CHAPTER 9

FUNCTIONAL LEVEL
STRATEGY
LEARNING
OBJECTIVES
• Identify the major fumctional strategies
of a business;
• explain the different alternative
strategies of every functional area; and
• establish the relationship between
functional strategies and business
strategies.
 Functional units and their structures vary among companies based on
their nature, operations, products, geographic scope, and structure.

MARKETING FINANCE

HUMAN PRODUCTION AND

RESOURCES OPERATION
A functional level strategy is
intended to maximize the
resource productivity of a
company so that value is
created as perceived by
customers.
 FUNCTIONAL LEVEL
STRATEGY
Maximize resource productivity
Marketing Strategies Financial Startegies

Deliver customer- Maximize the

value product financial value of a
company

Human Resource Production and

Strategies Operation Strategies

Guide the development Reconcile a company's

and implementation of resources and market
various program requirement
MARKETING STRATEGY
Kotler and Armstrong (2013) defined marketing strategy as the
marketing logic by which a company hopes to create customer value
and achieve profitable customer relationships. The aim of creating a
marketing strategy is to help a business become successful in a market,
in terms of growth and profit, by delivering customer-value products.

• Competitive Position Strategy

• Market Strategy
• Pricing Strategy
• Promotion and Distribution Strategy
 COMPETITIVE POSITION STRATEGY
• A competitive position strategy dictates the marketing strategy that is
adopted by a company based on its competitive position in a market.

• The following are the broad classifications of this strategy:

Market Leader Strategy Market Follower Strategy

Market Challenger Strategy Market Nicher Strategy

 Market Leader Strategies

The company that has the largest share in a market.

The following are the variations of market leader strategies:

Expand total demand strategy

In this strategy, the market leader expands the demand by developing new users
or promoting new usage of a product.

Protect market share strategy

Adopted by the market leader when it continuously innovates and fixes its
weaknesses to avoid competitors from taking opportunities.

Expand market share strategy

It is the desire of the market leader to expand its market share when it offers superior-
quality products, builds close customer relationships, and creates good service
experiences with customers.
 MARKET CHALLENGER STRATEGIES
The market challenger is a company that has a market share
lower than that of the market leader.

It can adopt either of the following strategies:

Full frontal attack strategy

When the market challenger adopts the full frontal attack strategy, it matches the
market leader's product, price, and distribution system. The market challenger
attacks the strengths of the market leader and other competitors, not their
weaknesses.

Indirect attack strategy

In this strategy, the market challenger avoids attacking the strengths of the
market leader. Instead, it works against the weaknesses of the market leader.
 MARKET FOLLOWER STRATEGIES
The market follower is a company that simply follows the market leader or
challenger instead of attacking them. It holds a market share lower than
that of the market challenger.

It can maintain its market share by adopting the following strategies:

Follow closely strategy
In this strategy, the market follower studies and learns from the experiences of the
market leader by improving the market leader's products and programs at a lower
cost.
Follow at a distance strategy
The market follower in this strategy simply holds on to its current customers and
tries to win new customers fairly as a way of avoiding retaliation from the market
challenger.
 MARKET NICHER STRATEGIES
Is a company that provides the needs of a small segment in a market which
has not been given preference yet by the market leader or challenger.

It adopts the following strategies for its competitive position in an industry:

Specialization niching strategy

In this strategy, a market nicher can specialize in one type of end user group or
specific customers.

Multiple niching strategy

A market nicher with multiple niching strategy as its competitive position strategy
serves two or more market niches.
MARKET STRATEGIES
• In this context, the term "market" refers to the buyers of a product or service,
not the place where a seller and a buyer meet. They can be actual or potential
buyers. This strategy is intended to determine the growth in a target market.

• Market strategy is broadly classified as follows:

Market Identification Strategies

Market-Product Growth Strategies

 MARKET IDENTIFICATION STRATEGIES
This strategy is designed to determine the customers to be served and the
manner in which they are to be served.
The following are variations of this strategy:

Segmentation strategy
This strategy aims to divide the market into distinct groups of buyers who have
different behaviors, characters, and needs.

