Functional strategy is The concept, types and role of functional strategy in management

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

A well-formed functional strategy is one of the most important elements of the structure of the company itself and a guarantee of high efficiency. In order to properly plan activities and determine priority areas, it is necessary to accurately divide the powers, responsibilities and goals for each department and the employees themselves.

General characteristics

Functional strategy is a supporting element in the overall strategic set, which determines the direction of a separate functional subsystem of the company's management, which ensures the achievement of goals and the fulfillment of the tasks set. It turns out that top-level strategies (competitive and corporate) give tasks, while functional ones show how certain solutions can be implemented.

Functional strategies of the enterprise are formed by the relevant bodies of individual subsystems. Everyone sees the solution to problems and the achievement of goals in their own way,therefore, imbalances and contradictions often arise. And leaders are required to create a harmonious and mutually supportive structure of functional strategies. For this you need:

• participation of all managers in the creation of the general strategy;
• required coordination of all items and coordination.

In order to form optimal strategies, you need to take into account all the guidelines and influencing circumstances.

Development Factors

Developing a functional strategy is a rather complex and multi-stage process that must be guided by a list of the following elements:

1. Effectiveness of previously adopted strategies.
2. Assessing the state of the internal and external environment of the enterprise, determining the level of influence on the company. Search and realization of potential opportunities, avoidance or solution of threats.
3. Formation of principles and recommendations for development.
4. Goals and key performance indicators for the long term.
5. Main activities and their resource support (financial, material and human).
6. Solving organizational and managerial issues.
7. The expected result of the implemented functional strategies of the company.

The procedure itself is based on:

• consistency - single accounting period;
• weightedness;
• economical – the benefits should outweigh (or at least equal) the costs incurred in performing the function altasks;
• evolutionary development;
• highly professional staff;
• innovation and investment improvement;
• coordination.

In addition, the strategies are based on the general principles of complexity, consistency, reachability, concreteness and flexibility. Also, developers should pay attention to the prospects and novelty of functional strategies: the use of new techniques, technologies and scientific research in practice.

Marketing

Marketing functional strategy is one of the leading strategies for the development of the company, which is explained by the provision of information, strategic and operational communications of the enterprise with contact audiences.

The marketing strategy defines features relating to:

• sales of goods and services;
• price policy;
• relationships with customers, suppliers and intermediaries;
• behavior with competitors;
• advertising and promoting the company's products on the market.

Formation of a marketing strategy consists of four phases:

1. Analysis of the "goods - consumer" ratio, creating a portrait of a typical client of the company.
2. Market segmentation.
3. Marketing mix.
4. Implementation and oversight of implementation.

This type of strategy is based on two elements: the market and the product. To be more precise: the process of turning a product into a commodity and its most profitable sale to the consumer.

Main Quests:

• character of the influence of selected product strategies on sales volumes;
• assessing the duration of the product life cycle and the possibility of entering the world market;
• price elasticity of demand for services, accounting for advertising costs;
• market research.

It turns out that a marketing strategy is an element of a complete system that is associated with both input information and output data. Based on needs, innovation, production itself and the market, where the main focus is on scientific discoveries and advanced technologies.

Innovative

The research and development strategy involves the creation and application of innovations of various nature, which guarantees the development of the company for the long term. Formed on the basis of scientific and technological forecasts and likely technological progress.

The described strategy is necessary to increase and maintain the competitive status of the company's products or services. Worth noting:

• reducing product cost through better inventory;
• ensure the increase in production and sales;
• creating the necessary conditions for entering new segments.

There are several types:

• offensive - thorough market research for the profitability of a high-tech product release;
• defensive;
• intermediate - search and useweaknesses of competitors, due to which empty niches in the market are filled;
• absorbing - creating your own and buying other people's ideas, patents;
• imitation - copying competitive products with a share of their own changes;
• robber.

When formulating an R&D strategy, attention must be paid to the level of risk and the time factor.

Industrial

Production functional strategy is an element of the strategic set associated with the development and implementation of the main activities of the enterprise in the field of product release. When creating, the following parameters are taken into account:

• required production volumes;
• scale and flexibility of production capacity;
• capex level;
• time frame.

Production strategy has three elements:

1. Planning and control.
2. Improve productivity.
3. Features of the human factor.

It is also worth noting that the company's production strategy is the most stable in comparison with others.

Financial strategy

Financial strategy is an internal regulatory document that describes in detail the goals, objectives, priority areas of the company's activities and the necessary financial resources that are needed to achieve them.

The financial mission is divided into several subgoals:

• profit;
• share capital and its profitability;
• asset structure;
• possible risks.

Consequently, forecasts and control are carried out on the basis of a number of indicators:

• profitability;
• financial leverage;
• solvency;
• liquidity.

The significance of this strategy is determined by balancing all tasks and limiting the volume of the company's activities.

Investment

Investment strategy is a system of long-term goals of the company's investment activities, which determine the overall objectives and the ideology itself. Detailed at:

• setting goals;
• optimization of the structure of generated resources and their rational allocation;
• shaping investment policy;
• maintaining communication with the external investment environment from two sides (as an investor and a user).

It is a properly planned investment activity that is the basic prerequisite for strategic changes in the overall organizational structure of an enterprise and its business culture.

Human Resources

Functional strategies for personnel management are focused on ensuring the normal course of the process of reproduction of the workforce, the formation and preservation of a favorable atmosphere within the team.

Main components:

1. Basic social element - improving the organizational structure and labor protection bodies, minimizing the impactharmful factors on the he alth of employees.
2. Functional talent development strategy.
3. Targeted social programs.

In general, functional strategies add up to a whole interconnected system, which in unity helps the company to become a leader in the market, as well as to keep an advantageous place in the long term.