Functional Strategy (definition and types)

Set a functional strategy It is found in the last link of any business strategy and consists of defining one by one the operational strategies of the entire process in which the company operates.

The formal presence of a functional strategy is as new as the existence of complex business organizations, which arose after the industrial revolution, but historically, it was applied in military art as a broad concept for the intelligent application of forces against the enemy in battle.

At the business level, competition is the enemy and forces are the decisions made to profit from any visible opportunity.

What is the functional strategy?

It is the one that requires the HOW? Do, operate, function, that is, after delimiting the

corporative strategy that specifies what to do?, the functional strategy, comes to indicate how to apply and use resources to achieve what you want to achieve.

A functional area of ​​the company adopts this type of strategy to achieve the objectives set out in the corporation's strategy, maximizing available resources and their productivity. In addition, it seeks the care and development of functional and operational capacity in order to achieve a competitive advantage to the company.

These strategies generate a frame of reference used by the management of operations and functions in order to support the organizational and business strategy.

Characteristics of functional strategies

• They are more detailed than corporate, organizational and business strategies
• They are planned in the short and medium term.
• Its main purpose is the description of all the unavoidable actions to achieve the short and medium term objectives.
• They create an environment favorable to the achievement of achievements and goals.
• It involves the participation of managers at all levels who participate in the development of business objectives.
• They have to be coordinated to work consistently with corporate strategy and business strategy.

Types of functional strategy

They are structured according to the departments or functional areas into which the company is divided, therefore the most common functional strategies in any company are:

• Production strategy:

It defines the guidelines to be followed during the coming years in relation to the productive system (type of system to be used, technical characteristics, incorporation of technology into the process, storage process, etc.).

• Commercial or marketing strategy:

Determines the actions that must be carried out to place the products and / or services in the corresponding market (consolidation of certain commercial characteristics of the product, pricing, definition of distribution channels, use of the different Communication strategies, etc.).

• Financial strategy:

The company must establish the sources of financing necessary to carry out all its investment projects, in addition to taking into account the cost associated with these sources.

• Development, research and innovation strategy:

It serves for the company to plan the actions to follow concerning the introduction of new techniques aimed at improving the productive efficiency, whether new techniques of business management, new ways of motivating staff, new systems of production, etc.

• Human resources strategy:

It consists of formulating certain actions pertinent to the direction and orientation of the people who work or provide their service within the company, that is, strategies aimed at establishing actions for recruitment, selection and recruitment of workers, training and worker training and work motivation that includes the worker in the business project.

It is worth noting that all functional strategies must be connected so that there is a coherent operation between them, since the decisions made Regarding operation, they can affect all areas even without being directly related to that area.

Importance of functional strategies

Occasionally companies tend to neglect the functional sense of a strategy, business is given great importance when defining WHAT? You want to do and leave in the background the functional strategy that is actually as important or even more important than the corporate or business strategy.

A company needs to correctly define and apply its resources, if the functional strategy It has not been defined correctly and also aligned with the other insurance strategies, the company will not achieve true efficiency and in the long term it will fail.

The functional strategies detail the actions to be followed in each of the areas that make up the company, outlining the path to reach certain objectives in the corporate strategy, without a path to follow, each department or area is dedicated to its own achievements and The company in general does not reach its productive goals, the development and desired growth and therefore the profits and profits expected by the shareholders.