Targeting strategy
·This strategy is designed to identify the particular group of customers to be served. It
involves two processes. The first process is the evaluation of the target market, and the
second is the selection of the market to be served.

Positioning strategy
The positioning strategy is concerned with the way customers are served. It can be
achieved by placing a product in the minds of the customers relative to competing
products.
 MARKET-PRODUCT GROWTH STRATEGIES
The market-product growth strategy has two dimensions, namely, the market and
the product dimensions. In this strategy, the markets and the products are classified
either as existing or new.
The following are the four variations of this strategy:

Market penetration strategy

This strategy is adopted by a marketing functional unit when it aims to improve a

company's sales through the rigorous selling of existing products to the current market
segment. In this strategy, the market segment is not changed as well as the product lines.

Market development strategy

·This strategy aims to improve a company's sales through the sale of existing products
to new markets. In other words, a company sells the same product lines to new
market segments without abandoning its old market segments.
Product development strategy.
In this marketing strategy, a company plans to grow by selling new products.

Diversification strategy
In this strategy, a company plans to grow by entering a new market
with new product lines.
 PRICING STRATEGIES
• Is an important factor in the struggle of a company to achieve competitive
advantage in an industry. The pricing strategy is not fixed, but it changes as a
product moves in its life cycle and its objective is to set a competitive price in
the market that will give a fair return on investment.

• Classifications:

New Product Pricing Strategy

Product-Mix Pricing Strategy

Price Adjustment Strategy

 NEW PRODUCT PRICING STRATEGIES
Introducing new products to the market means having to set
their prices for the first time.
The pricing strategies for new products are as follows:

Skim pricing strategy

This strategy allows a company to set a high initial price for its product to obtain
the highest possible revenue. This pricing strategy works effectively when
competitors can hardly enter the market to offer a lower price for the product.

Penetration pricing strategy

In this strategy, a company sets a low initial price for its product so that it can
easily penetrate and gain a considerable share in the market.
 PRODUCT-MIX PRICING STRATEGIES
Is a set of product lines or items offered by a seller for a single price. The
different variations of product-mix pricing strategies are as follows:

Product line pricing strategy

The product price in this pricing strategy is set across an entire product line. The price
between various products in a product line is set based on cost difference, customer
evaluation, and competitor's price.

Optional product line pricing strategy

This pricing strategy is adopted when there are accessories that can be added to
the main product. It is the primordial task of a company to determine which
items are included in the base price and which are to be added as accessories
with separate prices.
Captive product pricing strategy
It is the pricing strategy that is employed when a certain product must be used with
other products. For example, a razor cannot function without a blade. Setting the price
of the blade, whether high or low, illustrates captive product pricing.

By-product pricing strategy

This pricing strategy is adopted when there are accessories that can be added to
the main product. It is the primordial task of a company to determine which
items are included in the base price and which are to be added as accessories
with separate prices.

Product bundle pricing strategy

It is the pricing strategy used when products are offered to the market as a
bundle with one collective price. Prices of food in the fast food industry are
usually offered to customers using this pricing strategy.
 PRICE ADJUSTMENT STRATEGIES
When a market situation changes as the demand, taste, preferences, and other
variables change, he price in the market also changes. In other words, the
market price of goods rises and falls. This requires adjustments. The different
price adjustment strategies are as follows:

Discount and allowance pricing strategy

Segmented pricing strategy

Psychological pricing strategy

Promotional pricing strategy

Geographical pricing strategy

Dynamic pricing strategy

International pricing strategy

PROMOTION AND DISTRIBUTION STRATEGIES
• The plans for a company's activities intended to communicate its products to
target customers and persuade them to purchase them.

• This marketing strategy is broadly classified as follows:

Promotion Mix Strategy

Distribution Strategy
 PROMOTION MIX STRATEGIES
The promotion mix strategy consists of the following strategies:

Push strategy

This is a promotion strategy that makes use of distribution channels in promoting

and selling a product. In other words, the sales force and trade promotions push
the product through channels.

