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Functional Strategy explained with an example

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Functional Strategy: this article provides a practical explanation of functional strategy . This article highlights the definition, the 3 levels, responsibility, core points, the divisions and a practical example. After reading, you’ll understand the basics of this powerful tool. Enjoy reading!

What is Functional Strategy? A type of definition

In business, plans for the future are defined with goals and objectives. Together these goals are the basis for the strategy that is drawn up to actually achieve them.

Strategies determine the results, performance, and goals that have to be achieved. Generally, strategies are developed on three levels: corporate, business, and functional.

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What are the three strategy levels?

When the corporate strategies (strategy & tactics) have been defined by upper management, middle management will also have to define strategies and implement them for each functional area. Different functional areas of a company’s organisational structure include marketing, financial strategy, logistics strategy, production strategy, etc.

Functional strategies can be part of the overall business strategy, or serve as separate plans within one functional area. The strategies on a functional level include the actions and goals that have been assigned to different departments within the organisation. These support the overall business strategies.

If the broad-level strategy is increasing market share, then examples of functional strategies are increasing the number of trained employees, improving brand recognition, or reducing production inefficiencies .

Who is responsible for functional strategies?

In hierarchical organisations , different people are responsible for the implementation of strategies on a functional level.

Usually they are the senior experts such as a financial manager or engineering manager. On a corporate level, the CEO or president are responsible for the implementation of the most important strategies.

Some examples of common functional strategies are production strategy, debt financing, organisational strategies, marketing strategies, financial strategies, etc.

Functional strategy: the core points

Of the three levels of strategy, the functional strategy is the most detailed one. Each department has its own specific goals and tools or digital support solutions. These are also included in the this strategy. All departments also keep track of statistics on performance and team successes .

Take into account the following matters when creating functional strategies.

1. Aligning functional and business strategy

Eventually the goal of the functional strategies is to support the overall business strategies. That’s why the strategies on a functional level always have to be aligned with the business-level strategy and the corporate-level strategy.

If the business strategy is to increase market share in country X, it makes sense for one of the functional strategies to be to develop the computer systems of a partner in country Y. These goals haven’t been aligned. Chances of success are greater when all strategy levels are aimed at the same result.

2. Progression

A threat to properly implementing this type of strategy is tracking too much data and information in order to measure progress. It’s essential to consider carefully what data must be tracked to determine if progress is being made toward supporting the business strategy.

3. Integration

Just aligning the functional strategy to the business strategy isn’t enough. Horizontally separate functional strategies have to be integrated as well. An example could be coordinating procurement/production, stocks, and logistics. That way you don’t create a bottleneck for items that go through different departments before they get to where they need to be.

4. Allocating resources

It is important that the different divisions and departments get the right resources to implement the functional strategy. In other words, a functional strategy can’t be implemented if the department doesn’t have the resources. This refers to both material resources – money – and personnel.

If the department in question doesn’t have those resources, this can have serious consequences for the extent to which the department can successfully contribute to the business strategy.

Functional divisions

Below we explain a few business areas for which functional strategies are created.

Functional marketing strategy

Marketing consists of activities related to identifying consumer needs and working to meet those needs with a product or service. One of the most important components of a functional marketing strategy is the marketing mix . This consists of all steps a business can and must take to increase demand for products or services.

The traditional marketing mix consists of price, promotion, process, and people.

Prior to implementing the marketing mix, companies often conduct a SWOT analysis to thoroughly analyse the company’s circumstances.

There are a number of strategic marketing techniques, such as relationship marketing , hunger marketing , direct marketing , and brand leadership .

Financial strategy

The Functional Strategy for the financial area relates to everything to do with financial management, such as planning, acquiring, using, and managing a company’s financial resources. It’s about raising capital, creating budgets for various departments, application of funds, investments, work capital management, dividend payments, calculating net values, etc.

Human resources strategy

The functional HR strategy consists of everything related to the development of employees and the opportunities and working conditions they are offered in order for them to be able to contribute to the organisation. The functional HR strategy consists of recruitment & selection, development, motivation, and retaining employees and other relations.

Production strategy

The functional production strategy of a business is focused on the overall production mechanism of the company, operational planning, inspections, logistics, and the entire supply chain management aspect. The primary goal of the product strategy is to improve the quality of production tasks, increasing efficiency, and lowering total production costs.

Research & development strategy

The Functional Strategy for research & development is about innovation and the development of new products as well as the improvement of existing products. Examples of functional strategies in this area: product development, diversification, and market penetration.

Functional Strategy step-by-step plan including an example

Business strategies determine the organisation’s overall course. Based on this, the strategies on the organisation’s functional level are determined. This step-by-step plan describes an approach for defining a strategy at a functional level. It answers the question of how to create a functional strategy that properly supports the business strategy.

Functional Strategy steps - Toolshero

Figure 1 – Steps of a functional strategy

1. Aligning business functions and business strategy

In many organisations, strategies aren’t properly aligned with the overall business strategy. This leads to inefficiencies such as wasting resources and activities, as well as activities and projects that don’t support the overall strategy. In the worst cases, a functional strategy can even impede the overall business strategy.

One way to counteract this is by actively involving the functional management when developing functional strategies. They can provide specific information about workflows and the ways different units work.

As familiar from the theory behind the MOST analysis , it is crucial that the most important stakeholders are involved with creating the strategy. These are shareholders, the board, workers, clients, and suppliers. Their input is important so that the strategies are fully aligned and meet their most important expectations.

2. From Business Strategy to Functional Strategy

Different sources of information are used to develop a functional strategy. In most cases, the overall business strategy is the most important element. Preferences and demands from other stakeholders, such as clients and the board, are also taken into account. In addition, benchmarking provides important input, or the results of SWOT analyses .

Take the example of an HR strategy at a large pharmaceutical company. The business strategy defines a number of strategic objectives. What can HR contribute to this in order to support the overall business strategy?

Goal 1: enter emerging markets Goal 2: develop new products

Functional HR outcomes that serve as the basis for functional strategies in this area could be:

Outcome 1: flexibility to provide new start-ups with resources, talent, etc. Outcome 2: support cross-functional teamwork

3. Collect input from stakeholders

Collecting information about different individual functions isn’t just necessary to define their expectations, but is also aimed at ensuring that the functional strategy is aligned with the present reality. It’s therefore important that organisations regularly use surveys to find out what’s working and what’s not.

In the example of the HR department of the pharmaceutical company, the HR owner must, for instance, initiate an employee satisfaction survey to determine to what extent the positions meet employee expectations.

4. Define crucial objectives

It was explained before that functional strategies are generally much more detailed than, for instance, business strategies. There’s often no shortage of ideas of what to do with functional strategies.

However, the capacity to implement these ideas is usually limited. Therefore focus on the objectives that are absolutely essential for supporting the business strategy. Align this based on the input provided by different stakeholders.

5. Prepare for implementation

When it comes to defining the various functional actions that together make up the functional strategy, ‘who’ is just as important as ‘what’. The best way to achieve this is to turn strategy development into a team activity.

This way every management team is involved in developing the strategy. That allows each manager take personal responsibility for implementing a particular initiative.

6. Define Key Performance Indicators (KPIs)

Key Performance Indicators (KPIs) are vitally important to monitor the progress of the functional strategy compared to the business strategy. You can read more about creating these progress statistics here.

7. Feedback & monitoring

Developing a functional strategy based on the business strategy is a good first step for a successful organisation. However, as the business develops, circumstances can change. That’s why it’s important that the alignment of the functional strategy to the business strategy remains an important focus.

In addition to a set of good KPIs , it’s important that a business steering group is appointed to collect feedback to maintain alignment.

Functional strategy summary

Strategies on a functional level consist of actions and objectives that support the overall business strategy. In hierarchical organisations, different people are responsible for the implementation of various functional strategies.

They are usually the department managers. Such as a general financial director. He or she is responsible for implementing the financial strategy. A marketing manager is responsible for implementing the marketing strategy .

The most important condition for properly functioning strategies is that they are aligned with the overall business strategy. One way to ensure this is to involve functional management with strategy development. They know about the workflows, available resources, and maximum capacity.

When developing a functional strategy, information from different sources is used. Think for instance of input from stakeholders such as clients, the board, and suppliers. Benchmarking and the results of strategic analyses, such as SWOT analyses , are also considered.

Because functional strategies tend to be much more detailed than the overall business strategy, it’s necessary to make a choice from the many possible objectives. Only actions and processes that demonstrably support the business strategies must be implemented to effectively use resources.

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Now it’s your turn

What do you think? Are you familiar with the explanation of functional strategies? Are the functional strategies in your work environment properly aligned to the overall business strategies? Is there room for you to offer input on strategy development? Would you like to see changes to how strategies are organised where you work? Do you have any tips or additional comments?

Share your experience and knowledge in the comments box below.

More information

  • Connor, T. (2001). Product levels as an aid to functional strategy development . Strategic Change, 10(4), 223.
  • Dyer, L. (1983). Bringing human resources into the strategy formulation process . Human Resource Management (pre-1986), 22(3), 257.
  • Gunnigle, P., & Moore, S. (1994). Linking business strategy and human resource management: issues and implications . Personnel Review , 23(1), 63-84.
  • Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2010). Strategic management and business policy . Upper Saddle River, NJ: Prentice Hall .

How to cite this article: Janse, B. (2020). Functional Strategy . Retrieved [insert date] from Toolshero: https://www.toolshero.com/strategy/functional-strategy/

Published on: 03/30/2020 | Last update: 03/30/2023

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Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.

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Business Strategy Definition, Examples, Types & 10-Step Guide

Published: 13 December, 2023

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Stefan F.Dieffenbacher

Digital Strategy

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In the ever-evolving business environment shaped by digital dynamics, business strategy stands as a guiding force. Whether for start-ups or established companies, a well-defined business strategy is indispensable for ensuring long-term success. At Digital Leadership, we deeply grasp its pivotal role in laying the groundwork for effective digital transformation strategy and innovation strategy .

Through our Innovation Consulting and Digital Transformation Consulting services, we foster creativity, ensuring seamless alignment of technology adoption with business goals , and driving purposeful and impactful transformations. We go beyond conventional approaches by integrating Jobs to be Done into your business strategy , focusing on customers’ fundamental needs and motivations to establish meaningful and lasting connections. Taking the first step toward tailored innovation solutions, we offer an Innovation Blueprint, enabling businesses to assess and align their current innovation practices with specific needs and objectives.

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What is Business Strategy?

Business strategy refers to a comprehensive plan or a series of actions meticulously crafted to achieve specific business goals and objectives. It entails a systematic approach aimed at gaining a competitive edge, responding to market dynamics, and attaining sustainable success within a particular industry or market. This strategic framework encompasses several crucial elements, such as defining the organization’s vision, mission, and values, assessing internal strengths and weaknesses, and Identifying external opportunities and threats.

The Business Model Canvas (BMC) plays a pivotal role in business strategy, offering a visual and comprehensive framework that outlines the key components of a business model. Its importance lies in its ability to succinctly capture and communicate the fundamental aspects of how an organization creates, delivers, and captures value. The BMC consists of nine building blocks, including customer segments , value propositions , distribution channels , customer relationships , revenue streams, key resources , key activities , key partnerships , and cost structure . By utilizing the BMC, businesses gain clarity on their core operations, customer interactions, and revenue generation methods. You can download it now.

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An effective business strategy demands an in-depth understanding of the market, competition, and internal capabilities. It involves strategic decision-making regarding resource allocation, target market identification, and the development of a distinctive value proposition to differentiate the organization from its competitors. Importantly, business strategy is not a one-time endeavor but an ongoing process that adapts to changes in the business environment.

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What is Strategy in Business? How Does It Differ From Tactics?

Strategy is a deliberate and well-defined plan that outlines how an organization intends to achieve its goals and objectives, considering the allocation of resources, competitive advantages , and potential challenges. It serves as a roadmap for decision-making and actions to ensure the organization’s success and effectiveness in a dynamic environment.

Strategy and tactics are distinct concepts in the realm of business and planning:

In business, a strategy is the overarching blueprint that outlines an organization’s long-term goals and the broad approaches to achieving them. It is the high-level plan conceived by top leadership to provide direction and set the trajectory for success. Strategic decisions involve critical choices about markets, products, and positioning, impacting the entire organization. A robust strategy serves as a guiding force, providing stability and a framework for decision-making, ensuring that every action aligns with the overall mission.

While strategy sets the grand vision, tactics are the nitty-gritty manoeuvres designed for the immediate implementation of the broader strategy. Tactics are the specific actions, steps, and procedures undertaken by mid-level and front-line managers to execute the strategic plan. Unlike the more enduring nature of strategy, tactics are flexible and adaptable, responding to the dynamic and ever-changing business landscape. They deal with the specifics, answering the question of “how” the strategic goals will be achieved in the short term, making them the hands-on tools for day-to-day operations.

Importance of Business Strategy

A business strategy establishes a unified vision and direction for the entire organization. Clarity in goals and alignment with the company’s mission is crucial for every individual within the company. The strategy plays a pivotal role in providing this overarching vision, ensuring that individuals stay focused and committed to their company’s objectives.

Why is Strategy Important in Business?

Strategy is essential in business for its role as a guiding roadmap. It aligns everyone with shared objectives, prevents deviations from the mission, and enhances internal performance. A well-crafted strategy is crucial for identifying market opportunities and trends, staying competitive, fostering innovation, and creating a comprehensive organizational vision. In essence, strategy is vital for ensuring alignment, efficiency, and adaptability in the dynamic business landscape.

Value Creation for Customers

A successful business strategy centres on understanding value creation . It involves the difference between customer willingness to pay (WTP) and the price of goods or services . The strategy aims to widen these gaps for customers, the firm, suppliers, and employees. By increasing customer delight, firm margin, supplier surplus, and employee satisfaction, businesses create value for all stakeholders. Engaging stakeholders and developing employees are crucial components of a sustainable strategy.

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Enhancing Customer Satisfaction and Boosting Customer Delight

A well-crafted business strategy , deeply rooted in customer-centric principles, becomes the driving force behind tailored products and services that meet specific customer needs. This strategic approach optimizes every customer touchpoint, ensuring consistent and delightful experiences. By fostering a dynamic and adaptable response to changing customer preferences , business strategy enables organizations to stay ahead in a competitive landscape. Moreover, the continuous improvement cycle embedded in strategic planning allows businesses to identify and address pain points , creating a brand experience that goes beyond meeting expectations—it consistently exceeds them, fostering enduring relationships with satisfied and delighted customers.

Internal Business Performance Guide

Internally, a strategic business framework acts as a guiding force for optimal performance. It aligns teams, resources, and processes, fostering a collaborative environment where every individual works cohesively toward common objectives. This alignment enhances operational efficiency and overall effectiveness.

Identify Opportunities and Trends in the Future

Strategic thinking also includes proactive opportunity identification , allowing businesses to capitalize on emerging trends and innovative possibilities for sustained growth. It involves not only addressing current challenges but also anticipating future trends and opportunities. By incorporating this foresight into the business strategy, organizations position themselves as industry leaders, always staying one step ahead in a dynamic business landscape. This proactive approach extends to not just mitigating risks but also actively identifying and capitalizing on emerging opportunities.

Create a Competitive Advantage

Business strategy acts as the cornerstone for businesses aiming to carve out unique positions in the market. Through strategic differentiation, organizations can identify and leverage their strengths while addressing weaknesses, positioning themselves uniquely against competitors. Integrating innovation and foresight into the strategic business framework, empowers businesses to stay at the forefront, consistently delivering value that sets them apart, thereby establishing a sustainable and resilient competitive advantage.

Create a Whole organisational vision

A successful business strategy extends its impact beyond individual initiatives; it encompasses the entire organization. It nurtures a shared vision that aligns everyone toward a common purpose. This cohesive vision not only enhances internal cohesion but also provides a roadmap for sustained growth and success.

10 Key Components of Business Strategy

Developing an effective business strategy involves considering multiple components. 

1- Vision and Business Objectives

In business strategy , the component that lays the very foundation is a compelling vision and precisely defined business objectives. They not only provide direction but also serve as the bedrock for effective decision-making and resource allocation, ensuring that every aspect of the business aligns seamlessly with the overarching strategy. In essence, a well-crafted vision and business objectives are integral components, shaping the very essence of strategic initiatives.

The SWOT analysis emerges as a pivotal component of business strategy . It goes beyond a mere examination of internal strengths and weaknesses or external opportunities and threats; it forms the bedrock for strategic planning . At Digital Leadership, we understand the significance of conducting a SWOT analysis as an indispensable element of business strategy. This comprehensive evaluation becomes the compass, guiding organizations to capitalize on their strengths while tactfully addressing weaknesses. Thus, SWOT analysis stands as an essential cornerstone, providing the strategic clarity needed to navigate the competitive business terrain effectively.

By incorporating The UNITE SWOT Framework into business strategy, organizations gain a comprehensive understanding of their internal landscape and external environment, paving the way for more informed, innovative, and adaptive strategic planning.

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3- Core Values and Resource Allocation

Aligning business strategy with core values ensures ethical decision-making. Strategic resource allocation ensures that resources are deployed efficiently to achieve business objectives.

4- Tactics and Operational Delivery

Effective tactics translate business strategy into action. A well-defined operational plan ensures that day-to-day activities contribute to overarching strategic goals .

5- Measurement and Analysis

Continuous measurement and analysis of key performance indicators (KPIs) help organizations track progress and make data-driven adjustments to their strategy. In business strategy , the relentless pursuit of success demands a vigilant eye on performance metrics and key performance indicators (KPIs). Measuring progress against predefined KPIs serves as a compass, providing real-time insights into the effectiveness of strategic initiatives. This data-driven approach enables organizations to gauge the impact of their actions, identify areas of success, and pinpoint areas that may require strategic recalibration.

6- Supply Chain Management

Supply Chain Management involves the end-to-end oversight of the processes and activities that transform raw materials into final products or services and deliver them to customers. In the realm of business strategy , an efficiently managed supply chain contributes to the seamless execution of strategic initiatives.

7- Integrating Technologies

Strategic integration of cutting-edge technologies, such as AI, IoT, and blockchain, is vital for keeping organizations at the forefront of innovation. This involves leveraging technology to enhance various aspects of business processes. By incorporating emerging technologies into the fabric of the business strategy , organizations can respond effectively to changing market dynamics, customer expectations, and industry trends.

8- Business Process Management

Efficient business processes are integral to successful strategy execution , BPM guides organizations in optimizing their processes for maximum efficiency, ensuring seamless alignment with strategic objectives. As organizations navigate the complex landscape of business strategy , BPM serves as a foundational element, ensuring that operational activities are not only efficient but also in harmony with the broader vision and objectives set forth in the strategic plan.

