The 3 Levels of Strategy: The Difference & How to Apply Them (2023)

Every business leader should be familiar with the three levels of strategy. Like any business, strategy comes in various shapes and sizes. The strategy for a multi-national company will contrast with one from a startup.

Yet, the principles remain. To understand how strategies shift, we'll look at the existing strategy levels and how an organization can apply them.

Download our battle-tested strategic planning template that hundreds of organizations have used to jump-start your strategy development.

The 3 Levels of Strategy: The Difference & How to Apply Them (1)

Ultimately, the biggest takeaway we hope you get from this post is that strategy is for everyone.

You don't have to wait until your business grows to a certain size to “get strategic.” Instead, be conscious of where you are as a business so you can develop your strategy in a way that fits and grows with your organization.

We'll discuss how the 3 strategy levels in an organization differ and provide some context on how to use these different levels of strategy in strategic management.

The 3 Levels of Strategy are:

The three levels of strategy are corporate level strategy, business level strategy, and functional level strategy. We explain the differences and how to apply them in your organization. We also have separate articles on all 3 levels if you're only interested in learning about a certain level.
  • Corporate Level Strategy
  • Business Level Strategy
  • Functional Level Strategy

No matter the level of strategy, "organizations that promote a transparency and collective culture when it comes to strategy, generate a stronger commitment and sense of accountability from their employees." This statement by Guillermo Hermosillo Cue, Global Innovation Director at Burger King in our state of strategy report echoes the importance of strategic communication regardless of the strategy level.

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(Video) Levels of Strategies In Strategic Management Explained

Corporate Level Strategy

Corporate strategies are the top-level of strategy in an organization.

The corporate strategy defines the organization’s overall direction and the high-level ideas of how to move towards it. These plans are usually created by a select strategy group such as the CEO and the top management.

Generally, this is the group involved because they have a deep understanding of the company and the strategic business knowledge needed to steer the organization in the right direction.

A corporate strategy is generally broader than the other strategy levels. Strategies at this level are more conceptual and futuristic than business and functional level strategies. They usually span a 3-5 year period.

A corporate strategic plan generally encompasses:

  • The vision for the organization
  • The company’s values
  • The Strategic Focus areas
  • The strategic objectives
  • The most important KPIs

Why Create a Corporate Strategy?

In the corporate strategic plan, you’ll decide the markets you’ll compete in as an organization.

Then, it will direct the creation of business-unit-level and functional-level strategies.

These strategies, in turn, will guide the downstream decisions made by employees of all levels. Therefore, every decision made in the organization should directly or indirectly contribute to the strategy's corporate objectives. If it’s not clear yet:

Every organization needs a corporate strategy.

There is no such thing as a too-small organization nor a too-large one to define what they want to achieve and how they will do it.

We've used our own strategic planning and execution software to create our corporate strategic plan here at Cascade.

(Video) Corporate vs Business and Functional Level Strategies

👉🏻 Grab your free corporate strategy template to follow a structured approach and create your corporate strategic plan.

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Business Strategy Level

The business-level strategy is the second tier in the strategy hierarchy.

Sitting under the corporate strategy, the business strategy is a means to achieve the goals of a specific business unit in the organization.

One thing to note, implementing this strategy level is only useful for organizations with multiple business units. An organization with multiple business units may sell products and services or may sell multiple products/services in different industries.

A business level strategy example

A large Bank is a prime example of an organization selling multiple services in different industries.

To name a few, it has business units in corporate banking, wealth management, risk management, and capital raising. Each of these business units would have distinct goals and a distinct business strategy to achieve these goals.

📚 Read more: The 7 Best Business Strategy Examples I've Ever Seen

Why middle managers should create the business level strategy

Strategies at the business level should be constructed by the heads of business units and other middle managers within each unit.

It’s important to include a range of managers from each unit to participate in the strategy process because:

  1. It increases buy-in:
    Managers who've had a chance to contribute to the strategies creation feel included in the decision making. Therefore, they’re more likely to accept the strategy and jump on board with its execution.
  2. It improves ownership:
    Employees who are given the opportunity to contribute to the formation of the strategy are more likely to take ownership over its completion.