Pull strategy

This is a promotion strategy that is used when a company heavily engages in

advertising and customer promotion to influence a buyer to purchase a
product. In other words, a company is pulling its customers to buy its product.
 DISTRIBUTION STRATEGIES
The distribution strategy includes the following:

Personal selling strategy

In this distribution strategy, the sales force presents the products to customers to
make sales and, at the same time, build strong customer relationships.

Retailing strategy
In the retailing strategy, a company distributes or sells goods or services
directly to final consumers for their personal use.

Wholesaling strategy

A company may adopt the wholesaling strategy when it plans to distribute or

sell goods and services to companies that are buying for resale.
 Marketing Strategies

Competitive Position Pricing Strategies Promotion and Distribution

Market Strategies
Strategies Strategies

Market Leader Market Identification New Product Pricing Production Mix

Strategies Strategies Strategies Strategies

Market Challenger Market-Product Growth Product-Mix Pricing Distribution

Strategies Strategy Strategies Strategies

Market Follower Price Adjustment

Strategies Strategies

Market Nicher
Strategies
FINANCIAL STRATEGY
This unit, in coordination with the middle- and top-level
management, is largely responsible for the formulation of
financial strategies. A financial strategy is intended to
maximize the financial value of a company.

• Financing strategy
• Investing strategy
 FINANCING STRATEGIES
• The financing strategy is a strategic plan that seeks to determine how a
company supports the financial requirements of its operating activities and
its current assets and fixed asset acquisition in order to achieve its goals
and objectives. Financing can come from short- or long-term funds.
• The financing strategy includes the following:

Aggressive Financing Strategy

Conservative Financing Strategy

Maturity Matching Financing Strategy

AGGRESSIVE FINANCING STRATEGY

• In the aggressive financing strategy, the fixed assets of a

company and part of its permanent current assets are financed by
long-term debt, equity, and spontaneous current liabilities. The
total temporary current assets and part of the permanent current
assets are financed by short-term, non-spontaneous debt. An
extreme aggressive financing strategy is a leveraged buyout
(LBO) where a company borrows a significant amount of funds to
acquire another company, either public or private, using the
assets of the acquired company, as collateral and some of its own.
CONSERVATIVE FINANCING STRATEGY

• In the conservative financing strategy, the total assets of a company -

fixed, permanent current, or temporary current -are financed by long-
term debt, equity, and spontaneous current liabilities. Only the
seasonal portion of the temporary current assets is financed by short -
term, non-spontaneous debt.

MATURITY MATCHING FINANCING STRATEGY

• The maturity matching financing strategy, also known as the self -
liquidating strategy, is a financing plan that funds all temporary current
assets with short-term, non-spontaneous debt. The permanent current
assets and fixed assets are financed by long-term debt, equity, and
spontaneous current liabilities.
INVESTING STRATEGIES
• The investing strategy is concerned with the management of the
investment portfolio of a company to maximize returns at certain levels of
risks.

• Investing strategies are broadly categorized as follows:

Management Strategy

Asset Allocation Strategy

Investing Strategy
MANAGEMENT STRATEGIES
The management strategy reflects how a company manages or handles
its investment portfolio particular level of risk.

It includes the following variations:

Passive management strategy

A company places its investment portfolio when market prices are rising
and giving higher returns. It is the strategy adopted for the bull market.

Active management strategy

A company places its investment portfolio when market prices are falling
with a shorter cycle. This strategy is employed during the bear market.
ASSET ALLOCATION STRATEGIES
In the asset allocation strategy, a company invests funds in a mixture of assets that
have low correlation to each other to optimize its return on assets and risk level. A
company with an aggressive approach can put its funds in a volatile investment,
while a company with a conservative perspective can invest in stable securities.

The asset allocation strategy includes the following variations:

Strategic asset allocation strategy

A company employs the strategic asset allocation strategy when it has fixed the
allocation of its investment portfolio. This strategy is tailored to the profile of company.