9- Business Intelligence and Analytics

Informed decision-making relies on accurate data. Incorporating business intelligence and analytics into the business strategy ensures that decisions are data-driven and aligned with organizational goals, fostering a culture of continuous improvement.

10- Competitive Analysis

Understanding the competitive landscape is vital for informed decision-making, it assists organizations in conducting comprehensive competitive analyses and provides valuable insights to inform strategic choices and maintain a competitive edge.

Business Strategy Development in 10 Strategic Steps

How to Develop your Business Strategy - Business Strategy Development

Creating a business strategy is a meticulous process that requires careful consideration. Develop a business strategy   through the following ten strategic steps:

Step (1): Conduct a SWOT Analysis

Embarking on the business strategy journey begins with a thorough SWOT analysis, delving into the intricacies of internal strengths and weaknesses, coupled with external opportunities and threats. This foundational step serves as a compass for businesses, providing a nuanced understanding of their current position in the market landscape. In this comprehensive analysis, internal strengths are scrutinized to leverage and optimize, weaknesses are identified for targeted improvements, opportunities are explored for strategic expansion, and threats are assessed for proactive mitigation.

Step (2): Identify your Business Purpose

Moving forward in the strategic roadmap, it is imperative to distinctly define the purpose that drives the organization’s existence. This step involves a meticulous examination of the company’s mission, vision, and values to articulate a clear and concise business intention and purpose. By aligning the business strategy with the overarching mission and business purpose , businesses can foster coherence, ensuring that every strategic move resonates with the core values that define the organizational identity. This alignment not only serves as a guiding force for decision-making but also establishes a strong foundation for sustainable growth and impact in the marketplace.

TheUNITE Business Intention Model guides organizations to distinctly define the driving force behind their existence. In a meticulous examination encompassing mission, vision, and values, the UNITE model ensures the articulation of a clear and concise business intention and purpose and it establishes a robust foundation for sustainable growth and impact in the marketplace.

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Step (3): setting up business goals.

In the intricate landscape of business strategy development , the third step involves the meticulous process of setting up clear and measurable business goals , the significance of well-defined goals provide a structured roadmap. By articulating specific, measurable, achievable, relevant, and time-bound (SMART) objectives, businesses can ensure that their strategic efforts are purposeful and directed. Through this strategic clarity, organizations can align their resources, efforts, and initiatives with a unified vision, fostering a cohesive and results-oriented approach.

Step (4): Defining Your Competitive Advantage

Defining competitive advantage emerges as a linchpin in the framework of business strateg y, this step holds paramount importance in the strategic narrative, serving as a compass for organizations navigating the competitive terrain. By identifying and leveraging a distinctive competitive advantage, businesses create a unique value proposition that sets them apart. This strategic differentiation becomes a guiding force, steering organizations towards long-term success in a dynamic market.

Step (5): Opportunity Identification in the Market

As organizations embark on the business strategy journey, opportunity Identification emerges as a pivotal and forward-looking endeavour. In this nuanced phase of business strategy development , the focus shifts to the external landscape, where astute organizations keenly observe, analyze, and capitalize on emerging opportunities. By conducting a comprehensive scan of the market, businesses position themselves as agile players ready to navigate the currents of change. It empowers organizations to strategically align resources and capabilities to harness them effectively. In a dynamic business environment , seizing the right opportunities becomes a transformative catalyst for sustained growth and resilience.

Step (6): Build your Team

In the intricate tapestry of business strategy development , building your team stands as a critical pillar defining the success trajectory. At this juncture, the focus transcends individual capabilities to the collective strength of a cohesive and synergistic team. The significance of aligning team dynamics with strategic objectives, fostering collaboration, and harnessing diverse talents. As organizations navigate the complex strategic landscape, a well-built team becomes the driving force, propelling the strategic vision into actionable reality.

Step (7): Enhance Value Creation for Customers, Suppliers, and Employees

In business strategy enhancing value creation for customers, suppliers, and employees, takes centre stage as a transformative act beyond customer-centric approaches, business strategy framework extends its embrace to suppliers and employees, recognizing them as integral stakeholders in the strategic equation. This step signifies more than a transactional give-and-take; it embodies a commitment to fostering lasting relationships and mutual growth from customer delight to supplier partnerships and employee satisfaction, our approach ensures a harmonized symphony of value that resonates through every facet of the organization.

Step (8): Develop your Business Strategy Execution Framework

Developing your business strategy execution framework emerges as the meticulously composed score that transforms strategy into tangible action to execute your  Successful Business Strategy.  It becomes crucial to establish a clear roadmap for turning your strategy into actionable steps and determining the daily activities of the entire team.

The UNITE Strategy Execution Model holds immense importance in guiding organizations through the transformation of strategic plans into actionable steps, ensuring a seamless alignment of daily activities with the overarching business strategy .

Innovation Strategy Execution Framework

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Step (9): flexibility in executing business strategies.

To achieve your business goals and sustain a competitive advantage, flexibility in executing your business strategies is vital. Embracing the “Fail Fast” approach can prove beneficial. Once your Strategy Execution Framework is implemented, be prepared to make adjustments as required.

If certain aspects are not yielding desired results or if market conditions change, be open to pivoting your business strategies accordingly. Do not hesitate to allocate additional resources to specific goals or objectives if necessary. Always remember that adaptability and flexibility are crucial for long-term success in the dynamic business Environment.

Step (10): Measure & Improve

Take proactive steps to measure the impact of your strategy. Numerous businesses rely on AAARRR metrics, commonly known as Pirate Metrics, to assess the effectiveness of their transformation. By employing the Pirate Metrics framework AAARRR metrics, you can track the customer journey from acquisition to activation, retention, revenue generation, and referral. This evaluation simplifies the identification of areas for improvement and innovation, facilitating your progress towards success.

Pirate Metrics Funnel - AAARRR Metrics

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UNITE-Pirate Metrics Funnel (AAARRR)

The Strategic Planning Process guides you through the stages of creating a successful Business Strategy . Utilizing a Business Model Canvas can help you visualize the various components of your operations more effectively.

eXtended Business Model Canvas

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11 Types of Business Strategy with Real-life Business Strategy Examples

When formulating your Business Strategy, it’s valuable to consider the various shapes it can take. Each strategy is viable in its own right, and the direction you choose will be influenced by your Business Purpose and Objectives, as well as the resources available to you.

1) Cost Leadership Business Strategy

Cost Leadership is a strategic approach where a company aims to be the lowest-cost producer in its industry. This strategy involves achieving a competitive advantage by offering products or services at the lowest possible cost. Key elements include economies of scale, operational efficiency, stringent cost control, and often, a pricing strategy that undercuts competitors.

Example: Walmart business strategy

It exemplifies this strategy by leveraging large-scale operations and efficient supply chain management to provide products at lower prices than competitors. While effective, maintaining cost leadership requires a continuous emphasis on efficiency, cost control, and market share growth. However, companies pursuing this strategy must be cautious of potential imitation and should balance cost-saving measures with innovation to stay competitive.

2) Focused Business Strategy

A Focused Business Strategy, also known as a niche or segmentation strategy, involves targeting a specific segment of the market rather than trying to appeal to the entire market. This strategy is effective when a company identifies a particular market segment with unique needs and preferences.

Examples: Tesla Business Strategy

It employs a focused strategy by concentrating on the electric vehicle market. Instead of catering to the broad automobile market, Tesla targets consumers seeking high-performance electric vehicles. Focused strategies allow companies to tailor their products or services to meet the distinct demands of a niche market, often resulting in higher customer loyalty and less competition. However, it requires a deep understanding of the chosen segment and the ability to provide superior value to customers within that niche.

3) Differentiation Business Strategy

A Differentiation Business Strategy involves offering unique and distinctive products or services that stand out from competitors in the market. Apple, a prominent example, excels in differentiation through its innovative product designs, user-friendly interfaces, and ecosystem integration.

Examples: Apple Business Strategy

Apple’s strategy focuses on creating premium, high-quality products that provide a unique user experience, setting them apart from competitors. Differentiation strategies often lead to higher product prices, but they also cultivate brand loyalty and perceived value among customers. Successful differentiation requires continuous innovation, investment in research and development, and a keen understanding of customer preferences. Companies employing this strategy strive to build a strong brand image that becomes synonymous with quality and innovation in the minds of consumers.

let’s categorize Apple’s strategy into two types of Differentiation Business Strategy: Broad Differentiation and Focused Differentiation .

  • Apple’s Approach: Apple adopts a broad differentiation strategy by offering a wide range of unique and distinctive products to a large consumer market.
  • Diverse product line, including iPhones, iPads, MacBooks, Apple Watch, and more.
  • Emphasis on innovative design, cutting-edge technology, and user-friendly interfaces across all product categories.
  • Premium pricing is justified by perceived quality, innovation, and the Apple brand.
  • Apple’s Approach: Within its broad product line, Apple also employs a focused differentiation strategy by tailoring certain products to specific market segments.
  • Examples include specialized products like the Mac Pro for professional users and the iPad Pro for creative professionals.
  • Customization and features geared towards the unique needs of specific user groups.
  • Premium pricing for specialized products, targeting customers willing to pay for enhanced capabilities.

4) Sustainable Business Strategy

Sustainable Business Strategies centre around environmentally conscious practices, social responsibility, and long-term viability. Companies adopting sustainable strategies aim to minimize their environmental impact while contributing positively to society.

Examples of business Strategies

  • Tesla Business Strategy: Tesla exemplifies a sustainable business strategy with its commitment to electric vehicles, renewable energy solutions, and reducing carbon footprints. By prioritizing sustainability, Tesla not only aligns with growing environmental concerns but also attracts a consumer base increasingly valuing eco-friendly practices. Sustainable strategies extend beyond environmental aspects, encompassing ethical labour practices, community engagement, and transparent governance.
  • Coca-Cola Business Strategy: Coca-Cola implements an Environmental Sustainability Strategy to reduce its carbon footprint and water usage, emphasizing responsible sourcing and recycling initiatives.
  • IKEA Business Strategy: IKEA adopts an Eco-Friendly Business Approach by promoting sustainable sourcing of materials and designing products with a focus on longevity and recyclability.

These companies demonstrate a commitment to addressing global challenges, such as climate change and resource depletion, by integrating sustainable practices into their core business strategies. Sustainable strategies not only contribute to corporate social responsibility but also resonate with environmentally conscious consumers, fostering a positive brand image.

5) E-commerce Business Strateg y

Ecommerce Business Strategies revolve around effective online retailing, leveraging digital platforms, and optimizing customer experiences. Amazon, a prime example of a successful e-commerce strategy, employs an omnichannel retailing approach. This involves seamlessly integrating online and offline channels, providing customers with a cohesive shopping experience.

Example of a business strategy: Amazon Business Strategy

Amazon’s vast product selection, efficient logistics, and customer-centric focus contribute to its dominance in the ecommerce sector. The company strategically leverages technology, such as AI algorithms for personalized recommendations, to enhance user engagement. By prioritizing convenience, diverse product offerings, and customer satisfaction, Amazon exemplifies how ecommerce strategies can lead to market leadership and sustained growth in the digital era.

6) Competitive Business Strateg y

Competitive Business Strategies are essential for organizations seeking to gain a market advantage and outperform rivals.

Example of business strategy: Nike business strategy

Nike, adopts a differentiation strategy by focusing on innovation, branding, and product design. Nike’s marketing and product development efforts create a distinct brand image and a perceived higher value, justifying premium pricing. These examples showcase how varied competitive strategies align with business goals, enabling companies to thrive in diverse market landscapes.

7) Design Thinking in Business Strategy

Design Thinking in Business Strategy involves placing a strong emphasis on user experience, innovation, and customer-centric solutions.

Design Thinking business strategy examples:

  • Zara business strategy : It adopts an Agile and Customer-Centric Approach in its fashion retail strategy, responding quickly to market trends and customer preferences.
  • Starbucks business strategy : it differentiates itself through an Experience-focused Store Design, creating inviting and personalized environments that enhance the overall customer experience.

Design Thinking goes beyond aesthetics; it shapes the entire product or service journey, ensuring that businesses resonate with their target audience and remain adaptable to evolving market needs. These real-life examples showcase the transformative power of design thinking in crafting successful business strategies.

8) Data Driven Business Strategy

Data-Driven Business Strategies harness the power of information to optimize decision-making and enhance customer experiences.

Data Driven Business Strategy Examples

  • Netflix Business Strategy: Its Personalized Content Recommendation Strategy, utilizes data analytics to suggest tailored content, engaging users and increasing satisfaction.
  • McDonald Business Strategy : It adopts a Data-Enhanced Customer Experience strategy, leveraging customer data to personalize offerings and improve service efficiency.

These business strategy examples illustrate the transformative impact of data-driven approaches, emphasizing the importance of leveraging insights for strategic decision-making and creating a more personalized and responsive customer journey. In today’s digital landscape, businesses that harness the potential of data gain a competitive edge by staying attuned to customer preferences and market trends.

9) Technology Business Strategy

Technology Business Strategies exemplified by Google and YouTube showcase innovative approaches to digital market dominance. Google business strategy includes pioneering search algorithms, cloud services, and diverse digital products. And youtube’s business strategy focuses on Digital Platform Expansion, continually evolving as a video-sharing giant and expanding its reach. These strategies highlight the importance of diversification, continuous innovation, and a commitment to technological advancement. In the fast-paced tech industry, adapting and expanding digital capabilities ensure long-term relevance and sustained growth, marking these companies as trailblazers in the ever-evolving digital landscape.

10) Business Turnaround Strategy

Business Turnaround Strategies, as exemplified by IBM and Microsoft, underscore the importance of adaptability and strategic redirection in the face of challenges. IBM business strategy is a Successful Business Transformation strategy that stands as a testament to its ability to reinvent itself, transitioning from traditional hardware and services to a focus on emerging technologies like cloud computing and artificial intelligence. On the other hand, Microsoft’s Corporate Business Strategy showcases the company’s resilience in navigating market shifts and leveraging its strengths in software and cloud services. These examples highlight the significance of strategic agility, innovation, and a proactive approach in revitalizing businesses for sustained success.

11) Retail Business Strategy

Retail Business Strategies encompass a diverse range of approaches tailored to the dynamic consumer landscape. Emphasizing customer experience, streamlined operations, and omnichannel engagement, successful retail strategies strive to meet evolving market demands. These strategies often include personalized customer interactions, inventory optimization, and seamless online and offline integration. Retail giants continually refine their approaches, with a focus on adaptability, innovation, and leveraging technology to enhance the shopping experience. The retail sector’s strategies evolve to align with shifting consumer behaviors, making agility and customer-centricity key elements in sustaining competitiveness.

Digital Business Strategy

Digital business strategy is a comprehensive approach that organizations adopt to leverage digital technologies for transformative outcomes. In the digital era, businesses recognize the need to go beyond traditional models and embrace digitalization to stay competitive. This strategy involves integrating digital technologies into all aspects of a business, from operations and customer interactions to product/service delivery. Key components often include data analytics, cloud computing, artificial intelligence, and innovative digital platforms.

The goal is to enhance efficiency, customer experience, and overall organizational performance. Companies implementing a digital business strategy position themselves to navigate the digital landscape, respond to market changes swiftly and unlock new opportunities for growth. It’s a proactive approach that embraces digital transformation as a fundamental driver of success in the modern business landscape.

Business Growth Strategy

Business Growth Strategy refers to the deliberate and proactive planning and actions taken by organizations to expand and increase their market share, revenue, and overall scale. This strategy is crucial for organizations aiming to progress and thrive in competitive markets. Business growth can take various forms, such as expanding product lines, entering new markets, acquiring other businesses, or diversifying operations. It involves identifying opportunities for expansion, assessing potential risks, and developing a comprehensive plan to achieve sustainable growth. Successful business growth strategies align with the organization’s overall objectives and market conditions, ensuring that expansion efforts contribute positively to the company’s long-term success. Implementation often requires a combination of innovation, strategic partnerships, and operational excellence to capitalize on opportunities and navigate challenges effectively.

Corporate Strategy vs Business Strategy: What’s the Difference?

Corporate strategy and business strategy are distinct yet interconnected concepts that guide an organization’s overall direction and decision-making. Here’s a breakdown of the key differences between the two:

Corporate Strategy:

  • Scope: Corporate strategy involves decisions at the highest level of an organization, addressing its overall mission, vision, and goals.
  • Focus: It is concerned with how the organization as a whole will achieve success and sustain its position in the market.
  • Decision-Making: Corporate strategy decisions often involve choices regarding diversification, mergers and acquisitions, resource allocation, and portfolio management.
  • Time Horizon: Corporate strategy tends to have a longer time horizon and looks at the organization’s position in the industry over an extended period.

Business Strategy:

  • Scope: Business strategy is more specific, focusing on a particular business unit, product line, or market segment within the organization.
  • Focus: It is concerned with how a specific part of the organization will compete effectively in its market and achieve its objectives.
  • Decision-Making: Business strategy decisions involve choices related to product development, market positioning, pricing, and competitive advantage.
  • Time Horizon: Business strategy often operates within a shorter time frame, addressing challenges and opportunities in the near to medium term.

In essence, corporate strategy sets the overall direction of the entire organization, while business strategy zooms in on how individual business units or segments will achieve success within that broader framework. Together, they ensure alignment between the organization’s overarching goals and the specific actions taken at different levels.

What is Business Level Strategy

Business-level strategy pertains to the intentional and strategic actions undertaken by companies to attain a competitive advantage within their designated market segments. This strategy entails crucial decisions regarding resource allocation, product differentiation, and the creation of distinctive value for customers. Through the successful implementation of a clearly defined business-level strategy, companies can establish a unique market position, allure customers, and foster sustainable growth.

Strategies in organizations operate at three distinct levels: Corporate, Business, and Functional.

  • Corporate Level : This is the highest level, where top management establishes the strategic plans, including the mission and vision statements. Corporate-level strategies profoundly influence the long-term performance of the organization, guiding decisions related to growth, acquisitions, diversification, and investments.
  • Business Level : Business level strategies align with the corporate vision but focus on a specific business or market segment. At this level, the broader vision and objectives are translated into tangible strategies that outline how a business will compete in its specific market.
  • Functional Level : Functional level strategies address how various departments such as Marketing, HR, or R&D can support the defined business and corporate strategies. These strategies ensure alignment and coordination across different functions within the organization.

It’s common for a company to have multiple strategies at each level, reflecting the diverse needs of each layer. While managing multiple strategies introduces the risk of conflicting priorities, effective management can mitigate these risks.