If your organization only has one business unit, you don't need to worry about this strategy level - and can skip to the functional strategy level.

(Video) Levels of Strategy - Different Strategy Levels explained with Examples of Kraft, Nokia, Amazon (144)

Here at Cascade, we only have one business unit, our strategic planning and execution software, so currently, we don't have a strategy at the business level.

Now let's say Cascade also developed a second type of software, for example, software for processing payments. We would then need to develop a business-level strategy to allow the two business types to grow alongside each other.

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👉🏻 Grab your free business strategy template to follow a structured approach and create your business strategic plan.

Functional Level Strategy

This is the level at the operating end of an organization.

At the functional level of strategy, decisions made by employees are often described as tactical decisions. They are concerned with how the various functions of an organization contribute to the other strategy levels.

These functions can include marketing, finance, manufacturing, human resources, and more.

Functional strategy deals with a fairly restrictive plan. It gives the objectives for each specific function.

In simple terms, this is the strategy that will inform the day-to-day work of employees and will ultimately keep your organization moving in the right direction. The functional strategy level is probably the most important level of strategy.

This is because, without functional strategies, your organization can quickly lose traction and “get stuck” while competition moves forward.

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(Video) Corporate Level Strategy

Suppose you are a larger organization at this bottom strategy level. In that case, you start to think about how the various departments will contribute to your growth and how they will work together, keeping in mind your corporate strategy.

Your marketing strategy, finance, IT, operations, and other departments all have goals and responsibilities to deliver. Having a visible functional level of strategy that aligns back to the overall corporate strategy will increase the chances of success.

Functional level business strategy for a smaller organization

For a smaller organization, having a functional level is crucial.

If you're one or two people, you may end up wearing more than one “functional hat.” Or, you may not have the various functions clearly defined - but they are still present.

So, you might not have a 'marketing team', but there are still marketing activities that need to be done. You may not have a 'finance team', but your organization still has bills that need to be paid and checks to be collected.

In Cascade, we can create multiple plans within our software. We've created a strategic plan for each function in the organization, which links back to our main corporate plan to ensure everything is moving in the right direction.

"A journey of a thousand miles begins with one step,” as the saying goes.

Developing a functional-level strategy will ensure that your organization's steps are the right ones. As we mentioned earlier, the key takeaway here is that strategy is for everyone, no matter the stage of your business idea or organization.

Looking for a structured approach to your strategy and planning? These strategy planning templates will help you streamline strategic planning and execution at each level of your organization.

The three levels of strategy are the first step

Of course, having a good (or great) strategy isn’t guaranteed success.

But it's definitely the place to start in order to succeed. Understanding the levels of strategy is a big part of getting the creation right. However, with increased levels, there can be increased confusion.

(Video) Corporate vs. Business Strategy

Our dedicated strategy software, Cascade, will allow you to build your corporate plan, then create plans at the business and functional levels with ease. Cascade makes it super easy to align projects and collaborate across plans and departments.

Try it for FREE and see how you can go from simply writing your plan somewhere static to a more dynamic space that you can share with everyone in your organization - it makes all the difference!

The 3 Levels of Strategy: The Difference & How to Apply Them (6)


What are the 3 levels of strategies How do they differ? ›

The three levels are corporate level strategy, business level strategy, and functional strategy. These different levels of strategy enable business leaders to set business goals from the highest corporate level to the bottom functional level.

What are the 3 types of strategy? ›

Three Essential Types of Business Strategy - How You Can Apply Them
  • Business strategy.
  • Operational strategy.
  • Transformational strategy.
Jan 29, 2023

What are the different types of strategies How are different strategies related to each other? ›

Examples of competitive strategy include differentiation strategy, low-cost strategy, and focus or market-niche strategy. Business strategy is concerned with actions that managers undertake to improve the market position of the company by satisfying the customers.

