Table of Contents
Meaning
Functional level strategy is the day-to-day strategy designed to aid in the execution of corporate and business level strategies. These plans are developed in accordance with the directives provided by the executive leadership.
Functional level strategy focuses on operational-level decision making, also known as tactical decisions, for several functional domains like as production, marketing, research and development, finance, personnel, etc.
As these decisions are made within the context of business strategy, strategists give functional level managers with adequate guidance and implementation recommendations for the plans and policies the organization will adopt.
Importance of Functional Strategy
- It contributes to the overall business strategy by giving information on the management of business activities.
- It describes how functional managers should strive to obtain better results.
Functional Strategy specifies what is to be performed, how it is to be performed, and when it is to be performed at the functional level, which ultimately serves as a guide for the functional staff. In order to accomplish this, strategies must be broken down into actionable programs and policies that operate in unison. Thus, the strategy can be implemented by the functional managers.
Functional Areas of Business
Several corporate functional areas necessitate strategic decision-making, including the ones listed below:
- Marketing strategy: entails all activities related with identifying consumer needs and making efforts to provide those needs with the product or service they require in exchange for payment. The marketing mix, which includes all the activities a company can take to enhance product demand, is the most essential component of a marketing plan. It consists of product, pricing, location, promotion, people, process, and physical proof. Prior to executing a marketing plan, a detailed SWOT analysis is performed on the company’s current condition. Planning, implementation, and control are its three primary parts.
- Financial strategy: encompasses all aspects of financial management, including planning, obtaining, utilizing, and controlling a company’s financial resources. This includes raising capital, generating budgets, identifying sources and applications of cash, determining investments to be made and assets to be bought, managing working capital, paying dividends, and assessing the net worth of the organization.
- Human resource strategy: addresses how an organization fosters the development of its employees and provides them with the opportunities and working circumstances necessary for them to contribute to the organization. This also entails selecting the best candidate for a specific task or position. It strategizes all HR activities, including recruitment, development, motivation, retention of personnel, and industrial relations.
- Production Strategy: A company’s production strategy focuses on its overall manufacturing system, operational planning and control, logistics, and supply chain management. The major purpose of the production plan is to improve the quality, increase the quantity, and decrease the total production cost.
- Research and Development Strategy: The research and development plan focuses on creating and producing new products, as well as refining existing ones, in order to implement a successful strategy and dominate the market. Product development, concentric diversification, and market penetration are examples of company strategies that necessitate the introduction of new products and substantial modifications to existing ones.
There are three Research and Development methods for the implementation of strategies:
- To be the first business to market a revolutionary technology product
- To be a successful product’s innovative imitator
- To be an inexpensive producer of goods
Functional level plans emphasize the hiring of professionals and the consolidation of activity within the functional area.