Integrating Digital Transformation Strategy with Innovation Strategy in Your Business Strategy

Integrating Digital Transformation Strategy with Innovation Strategy is a dynamic approach that propels organizations to the forefront of the rapidly evolving business landscape. This synergy harnesses the power of technological advancements and creative ideation to drive comprehensive organizational change.

  • Digital transformation acts as the enabler, ensuring that technological innovations are seamlessly integrated into various facets of the business.
  • Innovation strategy fosters a culture of creativity, encouraging novel ideas and solutions to meet evolving market demands.

By strategically aligning these two pillars within the broader context of business strategy, organizations not only adapt to the digital era but also position themselves as pioneers, capable of continuous innovation to stay ahead of the competition. This interconnected strategy promotes agility, resilience, and a forward-looking mindset, essential elements for sustainable success in today’s dynamic business environment.

Frequently Asked Questions

1- what is a strategy.

A strategy is a meticulously devised plan that outlines the approach an organization takes to achieve its long-term goals. It involves a comprehensive and forward-thinking approach to decision-making.

2- What does strategic mean in business?

In business, being strategic encompasses making decisions that contribute not only to immediate success but also to the long-term sustainability and competitive advantage of the organization. It involves foresight and a proactive mindset.

3- Who is responsible for business strategy?

Business strategy is a collaborative effort led by senior leadership. However, the responsibility extends to experts specializing in strategic planning , such as the professionals at Digital Leadership. These experts play a pivotal role in crafting effective and innovative strategies tailored to the unique needs of organizations, ensuring a holistic and forward-looking approach.

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Functional Level Strategy: What Is It? Types & Examples?

  • May 21, 2021

people are discussing functional level strategy

After figuring out the purpose of your business and how you can compete in the market (corporate- and business-level strategies), it’s time to plan out your functional level strategy.

Each area of your business needs to be tied to a functional strategy so that each team can have specific plans and work toward the main business goals.

3 levels of business strategy

There are 3 main levels of business strategy: corporate-level strategy, business-level strategy, and functional-level strategy.

Why don’t we jump right into the functional-level strategy? Why do we have to read about 3 levels of strategies first? Because each of these strategies has its own functions regarding your business operations, and they’re all related.

Corporate level strategy

This is the highest level of strategy in your business. It has the ultimate influence on all the parts of your business—team goals, resources, priorities, expectations, etc.

Examples of corporate-level strategy include entering a new market, increasing market share, acquiring another company, etc.

Business level strategy

This is where the corporate strategies are broken down into more specific strategies. Business-level strategy focuses on creating a competitive advantage for your company in the market/industry.

Business-level strategy needs to align with the corporate strategies and help you achieve the overall business goals.

For example, if your corporate-level strategy is to increase market share, your business-level strategies can be:

  • improve the quality of an existing product
  • cut costs and charge lower prices
  • introduce a new unique feature of a product

Functional level strategy

The functional-level strategy determines the daily operations of each team/department in your business. It supports the execution of business-level strategy and corporate-level strategy.

In other words, a functional strategy is like a short-term plan for specific areas of your business. It includes tactics, goals, tasks to achieve those goals, resources, and a definite timeline. Management needs to track progress, assign and delegate, as well as following-up with their team members.

Function-level strategies usually target the following 4 specific goals:

  • Increase efficiency
  • Improve quality
  • Renew business
  • Respond to customers

Let’s continue with the example in the above levels of strategies. To serve the corporate strategy of increasing market share, your functional-level strategy for different teams can be:

  • R&D: research and develop new features, improve existing features
  • Marketing: lower the budget spent for some expensive campaigns

a team is discussing how to develop an existing product

Benefits of functional level strategy

Functional-level strategies help your company achieve the overall business goals, and tell you what needs to be done and in what ways. You need to align them with your organizational strategies , too.

In other words, functional strategies will give you an overall view of the big picture, as well as the smaller details within your business.

So, when it comes to setting functional-level strategies, you need to make them specific and actionable. It takes time and effort at first, but it’ll be much easier for you in the long term.

Characteristics of functional level strategy

Aligned with higher-level strategies.

Functional-level strategies need to align with corporate-level strategies and business-level strategies. They have to serve the main goals of your business.

Specific and actionable

While corporate-level strategies need to be broad, functional-level strategies are much more detailed. The tactics, goals, and steps need to be specific and actionable. You may need particular metrics to measure the success of each step.

Matching your existing resources

It’s best to know what resources your business currently has (labor, materials, facilities, etc). And your functional-level strategies need to match the resources.

In other words, they need to make the best use of what you have. And you don’t want to create strategies based on things you don’t have or can’t afford.

Functional level strategy needs to be measurable so that you can monitor your progress and make adjustments accordingly.

While it’s important to track your progress closely, you need to measure aspects that reflect how you’re striving towards corporate-level strategies and business-level strategies.

If you try to measure everything, you’ll be overwhelmed with unnecessary data and information.

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Strategies for functional areas of your business

Below are some strategies for the main functional areas that keep a business running. Understanding what strategies you can implement in each area will give you some ideas for your strategy-planning sessions.

Marketing includes the whole process of identifying customer needs and creating value for customers to capture value from them in return. The goal is to build and strengthen long-term relationships with customers.

Marketing strategies include steps to improve products, set prices, distribute and promote them, etc.

To implement marketing strategy, you can study your competitors using SWOT analysis (Strength, Weakness, Opportunity & Threats). You need to plan for different channels of marketing—whether it’s social media or direct marketing.

This includes the steps to manage your business finance—from raising capital and seeding funds, budgeting, and investing to acquiring assets and evaluating business net worth, etc.

Human resources

These strategies include recruitment, selection, hiring, training, development, team building, employee engagement and retention.

Production strategies focus on enhancing product quality and reduce production costs through managing manufacturing and operating system, as well as logistics and supply.

Research and development

Research and Development (R&D) strategies cover steps to improve existing products and develop new ones.

R&D strategies are often related to Cost Leadership and Differentiation strategies. If your company intends to occupy a certain segment, you must find out the right product for that segment and how to beat existing competitors, whether with a unique difference or with a cheaper price.

Examples of functional level strategy

If your corporate-level strategies include improving quality, efficiency, and delivery, then the functional-level strategies for different departments within your business might be:

Research & development

Quality: Design products that bring innovative changes to customer experience

Efficiency: Simplify the research & development processes

Delivery: reduce time to market by implementing parallel design techniques

Quality: Offer helpful deliverables

Efficiency: Target the right group of customers for the next marketing campaign

Delivery: React to the seasonal needs timely

Quality: Offer monthly training sessions

Efficiency: Minimize the costs of hiring and onboarding

Delivery: Find effective sources to hire and train employees timely to meet business demands

Quality: Find suppliers that provide reliable and high-quality supply

Efficiency: Establish relationships with suppliers and negotiate the best prices

Delivery: Stock enough and avoid redundancy

Quality: Improve the quality of the production process

Efficiency: Minimize time wasted in inefficient procedures

Delivery: Minimize delays in production

Quality: Minimize errors when inputting information and providing them to other departments

Efficiency: Automate the accounting process

Delivery: Provide real-time access to data

Functional-level strategies are difficult to set because they require lots of specific planning. But they’re there to align the goals of each area of your business with your company’s goals. And you can also have a better view of the operations of each department in your business.

Remember to set corporate-level and business-level strategies before setting functional-level strategies!

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The strategic planning process in 4 steps, to help you throughout our strategic planning framework, we have created a how-to guide on the basics of a strategic plan, which we will take you through step-by-step..

Free Strategic Planning Guide

What is Strategic Planning?

Strategic Planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy development.

What

Overview of the Strategic Planning Process:

The strategic management process involves taking your organization on a journey from point A (where you are today) to point B (your vision of the future).

Part of that journey is the strategy built during strategic planning, and part of it is execution during the strategic management process. A good strategic plan dictates “how” you travel the selected road.

Effective execution ensures you are reviewing, refreshing, and recalibrating your strategy to reach your destination. The planning process should take no longer than 90 days. But, move at a pace that works best for you and your team and leverage this as a resource.

To kick this process off, we recommend 1-2 weeks (1-hour meeting with the Owner/CEO, Strategy Director, and Facilitator (if necessary) to discuss the information collected and direction for continued planning.)

Strategic Planning Guide and Process

Questions to Ask:

  • Who is on your Planning Team? What senior leadership members and key stakeholders are included? Checkout these links you need help finding a strategic planning consultant , someone to facilitate strategic planning , or expert AI strategy consulting .
  • Who will be the business process owner (Strategy Director) of planning in your organization?
  • Fast forward 12 months from now, what do you want to see differently in your organization as a result of your strategic plan and implementation?
  • Planning team members are informed of their roles and responsibilities.
  • A strategic planning schedule is established.
  • Existing planning information and secondary data collected.

Action Grid:

What

Step 1: Determine Organizational Readiness

Set up your plan for success – questions to ask:

  • Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
  • Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?

Step 2: Develop Your Team & Schedule

Who is going to be on your planning team? You need to choose someone to oversee the strategy implementation (Chief Strategy Officer or Strategy Director) and strategic management of your plan? You need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 people.

OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .

Step 3: Collect Current Data

All strategic plans are developed using the following information:

  • The last strategic plan, even if it is not current
  • Mission statement, vision statement, values statement
  • Past or current Business plan
  • Financial records for the last few years
  • Marketing plan
  • Other information, such as last year’s SWOT, sales figures and projections

Step 4: Review Collected Data

Review the data collected in the last action with your strategy director and facilitator.

  • What trends do you see?
  • Are there areas of obvious weakness or strengths?
  • Have you been following a plan or have you just been going along with the market?

Conclusion: A successful strategic plan must be adaptable to changing conditions. Organizations benefit from having a flexible plan that can evolve, as assumptions and goals may need adjustments. Preparing to adapt or restart the planning process is crucial, so we recommend updating actions quarterly and refreshing your plan annually.

Strategic Planning Pyramid

Strategic Planning Phase 1: Determine Your Strategic Position

Want more? Dive into the “ Evaluate Your Strategic Position ” How-To Guide.

Action Grid

Step 1: identify strategic issues.

Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.

  • How will we grow, stabilize, or retrench in order to sustain our organization into the future?
  • How will we diversify our revenue to reduce our dependence on a major customer?
  • What must we do to improve our cost structure and stay competitive?
  • How and where must we innovate our products and services?

Step 2: Conduct an Environmental Scan

Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.

Step 3: Conduct a Competitive Analysis

The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:

  • To help you assess whether your competitive advantage is really an advantage.
  • To understand what your competitors’ current and future strategies are so you can plan accordingly.
  • To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.

Learn more on how to conduct a competitive analysis here .

Step 4: Identify Opportunities and Threats

Opportunities are situations that exist but must be acted on if the business is to benefit from them.

What do you want to capitalize on?

  • What new needs of customers could you meet?
  • What are the economic trends that benefit you?
  • What are the emerging political and social opportunities?
  • What niches have your competitors missed?

Threats refer to external conditions or barriers preventing a company from reaching its objectives.

What do you need to mitigate? What external driving force do you need to anticipate?

Questions to Answer:

  • What are the negative economic trends?
  • What are the negative political and social trends?
  • Where are competitors about to bite you?
  • Where are you vulnerable?

Step 5: Identify Strengths and Weaknesses

Strengths refer to what your company does well.

What do you want to build on?

  • What do you do well (in sales, marketing, operations, management)?
  • What are your core competencies?
  • What differentiates you from your competitors?
  • Why do your customers buy from you?

Weaknesses refer to any limitations a company faces in developing or implementing a strategy.

What do you need to shore up?

  • Where do you lack resources?
  • What can you do better?
  • Where are you losing money?
  • In what areas do your competitors have an edge?

Step 6: Customer Segments

What

Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.

  • What needs or wants define your ideal customer?
  • What characteristics describe your typical customer?
  • Can you sort your customers into different profiles using their needs, wants and characteristics?
  • Can you reach this segment through clear communication channels?

Step 7: Develop Your SWOT

What

A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.

It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”

  • Build on your strengths
  • Shore up your weaknesses
  • Capitalize on your opportunities
  • Manage your threats

What

Strategic Planning Process Phase 2: Developing Strategy

Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.

Step 1: Develop Your Mission Statement

The mission statement describes an organization’s purpose or reason for existing.

What is our purpose? Why do we exist? What do we do?

  • What are your organization’s goals? What does your organization intend to accomplish?
  • Why do you work here? Why is it special to work here?
  • What would happen if we were not here?

Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.

Step 2: discover your values.

Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .

How will we behave?

  • What are the key non-negotiables that are critical to the company’s success?
  • What guiding principles are core to how we operate in this organization?
  • What behaviors do you expect to see?
  • If the circumstances changed and penalized us for holding this core value, would we still keep it?

Outcome: Short list of 5-7 core values.

Step 3: casting your vision statement.

What

A Vision Statement defines your desired future state and directs where we are going as an organization.

Where are we going?

  • What will our organization look like 5–10 years from now?
  • What does success look like?
  • What are we aspiring to achieve?
  • What mountain are you climbing and why?

Outcome: A picture of the future.

Step 4: identify your competitive advantages.

How to Identify Competitive Advantages

A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.

What are we best at?

  • What are your unique strengths?
  • What are you best at in your market?
  • Do your customers still value what is being delivered? Ask them.
  • How do your value propositions stack up in the marketplace?

Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.

Step 5: crafting your organization-wide strategies.

What

Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”

How will we succeed?

  • Broad: market scope; a relatively wide market emphasis.
  • Narrow: limited to only one or few segments in the market
  • Does your competitive position focus on lowest total cost or product/service differentiation or both?

Outcome: Establish the general, umbrella methods you intend to use to reach your vision.

What

Phase 3: Strategic Plan Development

Want More? Deep Dive Into the “Build Your Plan” How-To Guide.

Strategic Planning Process Step 1: Use Your SWOT to Set Priorities

If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:

TOWS Strategic Alternatives Matrix

Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.

Step 2: Define Long-Term Strategic Objectives

Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?

Questions to ask:

  • What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
  • To reach our outcomes, what value must we provide to our customers? What is our value proposition?
  • To provide value, what process must we excel at to deliver our products and services?
  • To drive our processes, what skills, capabilities and organizational structure must we have?

Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.

Strategy Map

Step 3: Setting Organization-Wide Goals and Measures

What

Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).

You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.

Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.

What is most important right now to reach our long-term objectives?

Outcome: clear outcomes for the current year..

Strategic Planning Outcomes Table

Step 4: Select KPIs

What

Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.

How will we measure our success?

Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.

Step 5: Cascade Your Strategies to Operations

NPS Step #5

To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.

Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.

Questions to Ask

  • How are we going to get there at a functional level?
  • Who must do what by when to accomplish and drive the organizational goals?
  • What strategic questions still remain and need to be solved?

Department/functional goals, actions, measures and targets for the next 12-24 months

Step 6: Cascading Goals to Departments and Team Members

Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.

Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.

Examples of Cascading Goals:

What

Phase 4: Executing Strategy and Managing Performance

Want more? Dive Into the “Managing Performance” How-To Guide.

Step 1: Strategic Plan Implementation Schedule

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.

How will we use the plan as a management tool?

  • Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
  • Process Leader: Who is your strategy director?
  • Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
  • System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?

Outcome: Syncing your plan into the “rhythm of your business.”

Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:

  • Establish your performance management and reward system.
  • Set up monthly and quarterly strategy meetings with established reporting procedures.
  • Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.

Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.

Strategic Planning Calendar

Step 2: Tracking Goals & Actions

Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.

By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.

Effective Strategic Planning: Your Bi-Annual Checklist

What

Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:

  • Will your goals be achieved within the time frame of the plan? If not, why?
  • Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
  • Are your goals and action items still realistic?
  • Should the organization’s focus be changed to put more emphasis on achieving your goals?
  • Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
  • What can be gathered from an adaptation to improve future planning activities?

Why Track Your Goals?

  • Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
  • Culture: Successful plans tie tracking and updating goals into organizational culture.
  • Implementation: If you don’t review and update your strategic goals, they are just good intentions
  • Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
  • Empowerment: Changing goals from In Progress to Complete just feels good!

Step 3: Review & Adapt

Guidelines for your strategy review.

The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.

The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.

Strategy Review Session Questions:

Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..

Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..

Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.

A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.

There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.

Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:

Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?

Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?

Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.

Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?