Which level of strategy answers the question what business are we in? ›

The question "What business are we in?" and "What business do we buy?" are found in the corporate-level strategy. The "How do we compete?" is found in the business-level strategy.

What are the differences among the three levels of management quizlet? ›

Top-level managers are executives with responsibilities for the direction and success of the entire business. Middle managers are specialists with responsibilities for specific parts of a company's operations. Supervisors are first-level managers who are responsible for the work of a group of employees.

What are the different types of strategies? ›

Following are 12 different strategy types that can help a business reach its unique goals:
  • Structuralist. ...
  • Differentiation. ...
  • Price-skimming. ...
  • Acquisition. ...
  • Growth. ...
  • Focus. ...
  • Cross-selling. ...
  • Operational.
Jun 24, 2022

What are the 3 steps of strategic planning? ›

The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:
  • Strategy Formulation. ...
  • Strategy Implementation. ...
  • Strategy Evaluation.
Mar 4, 2023

What are the 3 elements of strategic planning? ›

Effective strategic planning is a process that should be broken down into three separate, equally important components: strategic thinking, long-range planning, and operational planning.

What are the three big strategic questions explain? ›

He taught that the three most important strategic questions each company must answer are: What is our business? (Mission) What will our business be? (The changing environment that we are certain about) What should our business be? (Vision)

What are the differences between competitive strategy and business strategy? ›

Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes. Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units.

Why different strategies are important? ›

Strategies promote flexible thinking and teach students the importance of shifting their approaches to different tasks. Strategies encourage independent learning. Strategy use helps students to become more efficient and more effective learners.

Which level of strategy is the most important in a company? ›

The corporate level is the highest, and therefore the most broad, level of strategy in business. Corporate-level strategy should define your organization's main purpose. It should also direct all your downstream decision-making.

What are the different levels of strategy give some examples? ›

The three levels of strategy are:
  • Corporate level strategy: This level answers the foundational question of what you want to achieve. ...
  • Business unit level strategy: This level focuses on how you're going to compete. ...
  • Market level strategy: This strategy level focuses on how you're going to grow.
May 10, 2021

What is an example of functional level strategy? ›

In addition to vertical alignment, functional level strategies should also be integrated horizontally within and among departments. For example, coordinate purchasing, inventory, and shipping within your operations department, and those activities with any new processes in the production department.

What are the 3 levels of management give an example for each? ›

The levels of management can be classified in three broad categories:
  • Top level / Administrative level.
  • Middle level / Executory.
  • Lower level / Supervisory / Operative / First-line managers.
Nov 4, 2017

What are three main differences between leadership and management? ›

Below are three key differences between leadership and management.
  • Difference: Administration versus Influence. ...
  • Difference: The Present versus the Future. ...
  • Difference: Where and How Trust Is Focused. ...
  • A Perfect Combination.
Feb 8, 2019

What are the three 3 differences between leaders and managers? ›

Leaders create a vision, managers create goals.

They think beyond what individuals do. They activate people to be part of something bigger. They know that high-functioning teams can accomplish a lot more working together than individuals working autonomously. Managers focus on setting, measuring and achieving goals.

What are the different types of business level strategy? ›

Four generic business-level strategies emerge from these decisions: (1) broad cost leadership , (2) broad differentiation , (3) focused cost leadership , and (4) focused differentiation . In rare cases, firms are able to offer both low prices and unique features that customers find desirable.

What are 3 strategies for success? ›

The Most Effective Strategies for Success
  • Have Grit — Persistence over the long haul is key.
  • Know Exactly How Far You Have Left to Go — Monitor your progress.
  • Get Specific — Have a crystal-clear idea of exactly what success will look like.
Mar 25, 2013

What are the three 3 strategies for competitive advantage? ›

The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus.

What is the difference between corporate level strategy and functional strategy? ›

As the corporate strategy defines the direction of the business and what it wants to achieve, the functional strategy explains how to support the execution of corporate goals and objectives.

What is the difference of corporate and business level strategy give example? ›

Business and corporate-level strategies differ primarily in their objectives. A business strategy focuses on competing in the marketplace, while a corporate strategy focuses on business growth and profits. Corporate strategies function at a higher level than business strategies.

