Lesson 10

Types of Strategies: Corporate, Business, and Functional Strategies

INTRODUCTION
In the strategic management process, it is essential for an organization to identify and
understand the different types of strategies at various levels: corporate, business, and
functional. These strategies work together to achieve the organization’s long-term
objectives. The corporate strategy is focused on the organization as a whole,
determining what industries or markets the organization should compete in. The
business strategy is centered on how to compete within a specific industry or market,
while functional strategies involve detailed plans at the departmental level to support the
overall strategy.

This module explores the classification of strategies into corporate, business, and
functional categories, discussing their purpose and impact on an organization’s
success. Understanding these three levels of strategy will help students appreciate how
decisions at each level influence the overall strategic direction of a company.

LEARNING OBJECTIVES
By the end of this lesson, learners will be able to:
1. Define and distinguish between corporate, business, and functional strategies.
2. Explain the purpose and impact of each type of strategy on an organization.
3. Understand the relationship between these three types of strategies and how
they align to drive organizational success.
4. Analyze real-world examples of companies utilizing corporate, business, and
functional strategies.
5. Classify different strategies into corporate, business, and functional categories.
6. Understand how strategies at different levels interconnect to create a unified
organizational strategy.

LECTURE DISCUSSION
Introduction to the Three Types of Strategies:
Corporate Strategy:
 Definition: The corporate strategy focuses on the overall direction of the
organization. It involves decisions regarding which industries or markets the
organization should enter or exit, acquisitions, diversification, mergers, and the
allocation of resources across various business units.
 Key Considerations: Market positioning, growth opportunities, risk management,
resource allocation, and synergy across business units.
 Example: Apple’s corporate strategy includes decisions to enter new product
markets (like wearables and services) and maintain its position in consumer
electronics.
Business Strategy:
 Definition: Business strategy is the plan that an individual business unit or
subsidiary adopts to compete successfully in its market. It involves decisions

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 regarding pricing, market positioning, competitive advantage, product
development, and customer relations.
 Key Considerations: Competitive positioning, differentiation, cost leadership, and
market segmentation.
 Example: Nike’s business strategy involves differentiation through innovative
athletic apparel and strong brand recognition in the sports market.
Functional Strategy:
 Definition: Functional strategies are focused on specific departments within an
organization (e.g., marketing, finance, operations, HR) and outline how each
department will support the overall corporate and business strategies.
 Key Considerations: Operational efficiency, cost control, technology use, product
development, and human resource management.
 Example: Coca-Cola’s marketing strategy might focus on promotional campaigns
to increase brand visibility and customer engagement, supporting its business
strategy.

Classification of Strategies:
 Corporate Strategy: Encompasses decisions that affect the whole organization,
such as entering new markets, mergers and acquisitions, and diversification.
 Business Strategy: Focuses on competing effectively within a specific industry or
market. Strategies may include cost leadership, differentiation, or focus
strategies.
 Functional Strategy: Operates within specific departments and ensures each
function supports the overall corporate and business strategies.

Purpose and Impact:

 Corporate Strategy: Sets the overall direction and scope of the organization. It
impacts which markets or industries the organization competes in and ensures
resource allocation is aligned with long-term goals.
 Business Strategy: Determines how a business unit will compete and achieve its
objectives in a particular market. It impacts competitive positioning and how
value is delivered to customers.
 Functional Strategy: Provides the tactical direction needed for departments to
execute the business strategy effectively. It ensures that day-to-day operations
align with broader organizational goals.

Interconnection Between Strategies:

All three types of strategies must work in harmony for an organization to be successful.
Corporate strategy sets the overarching goals, business strategy defines how to
compete, and functional strategies support the execution of business strategy through
specialized departmental actions.

Link to Video Recording: [Link]

Activity: Classifying Strategies of a Multinational Corporation

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Objective: Analyze a multinational corporation and classify its strategies into corporate,
business, and functional categories, then discuss how each type of strategy impacts the
organization’s overall success.

Instructions:
1. Select a Multinational Corporation: Choose a multinational corporation, such as
Amazon, Tesla, or Microsoft.
2. Research the Company: Conduct research on the company's strategies across
its different business units, focusing on their corporate, business, and functional
strategies.
3. Classify the Strategies:
 Identify and categorize the company’s corporate strategy (e.g., market
expansion, diversification, acquisitions).
 Identify the business strategies used by the company in specific markets
(e.g., cost leadership, differentiation, focus strategies).
 Identify functional strategies employed within the company’s departments
(e.g., marketing, finance, operations).
4. Write a Report: Provide a detailed report outlining the identified strategies at
each level and discuss how they contribute to the company’s success. Explain
how these strategies align with one another and drive the organization’s
performance.
5. Submit Your Report: Submit your report to be evaluated.

