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UNIT – 3
Corporate Level Strategy
&
Strategic Business Unit

STRATEGIC MANAGEMENT

PRESENTED BY –
GROUP-3
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STRATEGY

 A plan of action designed to achieve a long term or

overall aim.
 A combination of the words stratos, which meant
“army”, and agein meaning “to lead”.

Greek Language (6 th century BC)

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Different Levels of Strategy

Corporate level

Business level

Functional level
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Corporate Level Strategy

 Top management’s overall plan for the entire

organization and its strategic business units.

 Corporate level strategy occupies the heights level of

decision making.

 The nature of the decisions tends to be value oriented,

conceptual than the Business level, and Operational or
Functional level.
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Corporate Strategy

Corporate level strategy is related with decisions of

 Overall direction and growth of corporate.

 Resource allocation among businesses.
 Transfer of resources.
 Managing and nurturing a group or portfolio of
businesses.
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Types of Corporate Level Strategy

Growth: Expansion into new products and markets.

Stability: Maintenance of the status of the

organization.

Renewal: Redirection of the firm into new markets.

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Growth Strategy

 Merger- Involves a transaction involving two or more corporations in

which a stock is exchanged or swapped among independent business
organizations from which only one company services

 Acquisition- Is an option that involves the purchase of a company

then completely absorbed as in operating subsidiary or division of the
acquiring corporation.

 Strategic alliance- is another option involving a partnership among

two or more corporations or business units to achieved strategically
significant objectives that are mutually beneficial.
 Stability Strategy 8

 Pause/proceed with caution- This is in effect, a sort of time out.

It is an opportunity to rest before continuing a growth or retrenchment
strategy.

 No change strategy-It involves a decision to do nothing new.

 Profit strategy-It involves a decision to do nothing new in a

worsening situation and instead, to act as though the company’s
problems are only temporary.
Retrenchment Strategy 9

 Turnaround strategy- This strategy emphasizes on the

improvement of operational efficiency and is probably most
appropriate when a corporation’s problems are pervasive but not yet
critical.
 Contraction
 Consolidation

 Liquidation strategy- Is the termination of the firm’s business

operation.
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Strategy Business Unit

 A strategy that seeks to determine how an organization

should compete in each of its SBUs (strategic business
units).

 At Business-level allocation of resources among

Functional-level an coordinate with the Corporate level
to the achievement of the Corporate level objectives.
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Meaning:
A relatively autonomous division of a large company that operates as
an independent enterprise with responsibility for a particular range of
products or activities.
“These strategic business units are responsible for their own profit or
loss but are answerable to the top management”

Definition:
A strategic business unit, popularly known as SBU, is a fully-
functional unit of a business that has its own vision and direction.
Typically, a strategic business unit operates as a separate unit, but it is
also an important part of the company. It reports to the headquarters
about its operational status.
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Description:

A strategic business unit or SBU operates as an independent entity, but it

has to report directly to the headquarters of the organization about the
status of its operation. It operates independently and is focused on a
target market. It is big enough to have its own support functions such as
HR, training departments etc. There are several benefits of having an
SBU. This principle works best for organizations which have multiple
product structure.
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Examples

 The best example of SBU are companies like Proctor and Gamble,
LG etc. These companies have different product categories under
one roof. For example, LG as a company makes consumer durables.

 It makes refrigerators, washing machines, air-conditioners as well as

televisions. These small units are formed as separate SBUs so that
revenues, costs as well as profits can be tracked independently. Once
a unit is given an SBU status, it can make its own decisions,
investments, budgets etc. It will be quick to react when the product
market takes a shift or changes start happening before the shift
happens.
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Business-Level Strategies

Cost leadership:
Attaining, then using the lowest total cost basis as a competitive
advantage.

Differentiation:
Using product features or services to distinguish the firm’s offerings from
its competitors.

Market focus:
Concentrating competitively on a specific market segment.
 SBU Model 15

Corporate
Organization
Level

Business
SBU SBU
Level

Operational Business Business

Level Activities Activities
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Advantages Of SBU’S

 Intra Competition.
 Corporate Image.
 Better Management.
 Higher Efficiency.
 Better Customer Services.
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There are three factors that are generally seen as determining the
success of an SBU -

 The degree of autonomy given to each SBU manager,

 The degree to which an SBU shares functional programs and facilities

with other SBUs, and

 The manner in which the corporation is because of new changes in

market.
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