategy. And strategy at its simplest form is simply a proposal of action to realize a primary objective. This is what I'm going to do to get to the objective that I want to achieve.

Now strategy is going to impact the entire organization. And you're going to need input from every level of the organization. You can't simply in a vacuum set a strategy at the top without actually talking to the people below you. They may or may not be able to do the thing that it is you want to do. So it's important that you get that input from those different organizational levels from the very, very top all the way to the very, very bottom.

Now we're going to talk about a few strategy types. And the first one we're going to look at is corporate strategy. Now corporate strategy is the general manner in which a corporation will coordinate its operations in order to achieve specific goals. Now this is done at the highest level of the organization. But as you can imagine, it has an impact all the way down the organization to the lowest level because what we're really doing here is setting that plan for the entire corporation or the entire organization, that long-term big goal where we all want to get to at the end.

Now a business strategy is also known as competitive strategy. Now typically, this takes place at the middle level. So once we get this big corporate strategy from the very top, the middle level of the organization is then going to come up with its strategy to meet the goal that the top corporate strategy has set for the corporation. And it has an impact all the way down and on the highest levels of the business or the organization that this particular business strategy is for.

Next, we're going to talk about functional strategy. Now functional strategy, this takes place at the lowest level of the organization. And this is how we're going to function day to day to meet those goals that the corporate strategy and business or competitive strategy has set forth. And this impacts managers controlling specific functions of the business.

Now we've talked a little bit about strategy for things that we know or things that we want to plan for. But life is full of unexpected things. So what happens in an unexpected event? We have two key terms we we're going to look at. And the first one is contingency planning.

Now contingency planning is an organizational plan that is in place for responding to possible events. These are things that we know could possibly happen, these things that are within the realm of reality. For instance, planning for a sudden disruption, like a power outage or we lost a shipment of a particular thing or a truck overturned and now a shipment is late. These types of things are all possible events. So these are things we want to be able to plan for and have a plan in place in case these things happen.

Now crisis management is the procedures an organization has in place to deal with emergency events. And this can be things like, oh, I don't know, tsunami waves hitting your nuclear power plant or earthquakes so big they move the island of Japan 9 feet. These are all big crisis events.

And these are definitely what we call emergencies. So we want to make sure we have plans in place to deal with these types of emergencies. And these are definitely crisis situation.

Now the last thing we're going to look at is change management. Now this is the procedures an organization has in place to deal with known changes in the external or internal environments. For instance, we know a particular law is about to get passed by Congress so we know this is going to happen and this is going to affect how we do business and it's going to have an effect such that we need to change our management organization in order to meet that particular change in that external environment. Or people retire so we're going to have to change managers. And how's that going to affect the internal environment of our particular organization?

And in the world we live in, change happens all the time, externally and internally. So having a solid change management plan is going to be very important, especially in today's world where technology can take us through a change in the blink of an eye. So having that good change management plan can really help a business thrive, survive, and succeed. If they can catch other folks who don't do change management, if they catch those folks flat footed.

So what is it we talked about today? Well, first, we looked at strategy, that plan, that organizational plan, toward that goal that we want to get to. We also looked at different strategy types, things like corporate strategy or business strategy or functional strategy that take place among the different levels of an organization. We also looked at contingency planning and crisis management planning. And these are both things that affect how a company is going to react to certain changes.

As always, I want to thank you for spending some time with me today. And you folks have a great day.

Terms to Know
Change Management

The procedures an organization has in place to deal with known changes in the external or internal environments.

Contingency Planning

An organizational plan that is in place for responding to possible events.

Corporate Strategy

The general manner in which a corporation will coordinate it’s operations to achieve specific goals.

Crisis Management

The procedures an organization has in place to deal with emergency events.


A proposal of action to realize a primary objective.