Strategic Alternatives: 04 Main Types of Strategies

Strategic Alternatives

Strategic alternatives are long term plans that businesses develop to set their direction. When setting the organizational direction, the human and organizational resource availability will be considered and the goals will be set based on the resource availability.

Generally, analysis methods such as SWOT will be used when building the strategic alternatives of an organization. Once the Strengths, Weaknesses, Opportunities, and Threats are analyzed, the organization can decide the choices they have to build the strategic plan that best suits the success of the organization.  

Usually, strategic alternatives are not set when an organization is performing well. If an organization is not performing well and if the management of the organization decides that it is best to do a restructure of the organization, they look for strategic alternatives. A strategy is a broad concept of any organization and it can be used in different ways.

Organizational strategy is about setting long-term plans that will help to achieve the vision, mission, goals, and objectives of the organization using the available resources.

There are four main types of strategic alternatives that can be identified.

  1. Corporate level strategy
  2. Business level strategy
  3. Functional level strategy
  4. Operational level strategy

Corporate Level Strategy

Corporate level strategy can be defined as the long term goals and objectives of the organization that can create an impact on all the business units operating under one umbrella organization. If the company is a large group of companies with several sub-organizations under the mother company, the corporate level strategies is made for the long-term benefit of all the sub-organization.

Corporate strategy defines the businesses and the market segments that the company will operate and customers they are targeting to acquire. The corporate-level strategies are planned by the top-level management in the group of companies. They created corporate-level strategies that are then passed down to the organizations under the main umbrella for the purpose of generating their own strategies aligned with the parent company.

The corporate-level strategy provides a set of strategic alternatives from which the management of the organization chooses to continue and achieve in long run through the operations of the companies in several market sectors and possibly in several industries.

Business-level strategy

The business-level strategies include all the actions and the way of approaching to face the competition of a company and the ways that the management of the organization addresses the strategic issues facing by the organization. Basically, it will describe the foundation on which the organization competes in the market.

The business-level strategy is a unit level strategy created by the senior management of the business unit. This focuses on increasing the strength of the competitive position of the product or the service offered by the company while lining the strategies with the corporate-level strategies.

Under the business strategy, the management of the organization is mainly focusing on developing the products, integration, innovation management, and diversifying the production in order to achieve a competitive advantage in the market. This can be achieved by focusing on different differentiation strategies such as cost reduction and niche market strategies.

Functional level strategy

Functional level strategies are the objectives created by the different functions or divisions of an organization. Functional level strategies should be created in line with business-level strategies. Functional strategies can vary from department to department such a production strategy, marketing strategy, sales strategy, human resources strategy, and financial strategy.

Some functional strategies are also named as departmental strategies as the functions are usually connected with each department of the organization. Functional level strategies are focused on developing the competence of the organization while providing necessary support to the business-level strategy to achieve success in the competition.

Operational level strategy

Operational level strategies are formulated in the small sections within a department. Since these are operating at the small operating units in an organization such as factories, or small territories. Operating managers/ field-level managers are responsible for developing operating strategies while being in line with the functional strategies.

These identified strategic alternatives helps a business to align their activities with the organizational vision and mission.

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