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business strategy includes functional plans from which of the following groups

  • 2.1 Developing a Strategic Plan
  • 1 Unit Introduction
  • In the Spotlight
  • 1.1 Marketing and the Marketing Process
  • 1.2 The Marketing Mix and the 4Ps of Marketing
  • 1.3 Factors Comprising and Affecting the Marketing Environment
  • 1.4 Evolution of the Marketing Concept
  • 1.5 Determining Consumer Needs and Wants
  • 1.6 Customer Relationship Management (CRM)
  • 1.7 Ethical Marketing
  • Chapter Summary
  • Applied Marketing Knowledge: Discussion Questions
  • Critical Thinking Exercises
  • Building Your Personal Brand
  • What Do Marketers Do?
  • Marketing Plan Exercise
  • Closing Company Case
  • 2.2 The Role of Marketing in the Strategic Planning Process
  • 2.3 Purpose and Structure of the Marketing Plan
  • 2.4 Marketing Plan Progress Using Metrics
  • 2.5 Ethical Issues in Developing a Marketing Strategy
  • 2 Unit Introduction
  • 3.1 Understanding Consumer Markets and Buying Behavior
  • 3.2 Factors That Influence Consumer Buying Behavior
  • 3.3 The Consumer Purchasing Decision Process
  • 3.4 Ethical Issues in Consumer Buying Behavior
  • 4.1 The Business-to-Business (B2B) Market
  • 4.2 Buyers and Buying Situations in a B2B Market
  • 4.3 Major Influences on B2B Buyer Behavior
  • 4.4 Stages in the B2B Buying Process
  • 4.5 Ethical Issues in B2B Marketing
  • 5.1 Market Segmentation and Consumer Markets
  • 5.2 Segmentation of B2B Markets
  • 5.3 Segmentation of International Markets
  • 5.4 Essential Factors in Effective Market Segmentation
  • 5.5 Selecting Target Markets
  • 5.6 Product Positioning
  • 5.7 Ethical Concerns and Target Marketing
  • 6.1 Marketing Research and Big Data
  • 6.2 Sources of Marketing Information
  • 6.3 Steps in a Successful Marketing Research Plan
  • 6.4 Ethical Issues in Marketing Research
  • 7.1 The Global Market and Advantages of International Trade
  • 7.2 Assessment of Global Markets for Opportunities
  • 7.3 Entering the Global Arena
  • 7.4 Marketing in a Global Environment
  • 7.5 Ethical Issues in the Global Marketplace
  • 8.1 Strategic Marketing: Standardization versus Adaptation
  • 8.2 Diversity and Inclusion Marketing
  • 8.3 Multicultural Marketing
  • 8.4 Marketing to Hispanic, Black, and Asian Consumers
  • 8.5 Marketing to Sociodemographic Groups
  • 8.6 Ethical Issues in Diversity Marketing
  • 3 Unit Introduction
  • 9.1 Products, Services, and Experiences
  • 9.2 Product Items, Product Lines, and Product Mixes
  • 9.3 The Product Life Cycle
  • 9.4 Marketing Strategies at Each Stage of the Product Life Cycle
  • 9.5 Branding and Brand Development
  • 9.6 Forms of Brand Development, Brand Loyalty, and Brand Metrics
  • 9.7 Creating Value through Packaging and Labeling
  • 9.8 Environmental Concerns Regarding Packaging
  • 9.9 Ethical Issues in Packaging
  • 10.1 New Products from a Customer’s Perspective
  • 10.2 Stages of the New Product Development Process
  • 10.3 The Use of Metrics in Evaluating New Products
  • 10.4 Factors Contributing to the Success or Failure of New Products
  • 10.5 Stages in the Consumer Adoption Process for New Products
  • 10.6 Ethical Considerations in New Product Development
  • 11.1 Classification of Services
  • 11.2 The Service-Profit Chain Model and the Service Marketing Triangle
  • 11.3 The Gap Model of Service Quality
  • 11.4 Ethical Considerations in Providing Services
  • 12.1 Pricing and Its Role in the Marketing Mix
  • 12.2 The Five Critical Cs of Pricing
  • 12.3 The Five-Step Procedure for Establishing Pricing Policy
  • 12.4 Pricing Strategies for New Products
  • 12.5 Pricing Strategies and Tactics for Existing Products
  • 12.6 Ethical Considerations in Pricing
  • 13.1 The Promotion Mix and Its Elements
  • 13.2 The Communication Process
  • 13.3 Integrated Marketing Communications
  • 13.4 Steps in the IMC Planning Process
  • 13.5 Ethical Issues in Marketing Communication
  • 14.1 Advertising in the Promotion Mix
  • 14.2 Major Decisions in Developing an Advertising Plan
  • 14.3 The Use of Metrics to Measure Advertising Campaign Effectiveness
  • 14.4 Public Relations and Its Role in the Promotion Mix
  • 14.5 The Advantages and Disadvantages of Public Relations
  • 14.6 Ethical Concerns in Advertising and Public Relations
  • 15.1 Personal Selling and Its Role in the Promotion Mix
  • 15.2 Classifications of Salespeople Involved in Personal Selling
  • 15.3 Steps in the Personal Selling Process
  • 15.4 Management of the Sales Force
  • 15.5 Sales Promotion and Its Role in the Promotion Mix
  • 15.6 Main Types of Sales Promotion
  • 15.7 Ethical Issues in Personal Selling and Sales Promotion
  • 16.1 Traditional Direct Marketing
  • 16.2 Social Media and Mobile Marketing
  • 16.3 Metrics Used to Evaluate the Success of Online Marketing
  • 16.4 Ethical Issues in Digital Marketing and Social Media
  • 17.1 The Use and Value of Marketing Channels
  • 17.2 Types of Marketing Channels
  • 17.3 Factors Influencing Channel Choice
  • 17.4 Managing the Distribution Channel
  • 17.5 The Supply Chain and Its Functions
  • 17.6 Logistics and Its Functions
  • 17.7 Ethical Issues in Supply Chain Management
  • 18.1 Retailing and the Role of Retailers in the Distribution Channel
  • 18.2 Major Types of Retailers
  • 18.3 Retailing Strategy Decisions
  • 18.4 Recent Trends in Retailing
  • 18.5 Wholesaling
  • 18.6 Recent Trends in Wholesaling
  • 18.7 Ethical Issues in Retailing and Wholesaling
  • 19.1 Sustainable Marketing
  • 19.2 Traditional Marketing versus Sustainable Marketing
  • 19.3 The Benefits of Sustainable Marketing
  • 19.4 Sustainable Marketing Principles
  • 19.5 Purpose-Driven Marketing

Learning Outcomes

By the end of this section, you will be able to:

  • 1 Define strategic planning and list the steps in the strategic planning process.
  • 2 Write an effective vision statement and mission statement.
  • 3 Describe the role of company values.
  • 4 Perform a gap analysis.
  • 5 Write SMART objectives and goals.
  • 6 Summarize ways to monitor progress of the strategic plan.

Strategic Planning Defined

Let’s start with a simplified definition of strategy and then move on from there. Many if not most of you have watched a football game, either live or on TV. Perhaps you’re a fan of a particular team or you’ll watch the Super Bowl (perhaps just to see the commercials). Every football coach knows that you don’t enter a game without a game plan—the process of taking plays out of the playbook and putting them into a game plan for a specific opponent. This isn’t an easy task. The coaching staff has to consider the skills and experience of the players on the team as well as the strengths—and weaknesses—of the opposing team, and they will develop the plays that they feel will best neutralize the strengths of the opposing team while taking advantage of the strengths of their own players.

That football game plan is a great analogy for a business’s overall strategy —the plans, actions, objectives, and goals that outline how the business is going to compete in its chosen markets given its portfolio of products or services. In marketing, a portfolio is a collection or listing of all the goods and services that a company sells to customers.

Distinctions are often made between corporate-level strategy, business-level strategy, and functional strategy, so let’s briefly define them here. Corporate-level strategy covers the entire business in a complex organization where there are multiple businesses, divisions, or operating units (sometimes called strategic business units , or SBUs). Corporate-level strategies are formulated and implemented by upper management. Business-level strategy is the strategic plan created for a single business or operating unit, and these plans are generally developed by middle management to support the corporate-level strategy. Corporate-level and business-level strategies lead to the development of functional strategy , which is the plan to achieve the corporate- and business-level objectives in functional areas such as human resources, marketing, and production.

People say a picture is worth a thousand words, so take a look at how this breaks down in Figure 2.2 .

Many organizations have only a single product line, market focus, or business, so they will require only a business-level strategy. However, with larger organizations, it can be important to break the overall business into smaller, more manageable strategic business units to maintain an overall focus on the business as a whole and pull the business-level strategies into a cohesive whole.

Consider, for example, Procter & Gamble . The producer of such diverse products as diapers, Tide detergent, and Oral-B toothpaste has five industry-based strategic business units—baby, feminine, and family care; beauty; health care; grooming; and fabric and home care, family care, and new ventures. Each of these SBUs has its own chief executive officer and functions essentially as a standalone business under the corporate “umbrella.” 5

When you consider the complexities of the diverse markets Procter & Gamble serves, this makes sense. Competing in the oral care market is vastly different than competing in baby products, so separate SBUs require separate strategic plans.

Steps in the Strategic Planning Process

There are many variations of the strategic planning process—almost as many as there are publications on strategic planning. For our purposes in this textbook, we’re going to use the five-step process outlined in Figure 2.3 . Keep in mind, however, that the process may be a little different for some organizations depending on the stage of their products in the product life cycle (which we’ll learn more about in Products: Consumer Offerings ), the maturity of the industry in which the business participates, how competitive the marketplace is, and other factors.

These elements will all be defined in more detail in the sections that follow.

Step One: The Vision Statement: Where Do We See the Business Going?

The strategic planning process begins with a solid understanding of what the organization is trying to create—that is, its vision statement . A vision statement is forward-looking and is intended to create a mental image of what the organization wants to achieve in the longer term. Vision statements should be both inspirational and aspirational.

Let’s look at some vision statements from companies with which you might be familiar so you’ll see how this works:

  • Amazon : “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” 6
  • Volkswagen : “To make this world a mobile, sustainable place with access to all the citizens” 7
  • Fujitsu : “Understanding you better—serving you best” 8

Link to Learning

Vision statement.

For more information on how to write a vision statement, take a look at this brief video from RapidStart Leadership.

Step Two: The Mission Statement: Why Does the Business Exist?

Now that the vision statement is complete, it’s time to tackle the mission statement, which quite simply answers the question, Why does the company exist? The mission statement of an organization sums up in one to three sentences what the company does, who it serves, and what differentiates it from its competitors. Whereas the vision statement provided the destination (i.e., Where is the business going?), the mission statement provides the guideposts for the business to get there.

Mission statements serve two purposes. First, a well-written mission statement helps employees remain focused on the aims of the business. Second, it encourages them to discover ways of moving toward increasing their productivity in order to achieve company goals. Mission statements aren’t just for internal use, however. Prospective investors also often refer to a company’s mission statement to see if their values align with those of the company. Once again, let’s bring this definition to life by including a few mission statements from well-known companies:

  • BMW : “The BMW Group is the world’s leading provider of premium products and premium services for individual mobility” 9
  • Tesla : “To accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible” 10
  • Apple : “To bring the best personal computing products and support to students, educators, designers, scientists, engineers, businesspersons and consumers in over 140 countries around the world” 11

There are also two types of mission statements: customer oriented or product oriented. What’s the difference? A customer-oriented mission statement defines the business in terms of how it intends to provide solutions to customer needs. As examples, take a look at some of these customer-oriented mission statements:

  • IKEA : “To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them” 12
  • Netflix : “To entertain the world” 13

The other type of mission statement is a product-oriented one. With a product-oriented mission statement, the focus is on the offering itself rather than the needs of customers. Again, look at a couple of examples of product-oriented mission statements so you can see the difference between these mission statements and the customer-oriented mission statements shown above:

  • eBay : “To be the world’s favorite destination for discovering great value and unique selection” 14
  • Genentech : “To develop drugs to address significant unmet medical needs” 15

Mission Statement

For more information on how to write an effective mission statement, check out this brief video from Bplans.

Then watch this video from Entrepreneur.

Step Three: Perform a Gap Analysis

Before we get into the specifics of how to perform a gap analysis, let’s define it. Simply put, a gap analysis is an internal analysis of the company or organization to identify and review any inherent deficiencies that may hinder its ability to meet its goals. In other words, a gap analysis determines what factors in the organization may be causing it to underperform.

A gap analysis answers the following questions:

  • Where are we now?
  • Where would we like to be?
  • What’s stopping us from getting there?

A gap analysis as part of the strategic planning process is a way to determine where the “soft spots” are and where adjustments need to be made before setting a course of action.

There are four steps to completion of a gap analysis. Let’s take a look:

  • Step 1: Identify the current state of the business, organization, or department. Let’s use an example of a company that wants to increase market share of its product line. To date, current growth is sluggish, averaging only 5 percent per year. 16
  • Step 2: Identify where you want to be. “Where you want to be” may be identified by using different terms—the desired state, the future target, or a stretch goal. It stands to reason that you’ll want to consider your current state (from Step 1) and where you want to be in a reasonable time frame. Do you want to increase market share by 10 percent within the first year? Do you want to increase market share by 25 percent within the first three years? Because strategic plans often go out three to five years, your “where you want to be” can be lengthy as well. 17
  • Step 3: Identify the gaps. At this point in your gap analysis, you’ve identified where your organization current is and where it wants to be. Now it’s time to identify how you’re going to bridge that gap. This step involves figuring out what those gaps are. Is market share suffering because a new competitor introduced a similar but lower-priced product into the market? Is your pricing too high given production capabilities and costs? Has the advertising campaign introduced last year lost its sizzle, or worse yet, did your most recent advertising campaign flop? 18
  • Step 4: Devise improvements to close the gaps. It’s time to determine the proper course of action to close the gap, keeping in mind the cost of implementation for each solution. 19 This is where the rubber hits the road, so to speak, because ideas are easy; it’s the execution of those ideas that becomes challenging. An effective gap analysis not only identifies the problems (i.e., gaps) but also sets forth what needs to happen in specific terms to close those gaps. Will a new advertising campaign boost market share? Do we need to hire a new advertising agency? And what will a new advertising campaign cost? Are there cost-cutting measures that can be taken to reduce manufacturing costs, thereby reducing the product’s cost to consumers?

Step Four: Establish Objectives and Goals

With the mission and vision statement in place, along with a candid view of the organization through gap analysis, we can now define the goals and objectives for the organization. Goals and objectives are a critical part of every organization, particularly in the strategic planning process. When written effectively, these goals provide a sense of direction and a clearer focus. It’s these goals that give the organization a target at which it can aim, so to speak.

But before we go further, let’s differentiate between goals and objectives. Both terms refer to desired outcomes that the organization wants to achieve, but that’s where the similarity ends. Goals are statements of desired outcomes that are expected to be achieved over a longer period of time, typically three to five years. Goals are broad statements of the desired results; they do not describe the methods that will be utilized in order to achieve those results. For example, common business goals may include increasing revenue or market share or reducing the company’s carbon footprint. 20

On the other hand, objectives are “action items.” They are specific targets to be achieved within a shorter time frame, generally one year or less, in order to achieve the stated goal. Whereas goals describe the end result, objectives describe the actions or activities that need to take place in order to achieve the goal. For example, if your goal was to increase market share, the objective would likely be stated as something like “Increase market share to 6 percent by the end of the year.” 21

The goals and objectives of an organization define the key actions that allow it to execute its chosen strategy. However, in order to be effective, goals and objectives should be SMART— specific, measurable, attainable, realistic/relevant, and time-bound—as shown in Figure 2.4 .

  • First, effective goals should be specific— there’s the “S” in SMART goals. They should be clear and easy to understand. A specific goal answers questions like “What needs to be accomplished?” To illustrate this, imagine that you’ve decided to improve your grade point average. “Improve my GPA” is indeed a goal, but it’s too vague to be a helpful goal. By how many points do you want to improve your GPA? To make your goal more meaningful (and specific), you might want to restate your goal as “Improve my current GPA from 2.8 to 3.5.”
  • Second, effective goals should be measurable —there’s the “M” in SMART goals. Specificity is a solid start, but quantifying your goals makes it easier to track progress and see when you’ve achieved your goal. The bottom line is, you can’t see results without knowing what they look like, and if you’re not measuring anything, how will you know when and if you’ve accomplished it? Your original goal of “improve my GPA” isn’t measurable. How will you know when you’ve achieved your goal? When you’ve increased it by .1, .2, .5, or even a full point? By setting a goal to “improve my current GPA from 2.8 to 3.5 by the end of the semester,” you’ve set a goal that’s easily measurable—just look at your grades at the end of the semester!
  • Third, effective goals should be attainable . There’s actually some disagreement as to the name of this third element. Some marketing experts tout using “ambitious”; others suggest “achievable” or “actionable.” For our purposes, we’re going to stick with “attainable” because although goals should be a reach, establishing goals that aren’t within reach can turn out to be an exercise in frustration. Let’s go back to our GPA analogy. If it’s mid-April and you’re barely passing your current classes, you’re just setting yourself up for failure.
  • Fourth, effective goals should be realistic . Once again, there’s actually some disagreement as to the name of this element; you may see it shown as “relevant” in other textbooks or articles. We’re going to use “realistic” because the term reflects the balance between goals that are too easy and too hard. Taken in the context of a strategic plan, your goals must represent a substantial objective that you’re willing and able to work toward, but there should be a reasonable chance that you can achieve it. 22 Getting back to our GPA analogy, if you’ve got Cs in all of your classes and it’s already mid-April, improving your GPA to 3.5 by the end of the semester is probably not realistic.
  • Finally, effective goals should be time-bound . Every goal should be grounded by a time frame within which the goal is to be achieved. Without a deadline, there is little sense of urgency to work to achieve the goal. Having a goal with a target date (like the end of the semester) gives you something to focus on and work toward and prevents everyday tasks from taking priority over your longer-term goals.

SMART Goals

For more information on establishing SMART Goals, check out this video from SMA Marketing .

Monitor Progress

If you had decided to save money from each of your paychecks to eventually purchase a new car, you’d probably check the balance in your savings account on a regular basis to see how you’re progressing toward your goal. The same is true in the strategic planning process. In order for goals and objectives to be effective, marketers need to monitor them on a continuous basis to determine if they’re on track or if the goals and objectives need to be refined in response to unforeseen circumstances.

One way that marketers accomplish this is through the use of a marketing dashboard. Like the dashboard in your car, which tells you at a glance how much fuel you have, how fast you’re going, and a host of other important information, a marketing dashboard summarizes important marketing metrics and key performance indicators (KPIs; to be covered later in this chapter) into easy-to-understand measurements. 23 This enables marketers to view ongoing progress so that they can be aware of potential problems before they actually become serious issues.

Careers In Marketing

Marketing manager.

Marketing manager jobs differ by company and industry, but in general it’s a leadership position in charge of the marketing strategy at a company or for a product. Marketing managers often complete research, create pricing parameters, and work with other departments within the company such as finance, legal, advertising, promotion, and product development. Read this Marketing Manager article to learn more about the specifics of what a marketing manager does and the types of marketing manager that exist. It’s commonly known that marketing managers need to be proficient in problem-solving. Read this article to learn why it’s important and the specific skills you’ll need.

There is growth potential in being a marketing manager. The US Bureau of Labor Statistics projects a 10 percent growth in the job role from 2021 to 2031, and you can read more about the job outlook here .

Would you like to know more about the job role? Read this Forbes article to learn the top skills necessary, the typical path to this job, and degree requirements.

There are many types of jobs in marketing. You’ll be introduced to several throughout this textbook. You’ll also want to check out this list of 15 job titles and what the job role encompasses. Keep in mind that regardless of where you start in marketing, you have options as you move in your career journey. Many people move between marketing roles, and the skills you learn in each role will help you in other roles.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

  • Vision statement
  • Mission statement
  • Gap analysis
  • Goals and objectives
  • Functional strategy
  • Strategic business unit strategy
  • Corporate-level strategy
  • Business-level strategy
  • A statement that answers the question, Where do we see the business going?
  • An internal analysis of the company to identify inherent deficiencies that may hinder its ability to meet its goals
  • A statement that answers the question, Why does the business exist?
  • A strategic plan created for a single business or operating unit

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  • Authors: Dr. Maria Gomez Albrecht, Dr. Mark Green, Linda Hoffman
  • Publisher/website: OpenStax
  • Book title: Principles of Marketing
  • Publication date: Jan 25, 2023
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/principles-marketing/pages/1-unit-introduction
  • Section URL: https://openstax.org/books/principles-marketing/pages/2-1-developing-a-strategic-plan

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3 Types of Business Strategies to Consider for Your Organization

Business team discussing business strategy at a conference table

  • 13 Dec 2022

A business strategy is a framework that helps define an organization's vision, objectives, and tactical decision-making processes. Yet, identifying these essential elements can be challenging.

