Functional Strategy

Functional Strategy
Functional strategy- selection of decision rules in each functional area. Thus, functional
strategies in any organization, some (e.g., marketing strategy, financial strategy, etc.). It is
desirable that they have been fixed in writing.
In particular, functional strategies are as follows:
Production strategy( "make or buy") - defines what the company produces itself, and that
purchases from suppliers or partners, that is, how far worked out the production chain.
Financial Strategy- to select the main source of funding: the development of their own funds
(depreciation, profit, the issue of shares, etc.) or through debt financing (bank loans, bonds,
commodity suppliers' credits, etc.).
Organizational strategy- decision on the organization of the staff (choose the type of
organizational structure, compensation system, etc.).
May be allocated and other functional strategies, for example, the strategy for research and
experimental development (R & D), investment strategy, etc.
In addition, each of the functional strategies can be divided into components. For example,
organizational strategy can be divided into three components:
 strategy of building organizations - to select the type of structure (divisional, functional,

project, etc.);
 strategy to work with the staff - a way of training (mainly administrative staff), training
of staff (in a business or educational institutions), career planning, etc.;
 Strategy wages (in the broader sense - rewards and penalties) - in particular, the approach
to the compensation of senior managers (salary, bonuses, profit sharing, etc.).
Organization for the implementation of the strategy at the functional area responsible senior
specialist (Ch. Engineer, Director of Finance), at the enterprise level - the general director or
director of the department, at the level of groups of companies - a collegiate body (management,
board of directors).
Corporate-Level Strategy
This kind of strategy is concerned with market definition: what businesses and markets do we
want to be in? A strategic initiative might be launched to answer that question, or more likely
to realize the strategic intent of a new chosen business or market.
The Red-Ocean-Blue-Ocean metaphor has been popular over the last few years. A red ocean is a
market where competitors bloody each other up fighting for market share. A blue ocean is an
emerging, growing business arena; potential competitors have not yet identified it and the
opportunity for success is large.
An example of corporate-level strategy: The February 2011 announcement an alliance

between Microsoft and Nokia Corp. The alliance involve Nokia will produce phones running
Windows Phone 7, a recognition that Nokia’s investment in its own operating system has failed.
The alliance gives Microsoft access to the world’s largest phone maker and its huge mindshare—
in many developing nations a mobile phone is known as a Nokia. The deal with Microsoft gives
both Nokia and Microsoft a route to the future in the smart-phone market.
Business-Level Strategy
This kind of strategy is concerned with succeeding in chosen markets.
An example of a business-level strategy was Domino’s Pizza Turnaround which required all
areas of the organization to pull together to achieve a simple understandable business goal: have
a clear win against competitor in a taste test.
Functional-Level Strategy
This kind of strategy is concerned with making improvements to business functions that
support business and corporate strategy.
Functional strategy include IT strategy, marketing strategy, IT strategy, human resources

strategy, and operations. Typically, documents portraying functional strategy will list estimates
and plans for operating expenses, headcount, and continuous improvement.
As implied by the graphic, functional-level strategy is the foundation that supports both
corporate-level strategy and business strategy. Many strategic initiatives are simply the
implementation of functional strategies, but often a strategic initiative straddles numerous
functions and businesses.
An example of functional-level strategy: In 2008, Swiss Life Group, a Zurich-based insurance

company (ranked #373 on the Fortune Global 500 list) announced a change in its Information
Technology functional strategy priorities. The implications of this was a decision to considerably
scale back the number of IT projects in order to reduce costs through re-prioritization. This was
successful as shown in this November 2010 announcement,

Functional Strategy

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Functional Strategy

In particular, functional strategies are as follows:

 strategy of building organizations - to select the type of structure (divisional, functional,

An example of corporate-level strategy: The February 2011 announcement an alliance

Functional strategy include IT strategy, marketing strategy, IT strategy, human resources

An example of functional-level strategy: In 2008, Swiss Life Group, a Zurich-based insurance

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