INTRODUCTION (FUNCTIONAL LEVEL STRATEGIES)

Introduction (FUNCTIONAL LEVEL STRATEGIES)

Once higher level corporate and business strategies have been developed, management need to formulate and implement strategy for each of the functional areas of business. Strategy of one functional area cannot be looked at in isolation. Different functional areas of the business are interwoven together and how a functional strategy is synergised with other functional strategies determines its effectiveness.

Functional strategies are designed to help in the implementation of corporate and business unit level strategies. For effective implementation, the strategists have to provide direction to the functional managers regarding the plans and policies to be adopted. In fact, the effectiveness of strategic management depends critically on the manner in which strategies are implemented. Functional strategies provide details to business strategy and govern as to how key activities of the business are to be managed.

Functional strategies play two important roles. Firstly, they provide support to the overall business strategy. Secondly, they spell out as to how functional managers will work so as to ensure better performance in their respective functional areas.

Strategies in functional areas including marketing, financial, production, R & D and human resource management are based on the functional capabilities of an organisation. For each functional area, first the major sub areas are identified and then for each of these sub areas, content of functional strategies, important factors, and their importance in the process of strategy implementation are identified.

In terms of the levels of strategy formulation, functional strategies operate below the SBU or business-level strategies. Within functional strategies there might be several sub-functional areas. Functional strategies are made within the framework of corporate level strategies and guidelines therein that are set at higher levels of the organization. Operational plans at the SBU level tell the functional managers what has to be done while policies state how the plans are to be implemented.

The reasons why functional strategies are needed can be enumerated as follows:

•  Functional strategies lay down clearly what is to be done at the functional level. They provide a sense of direction to the functional staff. 
•  They are aimed at facilitating the implementation of corporate strategies and the business strategies formulation at the business level. 
•  They act as basis for controlling activities in the different functional areas of business. 
•  They help in bringing harmony and coordination as they are formulated to achieve major strategies. 
•  Similar situations occurring in different functional areas are handled in a consistent manner by the functional managers. 

Thus, strategies need to be segregated into viable functional plans and policies that are compatible with each other. In this way, strategies can be implemented by the functional managers. Environmental factors relevant to each functional area have an impact on the choice of functional strategies. Corporate strategies influence the formulation of functional strategies.

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