Tactical asset allocation strategy

The portfolio mix is changed when market conditions change. It is an active management
strategy. Risk is managed through portfolio rebalancing. In portfolio rebalancing, the
portfolio mix is returned to its original allocation to realize gains from investments and
expand growth opportunities in high-value securities.
INVESTING STRATEGIES
The following are common investing strategies that can be adopted by a company:

Value investing strategy

A company that adopts the value investing strategy purchases assets that are offered at a
discounted price, which gives the intrinsic value of the investment. The intrinsic value of an
investment is equal to the present value of the expected future cash flows at a particular
discounted rate.

Growth stock investing strategy

In this strategy, a company purchases assets or companies that have above average
earnings growth notwithstanding their valuation and the type of assets acquired. The
benchmark used in this strategy is industry earnings.
Momentum investing strategy

When a company buys securities that have average earnings in a short period of time and
sells those that have poor growth, it employs the momentum investing strategy.
 Financial Strategies

Investing Strategies
Financing Strategies

Management
Strategies

Asset Allocation
Strategies

Investing
Strategies
 HUMAN RESOURCE STRATEGY
A human resource strategy is an organizational plan about a
company's human resource and practices and the way they integrate
with other functional areas. It aims to guide the policies development
and implementation of various organizational programs.

• Overarching Human Resource Strategy

• Specific Human Resource Strategy
OVERARCHING HUMAN RESOURCE STRATEGIES

The overarching human resource strategy is a broad and

encompassing strategy that is concerned with the overall
effectivity of a company in terms of human resources so people are
managed, developed, attracted, and retained. It ensures that
employees become committed, motivated, and engaged.
 SPECIFIC HUMAN RESOURCE STRATEGIES
The specific human resource strategy is a plan that defines what a
company intends to do in various specific areas of human resource
management. The following are variations of this strategy:

Organizational Effectiveness Strategy Resource Strategy

Learning and Developing Strategy Reward strategy

Managing performance strategy Employee relations strategy

 ORGANIZATIONAL EFFECTIVENESS STRATEGIES
This human resource strategy focuses on the improvement of the processes
that support the achievement of a company's goals and the development of
positive culture. The variations in this strategy include the following:

Organizational development strategy

This strategy aims to develop or improve the preparation and implementation of
organizational development (OD) plans.

Organizational transformation strategy

This strategy plans to radically change a company's structure, culture, and
processes as a response to competitive pressure brought by changes in the market,
technology, product lines, and business acquisitions.
 Culture management strategy

It is the strategic human resource management plan designed to identify the ways
a company can manage the changes in its culture from the present state to the
desirable future state.

Knowledge management strategy

In this strategy, a company aims to acquire, use, and transfer knowledge effectively
to achieve competitive advantage.

Commitment strategy

This strategy aims to develop communication, education, training, and involvement

as a way of increasing rewards and motivation among employees for their
commitment to the company.
 Climate of trust strategy
The climate of trust strategy intends to develop or build trust, which is
considered the sound ground to generate commitment.

Quality management strategy

This strategy is intended to create and maintain a quality- oriented
culture and standards to meet the expectations of customers.

Continuous improvement strategy

The aim of this strategy is to improve and sustain the quality and
reliability of products and services over a period of time.

Customer service strategy

This strategy plans to achieve excellence in service in terms of delivering promises,
resolving customers' problems, post-sale infrastructure, and customer-focused systems.
 RESOURCE STRATEGIES
Resource strategies are concerned with meeting the requirements of a
company in terms of skills, talents, and behavior. The objective of this strategy is
to match the right people with the appropriate skills, knowledge, and potentials
to the operational needs of a company.
The variations of resource strategies include the following

Recruitment and selection strategy

This strategy focuses on sourcing the right employees for the right positions at the
right time using skills analyses, competency mapping, structured interviews,
psychometric testing, and assessments.
Retention strategy

This strategy aims to ensure that the right employees remain with a
company, and the high and wasteful turnovers are reduced or minimized.