Expected Outcomes:
 Students will be able to classify different strategies used by a multinational
corporation and explain their interconnections.
 Students will gain an understanding of how corporate, business, and functional
strategies support each other to achieve organizational success.

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Rubrics of Activity
Needs
Criteria Excellent (A) Good (B) Improvement
(C)
Accurately identifies
Incorrect or
and classifies Identifies and
incomplete
Identification and corporate, business, classifies most
classification of
Classification of and functional strategies
strategies; lacks
Strategies strategies. Detailed correctly, with
clear
explanation some explanation.
explanation.
provided.
Provides thorough Analysis is
Provides good
analysis of how superficial or
analysis, but may
each strategy lacks clear
Analysis of Strategy miss some details
contributes to the connections
Impact or connections
company's success, between
between
showing clear strategies and
strategies.
interconnection. success.
Research is Good research
thorough and with relevant Research is
Research and Use of includes specific, examples, though incomplete or
Examples well-explained some may lack lacks relevant
examples of depth or examples.
strategies. explanation.
Organized and
Clear, organized, Disorganized,
clear, though there
Presentation/Report and professionally unclear, or
may be minor
Quality written with no contains
errors or
grammatical errors. significant errors.
inconsistencies.
Demonstrates deep Demonstrates a Lacks critical
understanding and good thinking or
Creativity & Critical
original insights into understanding but creativity;
Thinking
the interconnection may lack original analysis is basic
of strategies. insights or depth. and lacks depth.

VALUES INTEGRATION
Integrity in Strategy Development
Core Value: Integrity
Aligning business objectives with organizational strategy requires transparency and
honesty at every level. The process should be built on sound ethical principles, ensuring
that objectives are not just strategically viable but also morally and ethically responsible.

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As students learn to design strategies, they will understand the importance of making
decisions that reflect honesty, fairness, and integrity—qualities that organizations
should uphold to foster trust with employees, customers, and other stakeholders.

Reflection Prompt: How can integrity in corporate and business-level strategies help
build long-term trust with customers and other stakeholders?

Accountability in Achieving Objectives

Core Value: Accountability
Setting clear, measurable, and time-bound objectives at the corporate, business, and
functional levels is essential for creating a culture of accountability within organizations.
When business objectives are aligned with the overall strategy, it becomes easier to
hold individuals and teams accountable for their performance. Accountability
encourages responsibility for outcomes, leading to better performance and continuous
improvement.

Reflection Prompt: In what ways can alignment between business objectives and
organizational strategy improve accountability at all levels of an organization?

Sustainability in Business Strategy

Core Value: Sustainability
In today’s business world, sustainability is not just about environmental practices but
also about making strategic decisions that ensure long-term viability. Corporate,
business, and functional strategies must consider long-term environmental, social, and
economic impacts. When aligning business objectives with strategy, students will learn
how sustainable practices at the business and functional levels can lead to greater
competitive advantage and a positive societal impact.

Reflection Prompt: How can organizations incorporate sustainability into their strategies
at all levels while still achieving their business objectives?

Innovation and Creativity in Strategy Formulation

Core Value: Innovation
Successful alignment of business objectives with strategy encourages innovation and
creativity. In business strategy, companies often need to think outside the box to stay
competitive. Aligning functional strategies such as product development, marketing, and
operations with corporate goals can create opportunities for innovation. When business
objectives are designed with an emphasis on creativity and forward-thinking, it drives
growth, opens new markets, and strengthens the organization’s competitive edge.

Reflection Prompt: How does innovation play a role in setting business objectives that
align with a company’s long-term strategy?

Collaboration and Teamwork

Core Value: Collaboration

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Aligning objectives across corporate, business, and functional levels is a collaborative
process that requires open communication and teamwork. Effective collaboration
between departments and business units is critical for ensuring that all parts of the
organization are working towards common goals. Students will recognize the
importance of fostering a collaborative environment in their future careers to achieve
business objectives that align with broader organizational strategy.
Reflection Prompt: Why is collaboration essential when aligning business objectives
with an organization’s overall strategy? How does it improve the implementation of the
strategy?

Ethical Leadership and Decision Making

Core Value: Ethical Leadership
Aligning business objectives with corporate, business, and functional strategies requires
strong leadership that prioritizes ethical decision-making. Ethical leaders set the tone for
strategy formulation and ensure that all objectives are designed in a manner that
supports fairness, respect, and responsibility. By integrating ethical leadership into their
approach to strategy, students will learn how to influence organizations toward practices
that benefit all stakeholders, not just shareholders.

Reflection Prompt: How can ethical leadership influence the alignment of business
objectives with organizational strategy?

