COBUFU - the three levels of Strategy

You might be wondering "What is this COBUFU, is it a new strategy".

Well, COBUFU is not a new strategy, it was the term (a code word) we used in our college to remember the three levels of strategy i.e. Corporate Level Strategy, Business Level Strategy, and Functional Level Strategy. 

When we hear the term strategy the first thing that comes in our minds is "Marketing Strategy" and only focus on discussing the factors related to it but, strategy is not just related to marketing, it is an holistic approach. It is at the foundation of every decision that has to be made within the organisation. In fact, strategy also has a major impact on the effectiveness of employees in every department within the organisation. 

As already mentioned, there are three different levels of strategy Corporate Level, Business Level, and functional Level, and they are illustrated in a form of a pyramid called "Strategy Pyramid". (as shown below).

Corporate Level Strategy, Business Level Strategy, and Functional Level Strategy are completely different. Each Level has its own importance.

Corporate Level Strategy: 

A corporate Level Strategy address the entire strategic scope of the organisation. It is a multi-tiered plan that leaders (top management) use to define, outline, and achieve specific business goals. It determines  overall scope and direction of the organisation and the way in which its various units work together to achieve the desired target. A corporate level strategy can be used to increase profits and oversee the operations of multiple businesses to achieve complex goals like entering new markets.

Types of Corporate Level Strategies:

• Stability strategy
• Expansion strategy
• Retrenchment strategy
• Combination strategy

Characteristics of Corporate level strategy

• Diversification
• Forward or Backward integration
• Horizonttal integration
• Profit
• Turnaround
• Divestment
• Market Penetration
• Liquidation
• Concentration
• Investigation
• No Change

Business Level Strategy:

A Business Level Strategy is intended to provide a company with competitive advantage. It determines how organisation's resources will be spent. For organisations each business unit will have its own business level strategy based on services, products, division or multiple related departments. The goal of business level strategy is to differentiate organisation from its competition, and create specific objectives and initiatives. 

Business level strategy is chosen based on the Strengths and Weaknesses of the organisation, its products and services, and on how it wants to be perceived by customers. 

Types of Business Level Strategies:

• Cost Leadership - Competing with a wide range of businesses based on price
• Differentiation - Competing by using a product or service with entirely unique features
• Focused differentiation - not only competing through differentiation but also by selecting a small portion of market to focus on
• Focused low-cost - Competing not only through price but also selecting a small porting of the market to focus on
• Integrated low-cost differentiation: Competing by using low cost and differentiation

Functional Level Strategy:

Functional Level Strategy can be defined as the day to day strategy which is formulated to assist in the execution of corporate and business level strategies. These strategies are framed as per the guidelines given by the top level management. It is connected with the question "How do we support the functional departments such as Marketing, Human Resource, Operations, Finance, Research and Development. In Functional level organisations work on the GRIN (Goals-Roles-Interdependence-Norms) framework. This helps them assess what needs to be done and how. It’s important to arm yourself with the right skills.

End Note:

To lay the ground work on creating a good strategy at all levels, it is important to understand what we need to do first and foremost. Before defining the strategy a good leaders must answer (find answers) for his(her) "Why, "What", "Where", and "How", for example, 

• Why do we exist?
• How will we behave?
• Where are we going?
• How will we succeed?
• What is most important right now?