Flexibility strategy

In the flexibility strategy, a company adopts measures such as outsourcing or

enhancing multi-skilling in order to create a flexible organization.

Talent management strategy

This strategy aims to develop employees, whether key employees or not,

endowed with talent and ensure that a company is able to motivate and retain
them.
 LEARNING AND DEVELOPING STRATEGIES
Learning and developing strategies, which ensure that a company has
talented and skilled individuals, are concerned with developing a learning
company that will provide opportunities to enhance talents and skills

Creating a learning culture strategy

This strategy aims to create a learning culture in a company that encourages growth,
increases commitment, and empowers and provides employees with a sense of purpose
in the workplace.
Organizational learning strategy
This strategy is concerned with the development of a company's resource-based
capacity by investing in people it requires. Organizational learning is a process of
coordinated changes with mechanisms for individuals to develop long-term
organization capacities.
Learning organization strategy

A learning organization continuously expands by facilitating the

learning of all its members. The aim of this strategy is based on the
belief that learning is a continuous process that incorporates
strategies for organizational and individual learning.

Individual learning strategy

The individual learning strategy, which is driven by the human resource

requirements of a company, aims to identify, manage, and support individual
learning through guidance, coaching, mentoring, and training.
 MANAGING PERFORMANCE STRATEGIES
Performance management is an integrated approach to deliver and improve
the performance of people working in a company. This human resource
strategy is intended to develop a performance culture and increase
organizational effectiveness. high- performance.
This strategy has an integrated and holistic approach since it is concerned
with the of a whole company.

Vertical integration strategy

This strategy aims to align business performance objectives with the competency,
commitment, and objectives of the teams and individuals in the company.
Functional integration strategy

In this strategy, a company aims to align functional strategies in the different

parts of the business to achieve its goals.

Human resource integration strategy

This strategy aims to link different aspects of human resource management

(e.g., organizational development, human resource development, and reward)
to achieve a coherent approach to managing and developing people.

Individuals' needs integration strategy

This strategy links individuals' needs and their satisfaction to the

performance of a company as a whole.
 REWARD STRATEGIES
A reward strategy is a plan that defines what a company believes should be
valued and rewarded. This strategy is classified as follows:

Broad-brush reward strategy

This strategy aims to commit or support a company toward a total rewards policy. It
aims to achieve the appropriate balance between financial and non-financial rewards
and, at the same time, develop employee relationships and the work environment.

Specific reward initiative strategy

This strategy aims to select a specific reward based on the analysis of the present
organizational situation and the assessment of a company's and employees' needs. For
example, replacing the present mechanism of giving contingent pay with a pay-for-
contribution scheme is a specific reward initiative strategy.
 EMPLOYEE RELATIONS STRATEGIES
The employee relation strategy sets out how a company determines
what needs to be done and changed in terms of managing
employee relationships. It aims to build stable and cooperative
relations by minimizing conflicts, promoting employee involvement,
enhancing communication, and pursuing common interests.

Adversarial strategy
In this strategy, a company decides what it wants to do. The employees,
on the other hand, are expected to cooperate.
Traditional strategy
This employee relation strategy reflects a day-to-day working
relationship where employees react through their elected officials
regarding business proposals.
Partnership strategy
In this strategy of employee relations, the employees are involved in the
formulation and execution of policies.

Power-sharing strategy
This employee relations strategy aims to involve the employees in the
operations and strategic decisions.

Human resource management strategy

This strategy builds employee relations by considering the support of
all employees with mutual commitment from various functional areas.
 Human Resource
Strategies

Overarching Specific Human

Human Resource Resource
Strategies Strategies

Organizational Resource Learning and Managing Employee

Reward
Effectiveness Strategies Developing Performance Relation
Strategies
Startegies Strategies Strategies Strategies
PRODUCTION AND OPERATION STRATEGY
The production and operation functional unit can be considered as the
core functional unit of a business. It transforms raw materials into
finished goods that satisfy the needs of a market. Production and
operation strategies are formulated in close coordination with other
functional units. The objective of a production and operation strategy is
to efficiently reconcile the requirements of a market with the
operational resources of a company.

