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Functional Level Strategy

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Functional Level Strategy

Uploaded by

akumar84070375
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Unit 2

Functional Level Strategy


A functional level strategy is a plan of action to achieve short-term, routine, or day-to-day business goals to
support the corporate and business level strategies. Basically, a functional level strategy helps a business
to manage operational activities on a daily or routine basis.
It is important to note that a functional level strategy involves multiple operational or functional areas
such as marketing, HR, production, R&D, sales, etc., Moreover, every functional unit generally develops
its own functional strategies.
A functional level strategy must have the following ingredients

 It should reflect the corporate and business level objectives/goals.


 It must ensure an optimum allocation of resources in all functional areas/units.
 Last but not least, a functional level strategy needs to maximize the coordination between all
functional areas to optimize their outcomes.

Why is Functional Level Strategy Important?


Functional level strategy is important for any organization because of the following reasons;

1. It works as steppingstones to achieve corporate and business-level objectives.


2. A functional level strategy helps in developing a layout to perform day-to-day/routine business
operations.
3. It acts as a binding force in any business; integrates different functional/operational departments
such as HR, marketing, sales, R&D, production, customer relationship, etc.
4. Functional level strategies are more pragmatic/practical in nature and help in dealing with every
practical scenario at micro levels (in an organization).

Features of Functional Strategies


Here are some important features of a functional level strategy

 In comparison to business or corporate strategies, functional level strategies are short-termed.


 It sets a layout as to what a business should do to make the grand strategy work.
 The basic objective of every functional level strategy is to ultimately pursue the corporate strategy.
 It pertains to the department, function, and division of an organization.
 Functional level strategies also deal with sub-functional areas (if any).
 Every functional unit or department develops its functional strategy on the basis of guidelines from
the higher level.
 Functional level strategies fall last in the hierarchy. They support business-level strategy, which
finally supports the corporate-level strategy.
 Functional level strategies mainly focus on the external environment.
 A functional level strategy may vary for the same organization in different locations. i.e different
business units/franchises in different areas/cities/states.
 Functional strategies of every functional unit must have strong integration between each other to
fulfill overall corporate objectives.

Functional Level Strategies With Examples


There are major types of functional level strategies, including;

Marketing Strategies
Marketing has evolved as one of the most important functional units in any organization. Although
marketing is a vast field itself, it basically focuses on identifying the needs of a target audience and then
offering products or services to cater to those needs. A marketing strategy consists of different parts, but a
marketing mix (product, price, place, promotion) is arguably the most important one.

Currently, there are a number of marketing techniques, including relationship marketing, social
marketing, place marketing, person marketing, direct marketing, etc.
Now, if an organization’s corporate levels strategy focuses on Quality, Delivery, and Efficiency, here is
how different organizational departments respond.
Example
Quality Offering helpful deliverables.

Delivery Timely reacting to the changing seasonal customer needs.

Efficiency Target the right audience for the coming/next marketing campaign.

Financial Strategies
Financial strategy deals with every section/area that comes under financial management. The strategy
mainly focuses on planning, acquiring, using, and controlling a corporation’s financial resources. If we dig a
little deeper, a financial strategy deals with issuing/raising capital, assets acquisition, investments,
budgeting, working capital management, application of funds, dividend payment, etc.

Example
Inputting information and giving it to other functional units with minimum or no
Quality errors.

Delivery Ensuring real-time data access.

Efficiency Automation of accounting/financing process.

Production Strategies
A production strategy manages everything related to the production process. This process includes
manufacturing system, supply chain management, logistics, and operational planning & control. The core
objective of a production strategy is

 Maximizing the quality.


 Minimizing the total cost of production.
 Increasing quantity.
Example
Quality Production process’s quality improvement.

Delivery Minimizing time wastage.

Efficiency Controlling/minimizing production process delays.

Human Resource Strategies


Human resource strategy in an organization deals with every single aspect related to the organization’s
workforce. The core function of any HR department is to work for employees’ development and help them
with suitable working conditions and growth opportunities so they can contribute to organizational goals.
Apart from that, HR covers recruitment, training, motivation, development, and retention of employees.
Example
Quality Regular training programs for skill improvement

Ensuring timely recruitment and hiring process to meet organizational workforce


Delivery needs.

Efficiency Minimizing the costs of the recruitment/hiring process.

Research & Development Strategies


An R&D strategy mainly focuses on two things;

 Innovation; developing new products


 Making improvements in current products
A business needs to keep introducing new products and improve the current ones to implement
different business strategies such as market penetration, concentric diversification, and product
development. Generally, there are three R&D approaches to implement these strategies;
1. Be the innovator; introduce an unprecedented product
2. Produce low-cost products
3. Be a smart, innovative follower; add more features and launch a similar but better product than
competitors.
Example
Quality Developing innovative products for a better customer experience.

Delivery Implement parallel design techniques to minimize time to market.

Efficiency Make R&D processes simpler.

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