Respect for Diversity and Inclusion

Core Value: Diversity and Inclusion
When setting business objectives at various levels, organizations must ensure that their
strategies take into account the diverse needs and perspectives of their stakeholders.
Diversity and inclusion should be reflected in all aspects of corporate, business, and
functional strategies. By doing so, organizations can build more inclusive cultures, foster
innovation, and attract a broader customer base.

Reflection Prompt: How can aligning business objectives with inclusive strategies
benefit an organization in terms of its workforce and market reach?

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Reference List
Barney, J. B., & Hesterly, W. S. (2019).
Strategic Management and Competitive Advantage: Concepts and Cases (6th ed.).
Pearson Education.
This textbook provides in-depth explanations of key strategic concepts, including SWOT
analysis, business-level strategies, corporate strategy, and more.

Porter, M. E. (1985).
Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
Porter's Five Forces model and his insights into business strategy, competitive
positioning, and market forces are foundational.

Kotter, J. P. (1996).
Leading Change. Harvard Business Review Press.
Kotter’s work on strategic leadership, change management, and organizational
alignment is essential for understanding how strategies and objectives align across
levels.

Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2020).

Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and
Cases (22nd ed.). McGraw-Hill Education.
This book is a comprehensive resource for understanding corporate, business, and
functional strategies and their integration.

McKinsey & Company (2020).

The McKinsey 7S Framework: An Organizational Model for Strategy Alignment.
McKinsey & Company.
This article outlines the 7S framework and how it helps organizations align their strategy
with structure, systems, and other organizational elements.

David, F. R. (2017).
Strategic Management: Concepts and Cases (16th ed.). Pearson Education.
An essential textbook for understanding strategic management concepts, including
SWOT analysis, business strategies, and corporate strategies.

Hill, C. W. L., & Jones, G. R. (2012).

Strategic Management Theory: An Integrated Approach (10th ed.). Cengage Learning.
A detailed overview of strategic management theories, business strategy models, and
frameworks, including Porter’s Five Forces, the SWOT analysis, and business-level
strategies.

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Ghemawat, P. (2001).
Strategy and the Business Landscape. Prentice Hall.
Ghemawat discusses strategy formulation within the business environment and the
strategic frameworks used to drive decision-making.

Ansoff, H. I. (1988).
The New Corporate Strategy. Wiley.
Ansoff’s work on corporate strategy and strategic planning is foundational for
understanding how organizations define their growth and development paths.

Johnson, G., Scholes, K., & Whittington, R. (2008).

Exploring Corporate Strategy: Text and Cases (8th ed.). Pearson Education.
A comprehensive resource on corporate strategies, this book provides case studies and
discussions on strategic alignment, market positioning, and strategic decision-making.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017).

Strategic Management: Competitiveness and Globalization (12th ed.). Cengage
Learning.
A global approach to strategic management that covers strategic analysis, corporate-
level strategy, business strategies, and the implementation of business objectives.

Robinson, R. B., & Pearce, J. A. (2015).

Strategic Management: Formulation, Implementation, and Control (12th ed.). McGraw-
Hill Education.
This book provides comprehensive insights into strategic management, including
frameworks like SWOT, PEST, and strategic planning processes.

Kotler, P., & Keller, K. L. (2016).

Marketing Management (15th ed.). Pearson Education.
This text is essential for understanding functional strategies, particularly marketing
strategies that align with corporate objectives.

Bryson, J. M. (2018).
Strategic Planning for Public and Nonprofit Organizations (5th ed.). Jossey-Bass.
Although focused on public and nonprofit organizations, this book offers valuable
insights into setting business objectives and aligning them with organizational strategy.

Robinson, S. P., & Judge, T. A. (2019).

Organizational Behavior (18th ed.). Pearson Education.
An exploration of organizational behavior that supports the understanding of how
organizational culture and leadership influence strategic decision-making and
alignment.

Schilling, M. A. (2013).

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Strategic Management of Technological Innovation (5th ed.). McGraw-Hill Education.
This book covers innovation strategies and the strategic management of technological
advancements, which is crucial for functional strategy alignment in tech-focused
organizations.

Barney, J. B. (1991).
Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1),
99-120.
Barney’s work on resources and capabilities provides a strategic framework for
assessing how internal resources are aligned with business objectives to achieve
competitive advantage.

Mintzberg, H. (1994).
The Rise and Fall of Strategic Planning. Free Press.
Mintzberg challenges traditional approaches to strategic planning, emphasizing the
importance of adaptability and alignment between objectives and strategy.

Keller, G. (2017).
Strategic Management: Theory and Practice. Sage Publications.
Keller’s approach emphasizes the importance of strategy in practice, with detailed
coverage of strategic analysis, business objectives, and practical applications in
strategic management.