• Infrastructural operation strategy

• Structural operation strategy
INFRASTRUCTURAL OPERATION STRATEGIES
• The infrastructural operation aspect of a production and operation management gives
preference to activities related to product planning and quality control systems. It
adopts a market- based perspective strategy. The objective of this strategy is to enhance
the efficiency of resource utilization in order to achieve a high level of productivity.
• This strategy is broadly classified into the following variations:

Production Planning and Control Strategy

Inventory Management Strategy

Capacity Planning Strategy

 PRODUCTION PLANNING AND CONTROL STRATEGIES
• A production planning and control strategy aims to ensure that the right
quantity of products are efficiently produced at the right time. The variations
of this strategy include the following:

Lean operation strategy

This strategy aims to eliminate waste from the production process thereby
reducing production cost and increasing customer value.

Total quality management (TQM) strategy

With this strategy, which is closely related to the lean operation strategy, the
objective of a company is to continuously improve production processes by
eliminating manufacturing errors.
Business process re-engineering (BPR) strategy

In this strategy, a company aims to radically improve its overall production

process by eliminating processes that are inefficient and do not add value
to a product as perceived by customers.

Six sigma process strategy

This strategy enables a company to improve its production process by

reducing the number of defective finished goods or ensuring that
99.99966% of the outputs are free of defects.
INVENTORY MANAGEMENT STRATEGIES
• An inventory management strategy aims to control the efficient flow and
transfer of raw materials to finished goods in order to prevent too high or too
low levels of inventory. The different variations of this strategy include the
following:

Inventory planning and control strategy

This strategy aims to determine the optimal quantity and timing of inventory
that are aligned with the requirements of sales and production.

Supply chain planning and control strategy

This strategy enables a company to streamline activities in the supply chain (e.g., raw
materials acquisition to product delivery) to maximize customer value and improve
competitive advantage in a market.
 Just in time (JIT) strategy

In this strategy, a company aligns the acquisition of raw materials with the
production schedule to increase efficiency and reduce waste.

Economic order quantity strategy

This strategy aims to reduce inventory costs (e.g., ordering and

handling costs) by ensuring that a company orders the right material
requirements from suppliers at the right time.
 CAPACITY PLANNING STRATEGIES
• A capacity planning strategy aims to produce and maintain enough products
to meet the customer demand that will resolve the issue of inventory
shortage or overage. The different variations of this strategy include the
following:
Lead capacity strategy
In this strategy, a company aggressively increases its capacity in anticipation of
an expected increase in market demand resulting in inventory overage.
Lag capacity strategy
In the lag capacity strategy, a company does not increase its production level in anticipation
of a demand increase; it only increases production based on the actual market demand.
Match capacity strategy
The match capacity strategy does not boost a company's production capacity based on the
expected or actual demand; rather, it makes a small incremental capacity increase based on
changes in the market situation.
STRUCTURAL OPERATION STRATEGIES
• A structural operation strategy considers the tangible shape and architecture of
producing goods or providing services. The objective of this strategy is to improve the
tangible structures of the production process such as the product design, process layout,
or facility layout to add value to a product in order to achieve competitive advantage.
• Different variations of structural operation strategies include the following:

Process Design Strategy

Layout Design Strategy

 PROCESS DESIGN STRATEGIES
• Process design is the selection of requirements, resources, and processing methods
to convert inputs (e.g., raw materials, labor, and overhead) to outputs (e.g., finished
product or rendered services). This strategy aims to produce a product with
customer value that will provide competitive advantage to a company.

Project process design strategy

This strategy aims to produce a highly customized product relatively long period of
time with a company's resources exclusively devoted to the product.

Jobbing process design strategy

Instead of exclusively devoting a company's resources to a highly customized product
in the project process design strategy, the aim of the jobbing process design strategy is
to distribute a company's resources to more highly customized products.
Batch process design strategy
A company may adopt the batch process design strategy when it aims to
produce several products that will undergo similar, repetitive processes.

