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• Advantages of having a corporate policy

  • Helps in focusing company's activities to its major functional areas of activity (Key Success Factors)
• Disadvantages of having a corporate policy

  • Can lead to inefficiencies such as wasting resources and activities, as well as activities and projects that do not support the overall strategy
• Functional strategies in strategic management


  • Usually a part of overall corporate strategy prepared for various functional areas of its organizational structure (i.e. Production, Marketing, Sales)
  • Helps managers in focusing company's activities to its major functional areas of activity (Key Success Factors)
• Functional areas of a company's organizational structure

  • Marketing
  • Finance
  • Logistics
  • Production
• Functional Strategy step-by-step plan

  1. Aligning business functions and business strategy

  2. From Business Strategy to Functional Strategy
• Functional strategies can be part of the overall business strategy, or serve as separate plans within one functional area
• Corporate strategies defined by upper management

  Middle management defines strategies and implements them for each functional area
• Functional strategies are determined based on business strategies

  Functional strategies support the business strategy
• Functional strategies are not properly aligned with the overall business strategy in many organizations, leading to inefficiencies
• Actively involving functional management when developing functional strategies can help align them with the overall business strategy
• Different sources of information are used to develop a functional strategy including the overall business strategy, preferences and demands from stakeholders, benchmarking, and SWOT analysis
• Collecting input for functional strategies

  1. Input from stakeholders, clients, and the board is taken into account

  2. Benchmarking provides important input

  3. Results of SWOT analysis are considered
• Functional HR outcomes

  • Flexibility to provide new start-ups with resources, talent, etc.
  • Support cross-functional teamwork
• Collecting information about different individual functions

  1. Define expectations and ensure alignment of functional strategy with present reality

  2. Use surveys regularly to assess what is working and what is not
• Defining crucial objectives for functional strategies

  1. Focus on objectives essential for supporting the business strategy

  2. Base objectives on input from different stakeholders
• Preparing for implementation of functional strategy

  1. Involve management team in developing the strategy

  2. Each manager takes personal responsibility for implementing a particular initiative
• Defining Key Performance Indicators (KPIs)

  1. Monitor progress of functional strategy compared to business strategy

  2. KPIs are important for tracking progress
• Feedback & monitoring for functional strategy alignment

  1. Appoint a business steering group to collect feedback and maintain alignment

  2. Ensure alignment of functional strategy with business strategy remains a focus
• Developing a functional strategy based on the business strategy is a good first step for a successful organization
• Circumstances can change as the business develops, so maintaining alignment of functional strategy with the business strategy is crucial
• Exercise 1: Identify the level of strategy each statement refers to - Corporate level, Business Level, Functional Level