For an organization’s strategy to succeed, its leaders must understand its identity in the marketplace. According to Harvard Business School Professor Felix Oberholzer-Gee in the online course Business Strategy , this requires “a deeper understanding of your company and a profound sense of optimism about its potential for exceptional performance.”

If you want to learn about strategies that can benefit your organization, here’s an overview of value-based business strategy, commonly implemented approaches that can achieve long-term success, and how to choose the right strategy.

Access your free e-book today.

What Is a Value-Based Business Strategy?

The most effective business strategies are typically value-based, which means prices are predicated on consumers’ perceived value of products and services rather than their cost of production. Value-based business strategies are ideal for companies offering feature-rich products and services, such as Apple and Amazon.

Several components of value-based pricing are best illustrated by the value stick. The value stick comprises four critical aspects to implementing value-based pricing: willingness to pay (WTP) , price, cost, and willingness to sell (WTS). The value of a company’s product or service depends on where each component falls.

Value stick graphic showing WTP, price, cost, and WTS

Customer Delight

The top of the value stick represents customer delight, or the value based on customers’ perceptions of your product or service. Since a value-based strategy is customer-centric, you can drive brand awareness, loyalty, and goodwill by thoroughly researching your target market, creating open lines of communication, and building strong relationships with consumers.

Doing so enables your company to gather feedback about your services’ value and customers’ WTP. It can also help you add valuable features to products that benefit your business.

Company Margin

The middle of the value stick is the value of a product or service from your organization’s perspective, also known as the firm’s margin. Your company sets this value between its cost of production and customers’ WTP. This ensures your company earns the difference between the price being charged for a product or service and the cost of creating it.

It’s important to consider how to balance maximizing profits with customer delight to ensure loyalty and long-term success.

Supplier Surplus

The last section of the value stick showcases the value perceived by your organization's suppliers, or the supplier surplus. This refers to the total cost of producing goods or services, including physical and non-physical costs. Your company should strive to keep costs low and provide higher value to customers.

Although a value-based strategy is one of the most successful over the long term, you may need to adapt your business plan and product value according to your company’s goals and market competition.

“Ultimately, we want our business strategy to create financial success,” Oberholzer-Gee says in Business Strategy.

In the course, he outlines three essential questions your company’s strategy should revolve around:

  • How can my business best create value for customers?
  • How can my business create value for employees?
  • How can my business create value by collaborating with suppliers?

Answering these can set your organization up for success.

3 Strategies Businesses Need to Compete

Beyond understanding the critical components of a value-based business strategy, you must also know how to implement one—especially if you own a small business. Small businesses benefit from value-based strategies because they promote customer and brand loyalty and drive product innovation to meet customer needs .

Here are three strategies you should consider implementing in your business.

Related: 3 Methods for Identifying & Leveraging Your Customers’ Needs

Driving Company Value Using Differentiation

Creating higher product value requires differentiating your services from competitors’. According to Business Strategy , differentiation is one way for smaller businesses to succeed when competing with larger platforms.

The first step to differentiation is considering the type of investment required. A larger competitor, for instance, can produce sizable investments at a lower cost by spreading a fixed cost over several transactions. This means differentiation works best for smaller companies when it's achieved with modest variable costs.

For example, group buying—also known as collective buying—is a strategy in which a company agrees to sell a product or service in bulk at a lower price. E-commerce retailers commonly use collective buying. Smaller companies can take advantage of it by offering products at scale or upgraded feature tiers to like-minded customers.

This method ultimately lowers the fixed cost of customer acquisitions because current customers recruit new ones who benefit from a lower price point. It can also increase value in ways that don't depend on product scale. For example, network effects —when a product or service gains value as more people use it—are beneficial because they increase WTP.

Focusing on Neglected Platform Participants

In addition to differentiation, another approach highlighted in Business Strategy is focusing on the WTP of a consumer group less favored by a competing platform.

Large organizations serve multiple customer groups and subsets, which can make differentiating your product and establishing your ideal customer profile (ICP) daunting. However, it’s difficult for those businesses to ensure every customer is happy because of the scale of their operations.

By targeting neglected customers unhappy with competitors' products or services, you can differentiate your offerings and win their business by better meeting their needs. To do this effectively, return to the essentials of value-based business strategy: Research your target market, gather feedback so you can address customers’ pain points, and develop trust.

Business Strategy | Simplify Strategy to Make the Greatest Business Impact | Learn More

Catering to Small Groups of Customers

Another business strategy to consider is focusing on customers who value connection. By doing so, you can significantly increase brand loyalty and develop customer advocates who recruit others and increase retention.

eHarmony, the online dating platform, is used as an example in Business Strategy. Within the competitive landscape of dating sites, customers’ WTP is often pulled in opposite directions as websites attract more members. Yet, an increase in membership can create more competition among users when trying to find someone to date, which can deter people from using the platform and decrease its perceived value.

Consider one of eHarmony’s competitors, Match.com. While Match.com’s membership price is lower than eHarmony’s, its large number of users lowers the value of its services for many consumers. Unlike Match.com, eHarmony sells its services to a small group of consumers to remove the possibility of them experiencing too much rejection when seeking a dating partner. Its users, in turn, pay a premium price for that experience and help the business succeed.

Choosing the Right Business Strategy

Developing a value-based business strategy is one of the best ways for your organization to excel. Once you’ve set your business goals, adapt your strategy by differentiating your products and services from competitors’, marketing to neglected customer bases, and targeting consumers who want a specific experience.

Taking an online course, such as Business Strategy , can help you understand how to implement strategy within your organization and shed light on why some companies are more successful than others.

Are you interested in learning more about business strategies that can improve your organization’s bottom line? Explore our online course Business Strategy and download our free e-book on strategy formulation.

business strategy includes functional plans from which of the following groups

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Functional Strategy: What It Is & How to Develop One in 5 Steps

Download our free Strategic Planning Template Download this template

The further down from the top you go, the less familiar your teams are with strategy and how it is executed on a regular basis. 

Recent research for Cascade’s Strategy report revealed an alarming fact: There is still a vast strategic misalignment between C-suite and team members across business functions. 

Although numerous studies and reports have been published on failed strategies, this crucial problem of the strategy remains unsolved.

In this article, we aim to give you a better understanding of how functional strategy fits in this picture, why organizations should care about a functional strategy to drive the execution of top-level strategies, and how functional managers can develop better strategies aligned with corporate strategy. 

Free Template Download our free Strategic Planning Template Download this template

Understanding three levels of strategy

We covered strategy levels in depth in this article , so here’s just a short summary of each one to get a better understanding before we dive in functional level strategy: 

Corporate strategy

Corporate strategies are a top-level strategies that defines overall company strategic direction. 

Business strategy 

Business strategy defines a direction and actions of individual business units within the organization. 

Functional strategy

Functional level strategies are those put in place at the operational level of an organization and will facilitate the corporate (or business) level strategy implementation.

In terms of strategic planning, a functional strategy should be the last strategy level created during the strategic management process as it defines the 'HOW are we going to support business objective on the departmental level?’. 

Types of Functional Level Strategies

Here are typical examples of functional-level strategies: 

Human Resources Strategy

HR strategy should outline how the organization will manage its human resources to achieve its strategic goals.

Financial strategy

This strategy highlights how finances will align with company goals for growth and innovation.

Research & Development Strategy

R&D strategy should specify how R&D contributes to corporate strategy by developing competencies through new products, services, and business models.

Marketing Strategy

It can cover many areas, from customer identification to market research to customer acquisition through social media. Still, its primary goal should be to generate demand for the company’s products and services. 

Production Strategy

Production strategies should focus on supply chain management , operation planning , and overall manufacturing system. The main objectives are improving quality, minimizing production costs, and increasing quantity.

The strategic needs and goals of, for example, the Human Resources Management department will differ substantially from those of marketing managers. Most organizations will have multiple functional strategies, and each department needs its own. 

📚Related content: 

  • The 3 Levels of Strategy: The Difference & How to Apply Them
  • What Is Corporate Strategy And Its 4 Key Components
  • Pre-built strategy templates for functional departments
  • What Is Business Level Strategy (How To Create + Examples)
  • The 7 Best Business Strategy Examples I've Ever Seen

The relationship between different levels of strategy 

As mentioned earlier, the strategy levels you choose to employ in your organization will depend on the size and structure of your company.

For example, if you're a large organization with multiple businesses operating under an umbrella company, you're going to need all three strategy levels: 

  • corporate strategy for the organization as a whole
  • business strategy for each of your different businesses
  • functional strategy for the various departments in each of the businesses.

On the other hand, organizations with one business unit will not need a separate corporate and business strategy. They will instead create a combined corporate and business strategy for the organization, plus a functional strategy for each of their departments.

For this article, we will focus on this scenario and, in this instance, explain why functional strategies should be closely tied to corporate strategy. 

As the corporate strategy defines the direction of the business and what it wants to achieve, the functional strategy explains how to support the execution of corporate goals and objectives.

The bottom line is that corporate strategy isn’t just for the C-suite team. It supports long-term company growth by helping every functional department align with the company's priorities, from sales to production and customer success teams.

Importance of functional level strategy

New technologies, automation, sustainability initiatives, and ever-changing customer expectations are redefining the business world as it was known.

As businesses compete for their market share, those who master organization-wide alignment will be well positioned to outperform their peers.

The success of functional-level strategies has a direct correlation to the success of your organization's corporate-level strategy. Even the most thoughtful corporate-level strategies will fail to produce results if a functional-level strategy is overlooked, misaligned, or poorly executed (or all three).

Functional level strategy is the direct concern of managers at the departmental level, but this doesn’t mean that corporate level strategists can ignore it. In fact, immerging into the details of strategic initiatives of disparate departmental units is probably one of the most significant tasks of corporate-level strategists.

Functional Strategy of Apple Company as an example

When Steve Jobs took over Apple for the second time and reorganized it into a functional organization, he clearly understood the task.

functional strategy example

Apple’s evolution of a functional organization played a crucial role in the company’s success. Via HBR.

Apple’s approach to leading with expertise, giving voice to functions , and sparking multi-dimensional collaboration has led to incredible innovation and success over the past two decades. 

Now, it's true that this Apple example is unique, and it might not be the best fit for all companies. Nevertheless, it illustrates well what a company can achieve if it pays more attention to alignment between corporate and functional strategy. 

Here’s another example. The company aims to launch a new product in a new market. However, the number one trap that derails many product launches is the failure to proactively get all teams involved, aligned, and on the same page. The fact is that a successful market penetration requires alignment across the whole organization and its functional areas.

This means that sales strategy needs to be perfectly aligned with the marketing department, while product development needs to work hand-in-hand with the team leading the production process. On top of that, all these departments need to perfectly sync with each other while staying aligned with company business goals to ensure success.

Not only does this help to launch new products faster and secure a competitive advantage, but also helps companies avoid epic failures due to poor product-market fit. (FYI, this is not just a start-up problem, it also hits the big boys. )

5 steps to create a functional strategy aligned with corporate strategy

Strategic plans at the corporate level are slightly abstract. They contain a broad-ranging vision and high-level objectives/goals, which can be hard to translate into concrete plans and targets.

For organizations to execute their corporate strategy and achieve these high-level goals, it is necessary to further break up these goals into clear and concise actions. This is where functional strategy comes into play. 

Functional level strategy is characterized by a strong emphasis on detail, metrics, and practicality. As a result, functional level strategy development involves a much greater level of communication and feedback both vertically and horizontally than strategy development at the corporate levels.

Recognizing this fact is the key to aligning functional strategies with the broader goals of corporate strategy.

Achieving success with a functional strategy can be a daunting task. However, based on the work experience with our clients, we put together some straightforward steps which any strategist can take to ensure excellent results.

Step 1: Share and communicate corporate strategy with functional unit leaders

Functional unit leaders should be involved in the creation process of corporate strategy. Department heads need to understand the corporate strategy and the goals and objectives their department can support to create an aligned functional strategy. But that’s not the only reason. You will be able to get their buy-in faster if they have to help implement the strategy they co-created. 

If they weren’t involved in the process, then at least a strategy walkthrough meeting should occur between organizational and functional leaders to put everyone on the same page. We've already created a guide on how to share and get feedback on your strategy , so if you're unsure how to go about this process, check out this guide. 

As a quick checklist, all involved stakeholders should come out of the meeting with a solid understanding of: 

  • The specific goals/objectives/KPIs that each department will 'own'.
  • The goals/objectives/KPIs that each department will 'contribute to'. E.g. If the head of sales owns the corporate strategy objective 'Increase year on year revenue by x%' - the sales department may also need support from marketing, customer success etc. 
  • The timelines associated with each goal/objective/KPI.
  • A clear understanding of what success looks like for each goal/objective/KPI.

Step 2: Strategy formulation on the functional level

The second step should allow department heads the time to interpret the objectives they own from the corporate strategy and begin to formulate a functional strategy for how they can best achieve these objectives.

In creating a functional strategy, department heads should pay special attention to the support they will need from different departments. Here’s what you should do at this stage:

  • Frame Objectives or Goals
  • KPIs for each Objective/Goal
  • Create Projects or work plans for each Objective/Goal
  • Ownership allocation for every action and decision-making in the strategy
  • Define timelines and milestones

Step 3: Foster communication

As noted earlier, two-way communication is critical to the success of corporate strategy as a whole. Within a hierarchy, horizontal and top-down communication is generally easier to achieve than transparent 360-degree communication across the organization. 

It is essential to consider the needs of the various parties involved and clearly define which parties should be involved. Creating an environment that fosters this communication is vital in creating an effective functional-level strategic plan. 

Step 4: Revise functional and corporate level strategies

At this point in the process, corporate and functional leaders should come back together to share and review functional strategy and how it aligns with corporate strategy.

Here are some questions that can help you evaluate functional strategy: 

  • Are functional objectives too narrow or too broad? 
  • Are your KPIs too optimistic? 
  • How does this functional objective contribute to the corporate strategy? 

Asking these questions can be the difference between a cohesive relationship between corporate and functional strategy, and one that is poorly aligned and ineffective.

Corporate leaders should provide feedback and recommendations to ensure close alignment between the strategy levels. 

Step 5: Implement proposed changes to functional strategy

You may have found in the review process that specific functional strategy objectives didn't align clearly with corporate-level objectives.

So, even if departments successfully execute and achieve these objectives, there won't be an impact on the success of the corporate objectives. If this is the case, the objective probably needs to go.

Having objectives that don't align with corporate objectives/goals will steal time and attention away from those that correlate with your corporate strategy's success.

Everything you do has an opportunity cost, which is why strategic alignment between strategy levels is so important. 

Functional leaders should make proposed strategy amendments based on the previous step's feedback. 

Time to move from theory to practice

Strategic alignment between strategy levels is a business investment that can positively influence organizational alignment; improving efficiency, innovation, and profitability. 

We hope this 5-step process will help you infuse some clarity into the whole process when planning your functional strategies. 

When you’re ready to turn your plan into action, try out our free Cascade’s strategy execution platform built to help teams achieve alignment and hit strategic goals faster. Or book a 1:1 demo with Cascade’s strategy expert. 

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Levels of Strategy in Diversified Companies: Corporate, Business, and Functional

  • September 20, 2023
  • Business Strategy & Innovation

business strategy includes functional plans from which of the following groups

In the vast landscape of diversified companies, strategic planning takes on many forms, each with its own purpose and scope.

From the lofty heights of corporate strategy to the granular details of functional planning, these levels of strategy intertwine to shape the direction and success of a company.

This article explores the significance of corporate planning, delves into the intricacies of business planning, and uncovers the role of functional planning in the ever-evolving world of diversified companies.

Prepare to embark on a journey through the levels of strategy, where innovation meets analysis and structure breeds innovation.

Table of Contents

Key Takeaways

  • Corporate planning involves establishing objectives and goals for the entire organization and determining the resources needed to achieve them.
  • Business planning focuses on defining the scope of a division’s activities and setting objectives within that area.
  • Functional planning involves developing action programs for each department to implement the division’s strategy.
  • The three levels of strategy (corporate, business, and functional) interact with each other to some extent.

Importance of Corporate Planning in Diversified Companies

Corporate planning plays a crucial role in diversified companies by determining the objectives and goals for the entire organization and allocating resources accordingly. This process is essential for implementing business strategy and ensuring the success of the company.

The benefits of corporate planning are numerous. Firstly, it provides a clear direction for the organization, allowing all departments and employees to align their efforts towards common goals. It also helps in identifying opportunities and potential risks, allowing the company to make informed decisions and adapt to changes in the market.

By allocating resources effectively, corporate planning ensures that the company’s various business units are adequately supported and can achieve their objectives. Additionally, it promotes coordination and collaboration between different departments, enhancing efficiency and innovation within the organization.

Understanding Business Planning in Diversified Companies

The process of determining the scope of a division’s activities and setting objectives within that area is an important aspect of business planning in diversified companies. Business planning in these companies helps in defining the specific goals and objectives for each division, which contributes to the overall success of the organization.

There are several benefits of business planning in diversified companies. Firstly, it ensures that each division has a clear direction and purpose, leading to improved focus and efficiency. Secondly, it facilitates better resource allocation and coordination among different divisions, resulting in improved collaboration and synergy.

However, implementing business planning in diversified companies can also pose challenges. These challenges include the complexity of managing and aligning the strategies of multiple divisions, the need for effective communication and coordination among different teams, and the potential for conflicts of interest among divisions.

Overcoming these challenges requires strong leadership, effective communication channels, and a robust planning process that accounts for the unique needs and dynamics of diversified companies.

The Role of Functional Planning in Diversified Companies

Effective coordination and clear objectives are essential in implementing functional planning within diverse organizations. When it comes to executing functional plans in diversified companies, there are several challenges that need to be addressed.

These challenges include:

Communication: Ensuring effective communication across different departments and teams is crucial in executing functional plans. Without clear and open lines of communication, there can be confusion and misalignment in the implementation process.

Resource allocation: Diversified companies often have limited resources that need to be allocated strategically. Allocating resources in a way that supports the execution of functional plans can be a challenge, especially when there are competing priorities and objectives.

Resistance to change: Implementing functional plans often requires changes in processes, systems, and even organizational culture. Overcoming resistance to change can be difficult, as employees may be comfortable with the status quo and reluctant to embrace new ways of doing things.

In order to overcome these challenges and implement functional plans effectively, organizations need to foster a culture of collaboration, provide adequate resources, and actively manage change.