Mass process design strategy

This strategy is adopted when the aim of a company is to produce a high volume
of projects with narrow or limited designs such as the production of motor
vehicles.
Continuous process design strategy
Similar to the mass process design strategy, the continuous process design
strategy is also intended to produce a high volume of products over a longer
period of time.
LAYOUT DESIGN STRATEGIES
• Layout is the physical arrangement of resources and the process that transforms
and transfers goods. The objective of the layout design strategy is to design a
process flow or physical layout that transforms resources efficiently relative to other
tasks or process flows.

Facility Layout Strategies

. The aim of a facility layout strategy is to ensure that there is an efficient and
smooth flow of production of resources, manpower, and equipment following the
principles of flexibility, optimum space utilization, and minimal cost. It is highly
influenced by the nature of a company and the products delivered to a market.

• Fixed-position layout strategy

• Functional layout strategy Facility Layout Strategies
• Cell-layout strategy
• Product layout strategy
• Fixed-position layout strategy
In the fixed-position layout strategy, the aim is not to move the product or resources;
instead, it is the equipment, materials, and other transforming facilities that are being
moved to a product.

• Functional layout strategy

A company adopts the functional layout strategy when processed products are transferred
or moved to the next station based on their requirements. Products with different needs
will be moved to different locations.

• Cell-layout strategy
In this strategy, a product being processed enters a certain part (or cell) for further
processing and, then, moves or joins other products in another part of an operation.

• Product layout strategy

This layout strategy efficiently arranges the transformation of resources (e.g., equipment
and machines) so that raw materials or products flow through a prearranged route.
\
 Production and Operation
Strategies

Infrastructural Operation Structural Operation

Strategies Strategies

Production Planning and Process Design

Control Strategies Strategies

Inventory Management Layout Design

Strategies Strategies

Capacity Planning
Strategies
 RESEARCH AND DEVELOPMENT (R&D) STRATEGY
Research and development strategies aim to introduce improvement and
innovation to business procedures and products which ultimately lead to new
processes and products. This increases profitability levels, improves future
business growth, and sustains competitive advantage.
The following are the variations in research and development strategies:

Basic research strategy. In this R&D strategy, the aim of the research is to
gain deeper understanding and build a body of knowledge regarding the
subject matter of inquiry for the future use of a company.

Applied research strategy. In this strategy, the objective is to determine a

particular method or approach to address a specific need of the customers relative
to a product.

Development research strategy. This R&D strategy addresses the need to develop
or innovate a new product or process.
 TECHNOLOGY STRATEGY
A technology strategy aims to create value to a company through the use of
technology in the production and operation processes, including the
development of a product. The creation of value to a company can be
achieved through the following measures:

1. Maintain the present technological capabilities in the production and

delivery of products and in different functional areas with minimal
improvement.

2. Adopt product or process innovation as the company expands its market.

3. Source out technological capabilities to gain technological distinctiveness.

 CRAFTING A FUNCTIONAL LEVEL STRATEGY
The functional level strategy supports the business level strategy, while the
business level strategy supports the corporate level strategy. In formulating
a functional level strategy, the following questions serve as guides:

1. For the marketing unit: How can a company deliver value-added products
and services to customers?

2. For the financial unit: How can a company maximize its financial value?

3. For the human resources unit: How can a company manage the
development and implementation of its programs and activities?

4. For the production and operation unit: How can a company reconcile its
resources with the market requirements?
 REVIEW THE FOCUS OF THE BUSINESS LEVEL
STRATEGY

IDENTIFY FUNCTIONAL LEVEL STRATEGIC MEASURES

TO SUPPORT THE BUSINESS LEVEL STRATEGY

COORDINATE THE STRATEGIC PLANS OF DIFFERENT

FUNCTIONAL UNITS

DEFINE THE FUNCTIONAL LEVEL STRATEGY IN EVERY

FUNCTIONAL UNIT
THANK
YOU!