Skip to content

What Is a Functional Strategy, and Why Should You Use One?

  • by

Functional Strategy is a way to identify and set goals for the optimal allocation of resources among various company functions. This plan also serves as a guide for coordinating and facilitating communications between the departments in order to maximize their results. Functional Strategy focuses on how we may support the corporate strategy within divisions such as Marketing, HR, Production, and R&D.

Why Is It Significant?

Functional strategy is a method of optimization that aims to enhance the efficiency of a firm’s operations across departments. Employees within these departments frequently use terms such as “Marketing Strategy,” “Human Resource Strategy,” and “Innovation Strategy.” When all of a company’s functional departments work together in the same direction, they reach their goals. As a result, the objective of the functional strategy is to align these plans as closely as possible with the corporate plan.

If the company’s approach is to develop new goods for consumers, marketing staff should build effective marketing campaigns that appeal to inventors and early adopters via the proper platforms. Functional tactics are operational methods of operation. Tactical decisions are made at the operational level. As a result, they are not really part of the strategy since they are very operation-oriented and, therefore, do not belong in strategy. As a result, they should be referred to as tactics rather than strategies. The primary goal of a functional strategy, on the other hand, is to enable the company’s strategy, not functional success.

Functional Strategy Case Study

Macro trends such as globalization, digitization, automation, outsourcing, rising competition, and process improvement have raised expectations for efficiency gains. Corroborating this argument is the fact that business functions are frequently the first to be impacted by an incoherent company and business plan. Furthermore, in most organizations, each business function has a number of competing goals. As a result, functional strategy is becoming increasingly important and relevant. Functional strategies assist their organization to become coherent and fit for purpose by focusing only on those value-adding portfolios of activities that are strategically significant to the company. A functional strategy, on the other hand, helps a company make its unique value proposition possible. The functional strategy also has an impact on the overall corporate strategy.

Because functional level strategy is so narrow, it’s typically more difficult to create than company and business strategies. However, taking the time to define clear action plans for each department can help tie management goals from the top of your organization all the way down to individual workers. This can be extremely difficult for a manager to evaluate the relative importance of all of these metrics, and this is where cross-departmental analysis comes in. When all of these elements work together toward a certain aim, success is inevitable.

Case – Google

Google handled two complaints in 2017 – one largely from advertisers, and the other from consumers. Advertisements were spotted on the same screen as the material they felt put the firm in a negative light (soft porn clickbait and white supremacist videos on Google’s YouTube). Customers were unhappy that their search inquiries brought them to fraudulent news sites, and they were becoming more irritated with how their personal information was being used to generate sellable data for other businesses. Google responded by giving advertisers more control over where their advertisements appeared, removing objectionable political and sexual content from YouTube, and blacklisting harmful material from search results.

Case – Yahoo!

Many investors believed that Marissa Mayer, a well-known and successful Google executive, would be able to turn around a failing Yahoo. She didn’t succeed because she didn’t understand how the firm worked operationally. She failed to account for the opposition of lower-level Yahoo! employees to Meyer’s ideas for changing the company. She eventually concluded that the best feasible option was to sell the firm as a result of her failure to change it. In 2016, Meyers sold a company that was once worth $135 billion to Verizon for $5 billion. Meyer’s corporate vision, which she incorporated into the company’s policies, failed because the firm was unable or unwilling to execute them at a practical level. Finally, in order to meet the growing demand for wireless services and maintain a level of earnings growth, Meyer had to sell off the firm’s assets to Verizon.

Leave a Reply