Level of strategy Essay
Experiences also accept the many companies feel that a functional organizational structure is not an efficient way to organize activities so that they resort to reengineering according to processes or Strategic business units (SBUs). With a strategic business unit that is a semi-autonomous unit within an organization, said unit is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting.
As a result, an SBU is normally treated as an internal profit centre by corporate headquarters and each SBU is responsible for developing its business strategies, strategies that must be in accordance with broader corporate as strategies as designed (Wikipedia, 2007) (Paraphrasing made). Part of process of developing strategy also involves the operational strategy which is the “lowest” level of strategy.
This level of strategy is believed to be very narrow in focus since it deals with day-to-day operational activities such as scheduling criteria. Hence, it must operate within a budget but is not at liberty to adjust or create that budget. The concept of operational strategy was actually encouraged by Peter Drucker in his theory of Management by objectives (MBO). The set of operational level strategies must be linked with the business level strategies which, in turn,
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It would not therefore hard to understand at this point that business strategy, which refers to the aggregated operational strategies of single business firm or that of an SBU in a diversified corporation, pertains to the way in which a firm competes in its chosen arenas (Wikipedia, 2007) (Paraphrasing made). To apply this concept for Wal-Mart, the company can treat each country where it has each presence to be a separate business unit which must design its strategies which due consideration to the unique culture of the that specific country.
Corporate strategy, should be able to answer answers the questions of “in which businesses should we compete? ” and “how does being in one business add to the competitive advantage of another portfolio firm, as well as the competitive advantage of the corporation as a whole? ” (Wikipedia, 2007) (Paraphrasing made). In the case of Wal-Mart, the company could decide whether investing in a country for new supply chains or department stores after having the proper and right information for decision making.
In what ever way one should look at it, for purposes of developing strategy, due consideration should be made between formulation and implementation. Strategies have the characteristics of deliberate act and hence implementation would be easier if formulations are linked to implementations. In the formulation of strategy models are actually applied. The company may use PESTEL, Porter’s Five Forces and competitor analysis and the SWOT. These models actually take into consideration the internal and external environments affecting the company.