What is the difference between business level strategy and functional level strategy? ›

Business level strategy involves the ability to compete of each business unit. Functional level strategy involves every single function in every business unit.

What makes a good strategy? ›

A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals.

How do you develop your strategy? ›

Strategy Development Techniques and Best Practices
  1. Understand the current position.
  2. Reflect on how you got there.
  3. Be clear about your corporate identity (mission, vision and values)
  4. Analyse your strengths and weaknesses.
  5. Analyse the business environment.
  6. Identify and evaluate strategic options.
  7. Set objectives.
Apr 1, 2020

Is strategy Important explain your answer? ›

Having a clear and focused strategy is critically important to the success of your business, and without a well-defined strategy, yours may stall or even fail. If you can take the emotion out of your decision-making process, you'll have a business and a team that is more focused, more productive, and more profitable.

What are the 3 levels of decision-making? ›

Decision making can also be classified into three categories based on the level at which they occur. Strategic decisions set the course of organization. Tactical decisions are decisions about how things will get done. Finally, operational decisions are decisions that employees make each day to run the organization.

How do you choose a business-level strategy? ›

How to implement a business-level strategy
  1. Identify target market and consumers. ...
  2. Find out what their needs are. ...
  3. Discuss how to cater to their needs. ...
  4. Make comparisons to competitor strategies. ...
  5. Set common goals to be met by the company as a whole. ...
  6. Set unique department goals. ...
  7. Complete routine checks at each company level.
5 days ago

What is the advantage of level strategy? ›

Organizations use business-level strategies to gain a competitive advantage over industry rivals by exploiting core strengths in specific market segments. One of the primary objectives of business-level strategy is to establish the organization's position in a particular industry relative to competitors.

What are the three levels of strategy used in organizations quizlet? ›

The board of directors oversees the three levels of strategy in organizations: corporate, strategic business unit, and functional. See Figure 2-1.

What is business level strategy with examples? ›

Business level strategies are more focused than corporate level strategies, but not nearly as focused as functional level strategies. If, for example, your corporate level strategy was to increase market share, your business level strategy might be: Broaden exposure. Increase marketing budget.

What is operational or functional level strategy? ›

While operational-level strategies cover the company as a whole, functional-level strategies involve individual departments, functions, or roles within the company. These functional strategies serve as components to the overall operational strategy.

What is operational level strategy? ›

An operations strategy refers to the system an organization implements to achieve its long-term goals and mission. It involves decisions based on multiple factors, including product management, supply chain, inventory, forecasting, scheduling, quality, and facilities planning and management.

What is operational strategy examples? ›

Operational strategies usually include additional strategies, such as product development, market penetration, customer engagement, supply chain, etc.

What are the three levels strategy in teaching? ›

The form of the “Three levels” Training Mode is divided into 3 levels as teaching basic skills, special skills and comprehensive skills. According to its characteristics, respectively in the nurturance education, professional courses and teaching practice, in practice to develop.

What are the 3 levels of decision making? ›

Decision making can also be classified into three categories based on the level at which they occur. Strategic decisions set the course of organization. Tactical decisions are decisions about how things will get done. Finally, operational decisions are decisions that employees make each day to run the organization.

What are the three 3 major schools of strategy? ›

According to Ritson (2013) the three schools of strategy are Planning, Positioning, and Resource based school. Strategy itself is defined as the patterned plan which brings together the goals, policies, and actions of an organization.

What are the 3 key elements in developing strategies? ›

Strategy is comprised of three parts: Vision, Goals, and Initiatives:
  • Vision describes who the customers are, what customers need, and how you plan to deliver a unique offering.
  • Goals are quantifiable and define what you want to achieve in the next quarter, year, or 18 months.
Apr 28, 2015

What are the 3 organizational strategies and their importance? ›

Those three strategies together — functional, business, and corporate — make up the very broad, very general organizational strategy that every company needs to be successful.


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