Interactions Between Corporate, Business, and Functional Strategies

To ensure successful implementation of strategies, it is important for organizations to understand how corporate, business, and functional strategies interact with each other.

In diversified companies, aligning corporate and business strategies is crucial for maintaining a cohesive and integrated approach towards achieving organizational goals. Corporate strategies determine the overall direction and scope of the company, while business strategies focus on the specific objectives and activities of each division. By aligning these strategies, companies can ensure that their various businesses are working towards a common purpose.

Additionally, it is essential to balance functional strategies with corporate and business goals. Functional strategies, such as marketing, production, finance, and research, need to support and contribute to the broader strategic objectives of the organization.

This alignment and balance between strategies at different levels are vital for achieving innovation and driving success in diversified companies.

Formal Planning Processes in Diversified Corporations

Large, diversified corporations require a formal planning process in order to facilitate decentralized decision-making and coordinate actions among multiple managers. This process, known as formal planning, involves several techniques that help clarify thinking and provide a structured approach to strategic decision-making.

The use of formal planning techniques allows for a more efficient and effective allocation of resources, as well as the identification of potential risks and opportunities. It also promotes innovation and creativity by encouraging managers to think critically and explore new ideas.

Decentralized decision-making, which is a key component of formal planning, empowers managers at all levels to make decisions that align with the overall corporate strategy and objectives. This approach fosters a culture of innovation and encourages employees to take ownership of their decisions and actions.

Key Aspects of Corporate Planning and Strategy

Acquiring the necessary resources and allocating them among different businesses are key components of corporate planning and strategy. In diversified companies, corporate planning plays a crucial role in achieving long-term success and sustaining growth.

There are several benefits of corporate planning in diversified companies. Firstly, it helps in ensuring that the company’s objectives are aligned with the overall organizational goals. By setting clear objectives and defining the scope of each business, corporate planning enables effective decision-making and resource allocation.

Secondly, it allows for better coordination and integration among different businesses, leading to synergies and economies of scale. However, implementing business planning in diversified companies can also pose challenges. These challenges include managing conflicts of interest among different business units, ensuring effective communication and coordination, and adapting to changing market conditions.

Despite these challenges, effective corporate planning and strategy are crucial for the success of diversified companies. They enable them to leverage their strengths and seize new opportunities in the market.

Components of Business Planning and Strategy

Effective business planning involves defining the scope of a division’s activities and establishing objectives within that area. This process is essential for strategic decision making and ensuring that the division’s efforts align with the overall goals of the organization.

When it comes to business planning and strategy, there are several key components to consider:

Identifying consumer needs: Understanding the needs and preferences of the target market is crucial for developing a business strategy that effectively meets customer demands.

Setting division objectives: Clearly defining the objectives and goals of the division helps guide decision making and focus efforts towards achieving desired outcomes.

Establishing policies: Developing policies that support the division’s objectives and align with the overall corporate strategy is crucial for making informed and effective strategic decisions.

Developing Effective Functional Plans in Diversified Companies

Developing feasible action programs for each department is a crucial aspect of functional planning in diversified organizations. To effectively implement the division’s strategy, it is important to align department objectives with the overall goals of the organization.

This requires developing effective functional plans that outline the specific actions that each department needs to take. By aligning department objectives with the division’s strategy, the organization can ensure that all departments are working towards a common goal and that resources are allocated appropriately.

Developing effective functional plans involves setting clear objectives and goals for each department, and determining the sequence of actions that need to be taken to achieve these goals. It also involves selecting the right programs and initiatives to execute, ensuring that they are feasible and aligned with the overall strategy of the organization.

Frequently Asked Questions

How does the process of formal planning benefit executives in smaller companies or situations that permit informal planning.

The process of formal planning benefits executives in smaller companies or situations that permit informal planning by providing a structured approach to strategic decision-making, clarifying thinking, and facilitating coordinated action among managers.

What Are the Specific Steps Involved in the Formal Planning Process?

The specific steps involved in the formal planning process include clarifying thinking, setting objectives, allocating resources, and establishing policies. This structured approach to strategic planning helps executives in smaller companies or situations that permit informal planning make more informed decisions.

How Do Corporate Objectives Differ From Business Objectives in Diversified Companies?

Corporate objectives in diversified companies encompass the long-term size, scope, and style of the enterprise, while business objectives focus on the division’s activities within a defined area. Strategic alignment ensures that both objectives work together to achieve overall success.

How Does Business Planning Determine the Scope of a Division’s Activities to Satisfy Consumer Needs?

Business planning determines the scope of a division’s activities by analyzing consumer needs and aligning them with the division’s capabilities. Through a structured process, it formulates strategies to satisfy these needs and drive consumer satisfaction.

What Is the Role of Functional Planning in Implementing Division Strategy in Diversified Companies?

Functional planning plays a crucial role in implementing division strategy in diversified companies. It involves collaboration between different departments to ensure divisional alignment and the successful execution of objectives and goals.

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Three Levels of Strategy: Corporate Strategy, Business Strategy and Functional Strategy

Strategy is at the foundation of every decision that has to be made within an organization. If the strategy is poorly chosen and formulated by top management, it has a major impact on the effectiveness of employees in pretty much every department within the organization. In our previous article on ‘ What is Strategy?! ‘ we have already tried to define and explain what business strategy refers to and what is NOT considered to be part of strategy. In this article, we will dissect strategy in three different components or ‘ Levels of Strategy ‘. These three levels are: Corporate-level strategy, Business-level strategy and Functional-level strategy. Together, these three levels of strategy can be illustrated in a so called ‘ Strategy Pyramid ’ (Figure 1). Corporate strategy is different from Business strategy and Functional strategy. Even though Corporate-level strategy is at the top of the pyramid, we start this article by explaining Business-level strategy first.

Figure 1: Three Levels of Strategy Pyramid

Business-level strategy

The Business-level strategy is what most people are familiar with and is about the question “How do we compete?”, “How do we gain (a sustainable) competitive advantage over rivals?”. In order to answer these questions it is important to first have a good understanding of a business and its external environment. At this level, we can use internal analysis frameworks like the Value Chain Analysis and the VRIO Model and external analysis frameworks like Porter’s Five Forces and PESTEL Analysis . When good strategic analysis has been done, top management can move on to strategy formulation by using frameworks as the Value Disciplines , Blue Ocean Strategy and Porter’s Generic Strategies . In the end, the business-level strategy is aimed at gaining a competitive advantage by offering true value for customers while being a unique and hard-to-imitate player within the competitive landscape.

Functional-level strategy

Functional-level strategy is concerned with the question “How do we support the business-level strategy within functional departments, such as Marketing, HR, Production and R&D?”. These strategies are often aimed at improving the effectiveness of a company’s operations within departments. Within these department, workers often refer to their ‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to align these strategies as much as possible with the greater business strategy. If the business strategy is for example aimed at offering products to students and young adults, the marketing department should target these people as accurately as possible through their marketing campaigns by choosing the right (social) media channels. Technically, these decisions are very operational in nature and are therefore NOT part of strategy. As a consequence, it is better to call them tactics instead of strategies.

Corporate-level strategy

At the corporate level strategy however, management must not only consider how to gain a competitive advantage in each of the line of businesses the firm is operating in, but also which businesses they should be in in the first place. It is about selecting an optimal set of businesses and determining how they should be integrated into a corporate whole: a portfolio. Typically, major investment and divestment decisions are made at this level by top management. Mergers and Acquisitions (M&A) is also an important part of corporate strategy. This level of strategy is only necessary when the company operates in two or more business areas through different business units with different business-level strategies that need to be aligned to form an internally consistent corporate-level strategy. That is why corporate strategy is often not seen in small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or conglomerates.

BCG Matrix and Levels of Strategy Video Tutorial

Example Samsung

Let’s use Samsung as an example. Samsung is a conglomerate consisting of multiple strategic business units (SBU’s) with a diverse set of products. Samsung sells smartphones, cameras, TVs, microwaves, refrigerators, laundry machines, and even chemicals and insurances. Each product or strategic business unit needs a business strategy in order to compete successfully within its own industry. However, at the corporate level Samsung has to decide on more fundamental questions like: “Are we going to pursue the camera business in the first place?” or “Is it perhaps better to invest more into the smartphone business or should we focus on the television screen business instead?”. The BCG Matrix  or the GE McKinsey Matrix  are both portfolio analysis frameworks and can be used as a tool to figure this out.

Figure 2: Hierarchy of Strategy

Levels of Strategy In Sum

The most common level of strategy is Business strategy and exist within strategic business units with as goal to gain competitive advantage in a certain market. If a company has multiple SBU’s, there needs to be an overarching Corporate strategy that ties all SBU’s together through corporate configuration. Here, top management must decide on resource allocation and where to invest and where to divest. Lastly, Functional strategy exist within departments such as Marketing, HR and Production. Ideally, we should refer to tactics instead of strategies because of the operational nature of the decisions made within these departments.  

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12 thoughts on “ Three Levels of Strategy: Corporate Strategy, Business Strategy and Functional Strategy ”

I can see how a business wants to build up its cooperation and they want to make sure that they can grow and build and get more revenue. Getting some better strategies to do so and to prevent them from losing money in a crisis with some help from a professional. It was interesting to learn about how there are some better investments and divestments so that they can be integrated into a portfolio.

Great Articles

Well explained with examples.. Thank you Keep posting such an articles

Such a wonderful blog about levels of strategy corporate business functional and I appreciate your effort for bringing this in to notice. Great blog indeed, will visit again future to read more!!

I appreciate your help in bringing this information or strategy and marketing framework to my notice.

A good insight indeed. So it literally means they is no how you can think of your business strategy before you study your environment ?Internal by VRIO,SWOT etc. and external by PESTEL or Porters 5 forces

Well explained the BCG model with suitable example . Thank you for uploading the video. It will be great help for all the students of strategic management. looking towards more such videos on strategic management area.

well simplified

thank you for the well explained BCG matrix, can you also look at Parenting advanrage concept and the Ashridge theory

As a student,I now knows that the ability to learn is an ultimate competitive advantage.Thanks for the simplicity and it’s very nice to invest my energy and time to read such instilling articles.

A commercial effectiveness strategy is critical for every business’s success, but it is especially critical for small businesses. A commercial effectiveness strategy, by definition, is a method for finding and delivering value to consumers through the production and distribution of goods or services.

thank you very much, very helpful information

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Business Strategy Effective Steps

Explore 7 Business Strategy Types for Sustainable Growth

Team Ninety, Author at Ninety

What is a business strategy and how do you create one? In this guide, you’ll find real-world tactics and business strategy examples to help you get growing.

Actionable Business Strategy Tips You Can Actually Use

A business strategy clearly defines how a company will compete in the marketplace. With a strategy based on goal-setting, planning and taking the right action, companies make a mark on their industries with high-quality, imaginative products and services that benefit their customers and create value for the organizations.

Research shows companies that create and execute a sound business strategy have a 30% greater chance of achieving growth . They also have a chance to double their ability to create value in the marketplace.

In today’s economy, business strategies need to be flexible, based on the latest research, and better able to adapt to change. A company business strategy should answer these questions:

  • Why are we in business?
  • What is our core strength?
  • Which products and services speak to that strength and our purpose?
  • Who are the people we should serve and how should we attract, inspire and retain them?
  • What’s the reason for taking these strategic directions?

What is a business strategy?

A business strategy is the overall action plan that a company uses to create a mission and achieve its vision. The business strategy guides a company’s decision-making processes to improve the way they create value for their customers and achieve a competitive advantage in the marketplace.

While the business strategy drives overall goals and the way to reach them, business tactics are the specific actions aligned with the strategy that will achieve overall goals.

Examples of a business strategy include:

Product or Service Differentiation

  • Elevating your product or service in the industry by highlighting its superior qualities.
  • Differentiated products and services answer consumer questions and solve their challenges better than the rest.
  • Differentiating features could include ease of use, attractive price points, modern styling, unique design, innovative technology, etc.

Competitive Pricing

  • Pricing that attracts more customers to sell a higher volume. Usually, the cost is lower than competitors’ pricing without affecting the company’s ability to create value.
  • Pricing that’s perceived as aspirational value, which means the cost creates a level of exclusivity with buyers. It renders the product or service out of reach for ordinary customers without affecting the company’s ability to create value.

Capturing Niche Markets

  • Acquiring a new company to gain a stronger presence with target consumers while retaining current market share.
  • Merging with a competitor to attract a new audience or growth market.

Technological Superiority

  • Investing in research and development to create proprietary software.
  • Hiring team members with unique skills and expert industry knowledge to improve productivity.
  • Acquiring another company’s technology to achieve market domination.

Outstanding Sustainability

  • Offering remote and/or hybrid work. 
  • Making energy-efficient upgrades and “reduce, reuse, recycle.”
  • Partnering with green companies.

Quality Customer Service and Retention

  • Running an efficient call center with trained expert team members.
  • Upgrading online and virtual support for customers.
  • Seizing opportunities to retain loyal customers with special offers and rewards.  

Innovation for a Better World

  • Updating current products and services to keep up with market and consumer trends.
  • Introducing new products and services on a set schedule that solve more consumer challenges and help them live great lives.

Want to get more tips on hybrid work schedules ? Subscribe to Ninety’s blog now.

The Importance of a Company Business Strategy

Understanding what is a business strategy and having a comprehensive plan helps organizations in the following ways.

  • Planning, to determine the key steps for reaching company goals.
  • Allocating resources, to plan efficiently, communicate roles and responsibilities effectively and stay on track of project goals.
  • Responding to opportunities, by identifying strengths and weaknesses, using strengths to build the company and knowing how to compensate for (or eliminate) weak areas of the organization.
  • Enabling better outcomes, to choose the actions that directly help with reaching goals.

For a company to benefit from its business strategy, both leaders and teams must be held accountable for getting strategic actions done and get rewarded for them. Harvard Business Review studies show that 70% of leaders and more than 90% of team members do not have any value incentives linked to strategic execution or success.

For people to actively contribute to strategic initiatives, companies should develop a culture of accountability and execution. Here are the first (and most important) steps you can take to develop an accountable company culture right now:

  • Make the company vision accessible to all.
  • Clearly communicate roles, responsibilities and how performance is measured .
  • Set clear goals .
  • Conduct efficient meetings .
  • Stay up-to-date on to-dos .
  • Prioritize issues .
  • Track relevant performance metrics .
  • Be consistent about giving and getting feedback .
  • Document core processes, so everyone knows how to do it and how to do it correctly.

A business strategy typically includes six elements:

  • Company Vision

Your company strategy outlines the direction of the company with clear instructions for how to get there and who is responsible for completing each step.

  • Core Values

A good business strategy uses the organization’s core values to guide the actions of leaders and team members so they’re motivated by the same goals and stay on the same page.

  • SWOT Analysis

Your strategy identifies strengths, weaknesses, opportunities and threats ( SWOT ) for the company. While leaders and team members need to be aware of weaknesses and threats and how to mitigate them, they use their strengths as an advantage when competing in their industry.

  • Key Tactics for Success

A well-defined strategy plans the specific operational activities that align with the strategy to help achieve overall goals efficiently and effectively.

  • Resource Requirements

An effective business strategy explains how to allocate and use required resources, who is responsible for doing so and how to include or replenish resources when needed.

  • Results Measurement

A clear business strategy includes a way to track progress and evaluate performance , which helps companies stay focused on targeted goals and create new ones, if applicable.

5 Steps For Creating A Business Strategy

Step 1: define company vision.

To define company vision:

  • Review your company’s core values for insight into what matters.
  • Determine where you see the company moving in the future.
  • Review your product and service offerings and the value proposition, and why people should buy them. This helps define how your company is different, and how to create demand and effectively compete in the market.
  • Identify the type of prospects your company wants to serve, either consumers (B2C) or other companies and organizations (B2B). Then, determine your target market. Make sure you address each group’s different motivations and specific needs. The B2C market can be defined by demographic and socio-economic factors like gender, age, occupation, education, income, wealth and location. Whereas a B2B market can be defined by industry, type of business and sales model of targeted customer groups.

Step 2: Set goals for creating value

Decide how your company can compete with these specific goals in mind:

  • To grow revenue.
  • To improve your financial position within the market.
  • To increase the company’s economic value for owners or shareholders.

Step 3: Analyze company and market attributes

This is where SWOT analysis comes in (strengths, weaknesses, opportunities, threats). SWOT analysis ensures that the company’s strengths are utilized in making the most of market opportunities. Potential weaknesses and threats can also be addressed so they won’t limit long-term success.

Step 4: Identify competitive advantage

To identify competitive advantage:

  • Define how company leaders and teams want to compete in the market.
  • Create demand for your company’s unique products and services.
  • Improve how your company creates value to increase sales margins.

Step 5: Build a business strategy framework

A strategy framework involves elements that support the overall business strategy and contribute to its success. These include:

  • Company culture: A key driver to implementing a successful business strategy.
  • Strategic marketing: A clear plan to build a brand, promote products and services and support sales initiatives.
  • Leadership: A team that includes all stakeholders who believe in and are ready to execute every element of the business strategy.
  • Resources: A workforce that includes all the people and materials to lead, prioritize and set expectations for the work outlined in the business strategy.
  • Strategy implementation: A set of documented operational processes and procedures to help implement your business strategy successfully.

For most companies, strategy implementation is a big deal. The majority of leaders ( 98% ) think strategy implementation takes more time than creating the strategy. In fact, 61% say their companies “struggle to bridge the gap between strategy formulation and its day-to-day implementation.” What’s more, experts say 4.5% of a business strategy's “potential” is not actualized due to poor action planning.

What are the 4 types of business strategies?

When people refer to the four types of business strategies, they’re usually talking about strategies that are determined based on the kind of decisions a company needs to make to achieve predetermined goals. The four types of business strategies are:

  • Cost leadership strategy — offering a better price for products and services in the market.
  • Differentiation strategy — offering products and services unique to the industry.
  • Focused cost leadership strategy — offering a better price for products and services to a specific audience or niche customer group.
  • Focused differentiation strategy — offering unique products and services that appeal to a specific audience or niche customer group.

Set realistic objectives

Think long-term when creating a business strategy that clearly addresses realistic goals. Be practical when developing or identifying solutions for:

  • The types of products and services you want to build.
  • The customers and markets you want to serve.
  • The actions you want to take that will help you make the strategy a success.

Get real about opportunities and threats

  • Carefully analyze your company’s current opportunities in the market and how they might evolve over time.
  • Anticipate the risks and challenges of reaching for opportunities with the benefit of clear thinking.
  • Gather concrete data, check sources and confirm information before finalizing decisions and action plans.
  • Devise a plan to mitigate potential roadblocks from achieving goals.

Lean toward differentiation

In recent years, companies like Apple, Amazon and others have not only been successful at bringing quality products and unique services to market. They’ve also been outrageously successful in creating whole new ways of living, working and finding happiness for consumers. This can only happen with timely dedication to building clearly differentiated products and services that align with their brands.

Stay competitive

  • Make sure your business strategy stays focused on competition.
  • Choose a market with little competition or one that’s not served at all.
  • Get there first.
  • Get busy capturing market share and building your brand.
  • Position your company so it’s more difficult for others to enter the market.

Do more with economies of scale

  • In today’s market, it’s not enough to lower the cost of products and services through economies of scale.
  • Always be imaginative with unique product features and new updates.
  • Offer high-quality customer service (read: agile, proven, trusted).

Share strategy both internally and externally

  • Sharing your company’s business strategy with leaders and teams at all levels of the organization helps to solidify its guidance on strategic initiatives. Explain how the strategy and its implementation relate to each employee and how it relates back to the company.
  • Share the plan with stakeholders like investors, partners, suppliers, industry analysts and your customers.
  • When you let everyone know what you’re doing, why you’re doing it and how it creates value for everyone, you build trust.

Focus on strategy execution

Over half of leaders ( 61% ) think they’re not doing a good job implementing their company’s business strategy, and only 40% of team members think leaders understand their company’s strategy or goals. For your business strategy to succeed, it’s critical to align the entire organization. Sharing the business strategy with people at all levels will provide great clarity on what actions need to happen at their level and how those to-dos relate to the overall success of the strategy.

Be diligent about tracking progress and measuring success

  • 92% of organizations report they do not track how well they are competing in the marketplace.
  • 85% of leaders spend less than one hour per month on business strategy.
  • 50% of leaders spend no time at all on business strategy.
  • 25% say measuring implementation is a tough challenge.

However, in companies that consistently meet their strategic goals, leaders meet at least once a month for four to eight hours. There, they review and measure strategy success and know what’s working, what’s not and where to focus. 

One way to evaluate the success of a business strategy is to track Key Performance Indicators (KPIs), but there are plenty of formalized tracking processes you can (and should) try. 70% of companies that say they use a formal process to track and review strategy also out-performed their competitors.

Find out how Ninety can help you easily plan and implement your business strategy right now with a comprehensive system of tools . Ninety helps you create, implement, and track your business strategy.

What is meant by business strategy?

Companies use strategy to refine their mission, goals and operation to deliver better value to their customers. When they use their resources to gain a better advantage in the market, companies create a competitive edge over other organizations and perform at a higher level. Companies use these approaches to achieve success to write a better strategic plan for their business.

In 1985, Michael E. Porter , a Harvard Business School professor known for his theories on economics, business strategy and social causes, developed three highly-effective business strategies for gaining competitive advantage that is still used today. Porter’s Generic Strategies were first published in his book, Competitive Advantage: Creating and Sustaining Superior Performance . They are:

Cost Leadership – producing products and services at a lower cost than industry competitors while charging industry-average prices. Companies create a cost-benefit through proprietary technologies and economies of scale, meaning they gain a cost-saving by increasing production levels.

Differentiation – offering unique products and services that are more highly valued by customers than other products and services in the industry. Companies are able to get higher prices for differentiated products and services.

Focus – having either a cost focus or a differentiation focus strategy to attract specific, or niche, segments of the market. To gain a cost advantage, companies offer low-cost alternatives to leading products and services in the industry that appeal to a target audience of buyers. To gain a differentiation advantage, companies offer unique products and services that are highly valued by niche audiences and fulfill their specific needs.

A great business strategy will help your company thrive. Subscribe below to our blog for more real-world tactics and actionable tips on how to implement a business strategy and more.

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9 Steps to Successful Functional Strategic Planning

11 July 2022

Contributor: Jackie Wiles

Take these steps to ensure your strategic planning process is productive, adaptable and tied to enterprise goals.

Pivots in strategic plans now happen with increasing frequency, and functional leaders must keep up.

Aim to create and communicate a clear action plan that states where the function currently is, where it needs to be, how to get there and how you will measure progress.

Even once the strategic plan is adopted, revisit it regularly to ensure it remains valid—and adapt as needed to changing scenarios and business conditions.

Seventy-six per cent of corporate strategy leaders say significant pivots to strategic plans now happen with increasing frequency. While functional leaders should never develop strategic plans in a vacuum, today’s disruptions—from price and wage inflation to risks related to Russia’s invasion of Ukraine—make it especially critical for functional strategic plans to account for a variety of scenarios and be able to change with pivots in enterprise strategy.

“The key is to abide by some key principles of any strategic planning process—whether at the enterprise, business-unit or functional levels”, says Marc Kelly , VP at Gartner. “Eliminate everything that isn’t necessary and sufficient to communicate an effective strategy.”

Download now: Build a Better Strategic Plan for Your Function

Commit to a strategic mindset

Before you even start your functional planning process, commit to keeping a strategic mindset. Do not allow yourself to be hijacked by short-termism, tactical execution plans and other tick-the-box activities. All too often, concerns about meeting short-term targets, fear of failure and a preoccupation with operational issues overwhelm aspiration.

This principle applies to your mindset on cost management and budgeting . Commit to a strategic approach wherever and whenever you decide which initiatives to pursue and fund.

View your function’s cost architecture through the lens of business value, and view cost optimisation as a continuous discipline focussed on directing resources (time, capabilities and budget) to differentiating growth initiatives , such as digitalisation. Be clear on the best budgeting approach(es) for your function’s needs, considering what type of purpose-driven budgeting best supports your strategy execution.

Download now: Your Guide to Optimising Costs Strategically, Not Tactically

Then take a methodical step-by-step approach

The best functional plans identify select initiatives that will drive enterprise ambitions and commit the capacity (time, budget, talent and technology) necessary to execute successfully. These nine steps provide a guide by which functional leaders can ensure a rigorous approach to planning, however adaptive their enterprise’s strategy .

Step 1: Outline expectations

Clearly define the enterprise and business context upfront for all stakeholders to prevent managers and executives from misunderstanding one another and derailing the process.

Outline for your function the responsibilities, process timelines and expected outcomes for each participant, especially in cases where the planning and budgeting processes cross functions. Identify which stakeholder(s) will ultimately sign off on your strategy and budget plans.

Step 2: Verify the business context

Enterprise mission , which defines your organisation’s reason for being and the goals it will continually pursue.

Example: One electric-car maker’s mission ‘to accelerate the world’s transition to sustainable energy ’ reflects its absolute commitment to moving toward sustainable practices and reminds employees of the company’s broader purpose.

Enterprise vision , which embodies the organisation’s abstract but realistic aspirations, including underlying values, principles and beliefs that support its decision-making processes.

Example: One aerospace company’s vision ‘to be the premier international defence, aerospace and security company’ is realistic and more alluring than the status quo. It is directional and focussed.

Make sure your function’s employees know how the mission and vision apply to their specific work. Be clear what impact business priorities, challenges and pivots will have on your function’s imperatives, opportunities, risks and priorities.

Step 3: Set goals and objectives

Enterprise strategy translates business aspirations into:

Goals: Individual or combined undertakings that, when achieved, drive differentiated value in the longer term.

Example: Become the largest supplier of renewable electricity in Europe.

Objectives: Discrete and measurable steps that describe how you will achieve a specific goal (see step 4 for the actions required for this).

Example: Increase wind capacity by 200% overall in three years with 10 new wind farms across five regions in Europe.

Once clear on the enterprise plan, you can evaluate the current state of your functional activities, identify the future state, and set goals and objectives accordingly.

Step 4: Develop an action plan

This is the stage at which you take your general assessment of goals and objectives and translate them into detailed action steps with assigned responsibilities. This functional action plan should be a formal document that summarises the sequence of steps or initiatives required to attain an objective. This is the primary source of information for how you will execute, monitor, control and close out objectives.

Action plans are subject to change as surprise events occur, so be prepared to respond with an adaptive strategy .

Step 5: Assess your capabilities

Identify key functional capabilities required to execute on your action plan. Ask business partners to assess how they perceive your function’s strengths and weaknesses. Your assessment and that of your business partners should broadly align. Regardless, generate a prioritised list of functional capabilities to bolster or gaps to fill as a result of your findings.

Step 6: Set measures and metrics

The terms measure and metric are often used interchangeably, but they are different.

A measure is an observable business outcome (for example, employee engagement ). Measures allow you to evaluate the efficacy of your action plans. Agree on them in advance to avoid reporting biases.

A metric describes the actual data collected to quantify the measure (say, percentage of 'satisfied' employees according to an annual survey ).

Make sure measures and metrics are complete enough to account for a range of variables. For example, do not only use customer satisfaction to measure engagement. Also track critical factors, such as discretionary effort and intent to stay.

Step 7: Put your strategy on one—yes, one—page

Simply and clearly state the key elements of your strategic plan: where the functional organisation is, where it is going and how it will get to the future state.

Capture an overview on a single page that communicates how you are adding value today and demonstrates how you plan to impact the business over the next year. Include a statement of strategy, a before-and-after description of the state of your function, one or two critical assumptions underpinning the strategy, and five to seven initiatives required to meet the functional objectives established to support business goals.

Step 8: Drive the plan home

Do this by evangelising the objectives and strategy across your function and company. The one-page strategy template is a helpful tool, as it makes the plan easy for others to consume, but you will still need a deliberate process for communicating the plan—and ensuring that key constituencies understand and agree with it.

You must develop a clear and consistent message that drives buy-in and commitment among functional leadership and engagement and motivation among the workforce, with all stakeholders clear on how your priorities are changing and why.

Step 9: Prepare to respond to change

Once the strategic plan is adopted and shared, it is critical to measure progress against the objectives, revisit and monitor the plan to ensure it remains valid, and adapt the strategy as business conditions change. To do this:

Monitor triggers to track the effectiveness of the strategic plan.

Cancel underperforming projects quickly.

Track and validate assumptions periodically.

Lastly, make sure you have an agreed-upon action plan for specific steps to take or decisions to make to increase the chances of success when monitoring triggers an alarm.

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Step 8: Drive the plan home

Do this by evangelizing the objectives and strategy across your function and company. The  one-page strategy template  is a helpful tool, as it makes the plan easy for others to consume, but you’ll still need a deliberate process for communicating the plan — and ensuring that key constituencies understand and agree with it. 

Step 9: Prepare to respond to change

Once the strategic plan is adopted and shared, it’s critical to measure progress against the objectives, revisit and monitor the plan to ensure it remains valid, and adapt the strategy as business conditions change. To do this:

Track and validate assumptions periodically. 

This article has been updated annually to reflect new events, conditions and research.

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Build a Great Strategic Plan for Your Function

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Module 1: Role of Business

Functional areas of business, learning objectives.

  • Identify the primary functional areas within a business
  • Identify key people and explain the activities within each functional area

Sideview photo of eight floors of an office building, showing many people inside at their desks. Title of photo: Worker Bees.

One of the reasons for separating business operations into functional areas is to allow each to operate within its area of expertise, thus building efficiency and effectiveness across the business as a whole. Functional areas in a business vary according to the nature of the market and the size of the business. For example, manufacturing companies like Nike and Apple have significant Research and Development (R&D) departments in order to stay in the lead in their respective business segments. On the other hand, retail companies may have no R&D functional area per se, but will be heavily invested in Operations areas surrounding Supply Chain Management.

In general, the key functional areas of a business are the following:

Marketing/Sales

  • Research and Development

Each of these functional areas is represented in the following organization chart.

Organization chart of the functional areas of business. Management is the first level. Underneath management are the following four categories: Operations (Production and Supply Chain), Finance (Accounting, Procurement, and HR), Marketing/Sales (Marketing, Sales, and Customer Service), and R&D (Development IT).

The primary role of managers in business is to supervise other people’s performance. Most management activities fall into the following categories:

  • Planning : Managers plan by setting long-term goals for the business, as well as short-term strategies needed to execute those goals.
  • Organizing: Managers are responsible for organizing the operations of a business in the most efficient way—enabling the business to use its resources effectively.
  • Controlling: A large percentage of a manager’s time is spent controlling the activities within the business to ensure that it’s on track to achieve its goals. When people or processes stray from the path, managers are often the first ones to notice and take corrective action.
  • Leading : Managers serve as leaders for the organization, in practical as well as symbolic ways. The manager may lead work teams or groups through a new process or the development of a new product. The manager may also be seen as the leader of the organization when it interacts with the community, customers, and suppliers.

Operations is where inputs, or factors of production, are converted to outputs, which are goods and services. Operations is the heart of a business—providing goods and services in a quantity and of a quality that meets the needs of the customers. Operations controls the supply chain, including procurement and logistics.

Marketing  consists of all that a company does to identify customers’ needs and design products and services that meet those needs. The marketing function also includes promoting goods and services, determining how the goods and services will be delivered and developing a pricing strategy to capture market share while remaining competitive. In today’s technology-driven business environment, marketing is also responsible for building and overseeing a company’s Internet presence (e.g., the company website, blogs, social media campaigns, etc.). Today, social media marketing is one of the fastest growing sectors within the marketing function.

The goal of Sales is to close the revenue the company needs in order to operate profitably, especially in B2B businesses. Again, depending on the nature of the market and the company size, Sales functional areas can vary in structure and approach: inside/outside representation, vertical/horizontal focus, direct, etc. Sales works to exploit the leads created by Marketing and activities generated by the sales force itself.

The Finance  function involves planning for, obtaining, and managing a company’s funds. Finance managers plan for both short-term and long-term financial capital needs and analyze the impact that borrowing will have on the financial well-being of the business. A company’s finance department answers questions about how funds should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the implications of financing decisions for the long-term health of the business.

Accounting is a crucial part of the Finance functional area. Accountants provide managers with information needed to make decisions about the allocation of company resources. This area is ultimately responsible for accurately representing the financial transactions of a business to internal and external parties, government agencies, and owners/investors. Financial accountants are primarily responsible for the preparation of financial statements to help entities both inside and outside the organization assess the financial strength of the company. Managerial accountants provide information regarding costs, budgets, asset allocation, and performance appraisal for internal use by management for the purpose of decision-making.

Key People Within Functional Areas

Here is an example of the functional areas of a large technology manufacturing corporation and the key functions and people within.

Organization chart showing the key people within functional areas of business. The first level is Management, represented by the CEO or President. The second level, underneath Management, includes Operations, Finance, Marketing/Sales, and Research and Development. Operations is represented by the COO. The level beneath Operations includes Production, Supply Chain Management, and Procurement; these areas are represented by the VP of Production, the Director of Supply Chain Management, and the Director of Procurement. Finance is represented by the CFO. The levels beneath Finance Accounting, Human Resources, and Legal; these areas are represented by the VP of Accounting, the VP of HR, and the General Counsel of Legal. Marketing/Sales is represented by the CRO. The levels beneath Marketing/Sales include Marketing, Sales, and Customer Service; these areas are represented by the VP of Marketing, the VP of Sales, and the Director of Customer Service. Finally, R&D is represented by the CTO. The levels beneath R&D include Development and IT; these areas are represented by the VP of Development and the Director of IT.

The Management functional area in most large corporations is led by the Chief Executive Officer (CEO). Depending on company size, there may be a President in position as well.

The Operations functional area is managed by the Chief Operations Officer (COO). In this example, Operations consists of Production, led by a Vice President (VP), a Supply Chain department, and a Procurement area with Director-level people in charge.

The Finance functional area is led by the Chief Financial Officer (CFO), who is one of the most important “C-level” executives. In addition to running Finance and Accounting, the CFO is responsible for reporting company results to the financial community. Finance also contains Human Resources (HR) in many companies and the Legal department as well. It is common for the CFO to have VPs of HR, Accounting, and Legal as direct reports. HR contains functions like employee training, compensation and benefits, and recruiting. Accounting has multiple functions, such as Accounts Payable, Receivable, record-keeping, and cash flow. The Legal department is responsible for contracts, copyrights, and various negotiations on behalf of the company.

The Marketing/Sales functional area is managed by the Chief Revenue Officer (CRO), which is a relatively new addition to C-level executives. The CRO may have a Sales VP and Marketing VP as direct reports, but in some cases, the CRO may act as VP of Sales or Marketing. This functional area may also contain Customer Service (and Support) with a Director-level manager in charge. Marketing has specialized functions, such as communications (press releases), social media, data science analysis, and product marketing. Customer Service is usually responsible for Customer Relationship Management (CRM) and problem resolution and support.

Finally, the Research and Development functional area is the lifeblood of manufacturing businesses. R&D is staffed with scientists, thought leaders, subject matter experts, and industry analysts striving to provide the organization with knowledge and ideas to keep up with, and ahead of, the competition. R&D is led by the Chief Technology Officer (CTO), who manages a Development VP or similar title, depending on what technology products are being produced: semiconductors, software systems, or dental appliances. In many organizations, the Information Technology area (IT), responsible for providing internal technology tools to the company’s employees, is housed in the R&D organization.

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How to Build a Functional Business Plan

How to Build a Functional Business Plan

In this blog we discuss The Buildify Method’s approach to putting together a functional business plan along with the different business systems that are used in an effective business plan for start-ups, fast growing companies, tech companies, and even large businesses: How to Build a Functional Business Plan.

Welcome! You’re about to read original content from The Buildify Method .  As a nationally recognized business consultant, coach, and speaker, Aaron Keith is passionate about supporting the entrepreneur community by sharing his knowledge gained from coaching over 10,000 entrepreneurs in nearly 20 years. Companies ranging from billion dollar enterprises and celebrities, all the way to main street and small start-ups. We are committed to helping entrepreneurs take a business from one level to another. We have everything from a podcast to coaching programs , and software .

Today we are going to dive in and work on very specific performance-based systems and the importance of a business plan. Aaron has been coaching and consulting companies for about 20 years and has coached over 10,000 companies from around the world. We also share some information about some systems and processes that have helped all size companies, big and small.

The first topic is goals. Goal setting is absolutely critical, but it’s not just goal setting. It’s the systems behind the goals. The first system that comprises a proper business plan or an effective business plan is called a sales goal breakdown. Your sales goal breakdown is a document that takes your sales goal and breaks it down into minute detail.

Why is this needed? It’s needed so that your brain latches on. There’s a system, and there’s your brain. You want systems to impact your brain. Your brain is what causes performance. Just having a system on your computer isn’t going to do anything for you. Having a system that you’re interacting with causes the brain to move differently, which causes different actions, which causes different results.

Business System

Let’s focus on the system first. Here’s how you want to set up your sales goal breakdown document. First, the very top should have your sales volume. From your sales volume, that’s going to break down what your average sales price is. Once you have your annual sales price, it’s going to break down the number of units you need to sell per year.

So that first chunk is annual sales volume, average sales price, and number of units sold. Now, the next section is actually a little more important. It breaks it down for the month. So it’s going to show you, this is how much sales volume you need to do for the month. Then, from there, it’s going to reduce it again and keep breaking it down.

It’s going to then show you how many units you need to sell from the number of units you have to sell per month. It’s going to say how many active customers you need to be working with each month. From there, it’s going to reduce again and show you how many appointments you have to go on to get that number of active customers. Once we know how many appointments you have to go on, we reduce again, down to leads.

That way, from start to finish, you know how many leads you need to convert to appointments. And that many appointments convert to active buyers and sellers. This many buyers and sellers will close this many transactions per month. Don’t stress if this was too fast; we have a resource you can use that breaks it down for you.

Business Numbers are Critical

It is critical that you know these numbers. Why do you need to know these numbers?

If you don’t know these numbers, then your brain is not latched on to what you have to produce and cause in the world. Being present to what you need to produce is absolutely critical to increasing your performance as a real estate agent, as an entrepreneur. This document directly impacts your brain and causes you to perform at a higher level because you intimately know your numbers.

How do I know if the sales goal I set is too large?

If last year you did 20 million, don’t set this year’s goal at 100 million. If your goal is too large, there might be such a large disparity between here and there, that your brain can’t latch onto it as real. It’s too conceptual. You do not want that. You want to set a goal that should intimidate you, it should scare you. So if you did 20 million last year, maybe set your goal at 40 million or 50 million- doubling that business. That works.

Your goal should scare you a little bit but your brain should be thinking that it’s possible. That’s a good goal.

On the other side, you don’t want to play too small. You did 20 million last year, doing 25 million this year is not a goal; it’s too small. If you want ideal human performance, you need to cause stress or pressure to cause you to grow. It’s just like working out. If you work out with a 5 lb. weight all year, it’s not causing any stress on the body. The body doesn’t have to adapt, hence you don’t grow muscle. Your brain and your performance are the same way. There has to be some degree of stress or pressure on you for you to take yourself to the next level as an entrepreneur, and it’s why you need to learn How to Build a Functional Business Plan.

The Personal Calendar

This next system is critical for every entrepreneur, whether you’re in real estate, it doesn’t matter. This is a really critical system that we all have to master. It is also a system most of us need to improve, regardless of how many years you’ve been in business. This system is scheduling and task management.

Personal Schedule

Everything that matters to you needs to be scheduled. The reoccur button needs to be set with no ending. Your personal schedule is designed to support your business in some way. A lot of your personal needs set you up so that when you’re in your business you’re performing at your best.  Examples are haircuts, massages, facials, time off, vacations, date night, or just personal time where you’re just off the clock. I strongly recommend going into your calendar for the year and putting in all your vacations, your workouts, meditation time, date night, and all those things that matter to you so that you’ve seat a framework around your life that supports you.

That creates balance. When you have balance in your calendar, that balance gives you capacity. Capacity is critical. The more capacity you have, the more you have room to grow and expand and take on more. So that’s the personal calendar.

The Business Calendar

Again, anything that matters to you must be in the business calendar. There are a couple of things that are absolutely important that are nonnegotiable. They must be in your calendar.

First is business development time. Your business development time is that time where you’re working on your business with no interruptions. Your cell phone and emails are off and you are just cranking away on your business. Your business development time is when you get to work on your company and not in your company. That’s how your business grows and move to the next level.

You can’t just sit by a tree and wait for an apple to fall. You need to water the tree, prune the tree and eventually the tree will produce an apple. Most of you want clients, but you’re not taking care of the things that produce clients. Your calendar is one of the primary systems that remind you when and how frequently to do those actions. Your business development time is one of those main actions.

Marketing and Lead Time

All marketing and lead generation time must be built into your calendar. It should be reoccurred for the rest of the times. You need a market for the rest of your career; that doesn’t change. The calendar must include when you make phone calls, when you do networking, when you send out newsletters, videos and all the different marketing actions that you have. Make sure it is recurring and is a routine.

If you’re interested in performance, you want to have things in your calendar. When they become routine, you’re very effective. You want your week to be a routine that has all the things in it that matter to you. One of the things that has to be in there is your finances, your budget. Critical aspects also include when you’re doing your marketing and when you’re working on your business.

Questions on Calendaring

What are some of the questions we have around calendaring?

The number one question that we’ve got, is when is the best time to do my marketing and lead gen activities? The best time that I’ve found, for real estate, is before 11am-your mornings. After around 11am, your clients are going to start contacting you. Your mornings are more for you and working on your business than on your client. Our recommendation is that you schedule all of your marketing time before 11am.

Task Management

Your calendar and task management are heads and tails of the same coin. They very much mesh together and come together in a unified system. Here’s the way I want you to set up your tasks. Number one is that you should have an Excel spreadsheet or Word document or some kind of technology that allows you to organize your tasks in the following fashion. First I want to see the task. Next column should be priority level (1, 2, or 3 based on if it needs to be done today, next couple of days, or next year). Then, we have the date the task needs to be completed by, followed by who is responsible for taking that action. In my companies we use Excel and Microsoft OneDrive, so I can see everybody’s tasks. It allows me to add things for all of my staff’s to-do. It’s shared so everybody can see everyone else’s to-do list. I recommend doing the same system for projects. Have a to-do list and a project list.

Project List

While a to-do list is a one-time action, a project list requires multiple occasions to get things done. The project list can be a list of things you are one day going to get around to; it is not a to-do list. It’s more of a holding or capture tool. Your calendar is actually your to-do list of what you’re going to get around to doing.

In the morning, I recommend having a calendar to occasion to look at your calendar and deal with your to-do items and take them from your to-do list and plug it into your calendar. This way, there is space and time dedicated to doing the task.

People asked how they can better use their to-do list. I think it was covered by saying the to-do list is a capture tool and the calendar is the real to-do list.

Performance-Based Systems

No we’re talking about performance-based systems. And we’re talking about the plan that embodies or encompasses a lot of these systems. So, the next main system that I want to move into are often systems that aren’t talked about; they aren’t addressed by a lot of entrepreneurs. It is absolutely critical that your business plan has a business budget and a personal budget.

How does your budget impact your company? Whether you’re a brand new real estate agent who has never done a transaction, or you have a team of 60, you absolutely have to manage your budget.

Let’s start with your personal budget. Your personal budget impacts your business budget because your business budget has to pay your personal budget.  If your personal budget is wrong, then your business budget is wrong.  Then your sales goals are wrong because your sales goals have to make enough money to pay your business budget. Your business budget has to pay your personal budget and it gets worse.

If your personal budget is off it affects the business budget, if the business budget is off it affects the sales goal. If your sales goal is off, your entire business plan is off because your business plan is predicated on generating enough money to run the company. So this is the little rock at the bottom that has a huge cascading effect across your company. And I get that most of us were not taught a lot about money.

My finance coach sat down with me and really taught me about finances years ago. So I am passionate that entrepreneurs learn about this topic. If you want to email me directly, I’ll send you some books that are very, very good at teaching you about finance and budgeting.

Personal Budget

So, let’s go over some of the thing we have in our personal budget. You should have the following in there: travel, cash reserves for a rainy day, and another line item for investment and retirement. Let’s just focus on these three because they are variable.

Your travel budget can be $50 or $50,000. You need to set real numbers around what you want your travel budget to be, what you want your cash reserves to be and what you want your investments and retirement to be.

You may need to meet with a financial advisor or do some research. Take some time to start putting some numbers in the budget around these line items because they vary so greatly. They’ll have a massive impact on your business budget, and then later on your sales goal.

Business Budget

Next we will look at the business budget. You need to have taxes built into your business budget. Business reserves need to be set aside as well as profit, our fixed expenses and variable expenses.

What should I use to manage my money?

For your business and your personal, I would recommend using QuickBooks. I would not use QuickBooks online, get QuickBooks desktop. They do not function the same and the online version has some glitches. You can open a company for your business and another for your personal. You can open as many businesses as you want in QuickBooks. That way, your business and your personal both reside there; that’s important. And QuickBooks is very inexpensive.

Second is budgeting. The QuickBooks budget and most accounting software budgeting system do not work perfectly. You want to use Excel. It makes it very simple to track your budget, your actual and your difference.

Lead Source Breakdown

We are starting to acquire more and more of our business systems. The next one I want to look at is called a lead source breakdown. What is a lead source breakdown? It’s absolutely critical that you understand where you want your leads to come from and how many leads from each one of those sources.

Your first system was the sales goal breakdown and it broke down all of the aspects of your sales goal. And the last aspect of it was how many leads you need per month and per year. That’s how these two connect. We know how many leads we need per month.

Your lead source breakdown then starts to take these leads that we need per month and break it down by the source. Say you need 25 leads a month. Your lead source breakdown is going to show you that you need five leads from business alliances, three leads from online, and eight leads from your database. That way you can start to predict where you want your business to come from.

This is where you get to impact how your business functions.

What are some of the key sources your leads should be coming from in a successful real estate business?

If this was my company, these would be my top pillars:

-Business alliances (CPA, wealth manager, architect, divorce attorney, interior designer, etc.)

-Sphere (my database-absolutely critical to the growth and development of your company)

-Networking (another big, big, big pillar)

-Open houses (great way of bringing in new business)

Marketing Plan

Now we need a marketing plan that’s going to produce all those leads. I’ve worked with and coached over 10,000 companies from around the United States. Most businesses do not have a marketing plan that they can hand me. Your marketing plan should be something printable. You should be able to touch it and it has to do a couple of things.

It needs to look at all of the marketing actions and the frequency and duration of those actions. Your marketing plan is the absolute most important thing that’s going to generate new leads. If you know how many leads and you know the sources of those leads, your marketing plan is designed to bring you those leads from those sources. This is something that you’re going to have to spend some time building out.

We have a Buildify Business Plan and inside that we have our marketing plan.

What are the biggest challenges you see with real estate agents in their marketing?

There are a couple of them. I would say the size of your database is a huge challenge. So many of you reading need to do a little gut check and ask yourself if your database is actually large enough to fulfill on the sales goal that you set. So you need to get out there, meet some new people, start networking, join some groups and just be out in the world more.

That is one of the number one challenges; that people aren’t setting a KPI (key performance indicator) around how many new people they need to bring in per week, per month, per quarter, per year of your business to fulfill all of your sales goals.

The next is consistency. A lot of us are just not super consistent when it comes to marketing. When your business is going great and moving fast and furious you stop marketing. Then when your escrows start to close everything gets calm and you realize you haven’t been marketing in weeks.

So there’s this up and down cycle to your marketing actions. Consistency comes back to your calendar. If marketing is in your calendar, it’ll solve that.

Most of you don’t have a plan. If you had a solid plan followed consistently, your results would be spectacular.

Lead Tracking Form

The lead tracking form is another system we have at Buildify. It’s a beautiful document and it tracks two specific things. It attracts the volume of the leads that are brought in and the source of those leads. Your lead tracking form should break down the date of the lead so that we can see how many leads you brought in per month and the source of those leads and where they came in. It’s also going to track your conversion ratio. Most entrepreneurs don’t know their lead conversion ratio.

What if I’m not bringing in enough leads each month?

If you’re not bringing in enough leads each month, it’s most likely because you’re not following your marketing plan. That is the system that generates leads. If you’re using a lead tracking form, you’ll be able to see where the leads are coming from. This tells you a couple of things. It also gives you ROI (return on investment) and it gives you ROT (return on time).

If you’re spending a lot of time on your database and only getting a few leads, something’s off. This is a very important feedback mechanism. It’s giving you information around your performance and performance of the systems that encapsulate it.

The Pipeline Report

The last system we have is a pipeline report. Your pipeline report is also one of the primary systems that make up your business plan. We keep it very simple and structured. Your pipeline report is tracking by month and by quarter. So the way we structured the Buildify pipeline report, it shows your production, all your buyer and sellers that you’re working with by month and by quarter. You can see how much sales volume you have scheduled to come in per month and per quarter against your goals.

Your pipeline report is designed to hold you accountable to your production. Most of us are numb to our numbers. We are not paying attention to the goal. Real estate is one of those businesses you need to ahead of your company, dealing with the month you’re in isn’t going to impact anything.

The pipeline report will show you in real time how much you have coming in per month per quarter against your goal and it causes performance. It gets you engaged and motivated. That’s why the pipeline report is one of our primary systems. It’s foundational and critical.

How often should we be looking at our pipeline report?

Good question! Your pipeline report is something that you should be looking at on a daily basis, even just for a few minutes. Just a glance so you’re always staying present. For those of you that have assistants, your assistant would be the one maintaining your lead tracking form. They’re going to maintain your pipeline report for you. This is not just for the lead agent or the owner. If you have a team, every agent on your team needs the system we’ve mentioned today. Make sure each agent has their own documents and they need to be discussed at weekly team meetings.

They are designed for an entrepreneur and real estate agent to perform at a higher level.

Another question asked was “How will this help with the up and down cycle of my business?”

Your pipeline is keeping your brain out ahead of the business. Many get enthralled with the day to day and stop marketing. They stop focusing on the goal, which diminishes your intention. Every morning when you look at your pipeline report, you’re staying present to where you’re going, where you’re supposed to be. Intentionality increases focus and your commitment and actions follow suit. So you end up taking more action, and more importantly intentional action.

So your performance as an entrepreneur changes because the pipeline’s impacting your brain, it’s impacting your thinking and your focus.

In closing…

Look at your notes and make sure that you have the following in your business plan.

  • Sales goal breakdown (documents breaking down your sales goal in granular detail)
  • Business Budget and Personal Budget (finances managed with integrity)
  • Lead Source Breakdown (breakdown the source of those leads and where you want those leads to come from)
  • Marketing Plan (core system to generate those leads in those key areas)
  • Lead Tracking Form (track those leads based on where we wanted them to come from)
  • Pipeline Report (going to track active customers-buyers and sellers, how much money coming in per month against monthly and quarterly goals)
  • These are some of the core systems that make up your business plan.

We’re committed that you take your business from one level to another using the Buildify processes and systems designed to help you do that. So here’s what we recommend- visit Buildifysystems.com . At the top of the page you’ll see ‘Business Plan’. We have the gold standard of business plans in the real estate industry. Our business plan is not just a comprehensive, interactive business plan. It’s very simple to put together, we walk you step by step. It also comes with a suite of performance based systems, most of which we spoke about today.

We thank you so much for joining us today.  We know your time is valuable. Please keep a lookout as we have new podcast episodes coming out weekly! If you want to get a few more nuggets, you can follow us on our podcasts which is TheBuildifyMethod.com .

Thanks again for joining us and we look forward to being a resource for you over the years to continue helping you grow and expand your company.

Let’s Connect!

To continue growing and expanding your knowledge as a business owner, check out The Buildify Method podcast on your favorite podcast app.

Business Education Videos

To access a wide variety of our business education video’s go to our video page https://www.buildifysystems.com/seminars/ or on our YouTube channel http://www.youtube.com/c/AaronKeithConsulting .

Thank you for reading The Buildify Method Blog . We hope you got a few nuggets that you can take back to your business. If you haven’t already, please subscribe to our podcast and leave a review. It’ll help other entrepreneurs discover us and benefit from the community we’re building. We look forward to having you with us for the next Blog-isode.

Author:  Aaron Keith

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  1. What is Business Strategy? Definition, Components & Examples Explained

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  2. 3 Levels of Strategy: Corporate, Business, and Functional Level

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  3. Functional Strategy

    business strategy includes functional plans from which of the following groups

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  5. ❓️Who Are The Functional Managers? ❓️ #businessinsights #shorts #shortvideo

  6. Which of the following groups was central to the formation of populism?

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  1. How to Develop a Business Strategy: 6 Steps

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  6. 9 Steps to Successful Functional Strategic Planning

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    The functional-level strategy determines the daily operations of each team/department in your business. It supports the execution of business-level strategy and corporate-level strategy. In other words, a functional strategy is like a short-term plan for specific areas of your business. It includes tactics, goals, tasks to achieve those goals ...

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    Step 3: Foster communication. As noted earlier, two-way communication is critical to the success of corporate strategy as a whole. Within a hierarchy, horizontal and top-down communication is generally easier to achieve than transparent 360-degree communication across the organization.

  13. Levels of Strategy in Diversified Companies: Corporate, Business, and

    Functional strategies, such as marketing, production, finance, and research, need to support and contribute to the broader strategic objectives of the organization. This alignment and balance between strategies at different levels are vital for achieving innovation and driving success in diversified companies.

  14. Three Levels of Strategy: Corporate, Business and Functional EXPLAINED

    These three levels are: Corporate-level strategy, Business-level strategy and Functional-level strategy. Together, these three levels of strategy can be illustrated in a so called ' Strategy Pyramid ' (Figure 1). Corporate strategy is different from Business strategy and Functional strategy. Even though Corporate-level strategy is at the ...

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  16. 9 Steps to Successful Functional Strategic Planning

    Step 1: Outline expectations. Clearly define the enterprise and business context upfront for all stakeholders to prevent managers and executives from misunderstanding one another and derailing the process. Outline for your function the responsibilities, process timelines and expected outcomes for each participant, especially in cases where the ...

  17. Functional Areas of Business

    Management. The primary role of managers in business is to supervise other people's performance. Most management activities fall into the following categories: Planning: Managers plan by setting long-term goals for the business, as well as short-term strategies needed to execute those goals. Organizing: Managers are responsible for organizing ...

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    Your personal schedule is designed to support your business in some way. A lot of your personal needs set you up so that when you're in your business you're performing at your best. Examples are haircuts, massages, facials, time off, vacations, date night, or just personal time where you're just off the clock.

  20. Chapter 2 M Flashcards

    setting goals and objectives. E. developing functional plans. A. The definition of the company's mission is the first step in the strategic planning process. The mission is then transformed into ________, which in turn guide decisions about ________. A. a detailed business portfolio; functional planning. B.

  21. Quiz 5 Flashcards

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  22. Functional Strategy

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  23. Mod e 3 business strategy includes functional plans

    View full document. Mod e 3) Business strategy includes functional plans from which of the following groups? (Select all that apply) [At the end of this lesson you will be able to define a supply chain strategy and its relationship to the goals of the business strategy.] Marketin g Qualit y Testing and Evaluation Financ e.