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CS Professional · Strategic Management and Corporate Finance · Introduction to Strategic Management

Which statement about the relationship between the levels of strategy is correct?

Business strategies should be framed within the direction set by corporate strategy, and functional strategies should support business strategies. Strategy cascades downwards so that all levels stay aligned. Independent formulation causes inconsistency, and day-to-day departmental matters are not the concern of corporate strategy.

  1. AFunctional strategies are formulated first and corporate strategy is then derived from them
  2. BBusiness strategies should be framed within the direction set by corporate strategy, and functional strategies should support business strategiesCorrect
  3. CCorporate strategy deals only with day-to-day departmental operations
  4. DEach level should be formulated independently without reference to the others

Explanation

Strategy cascades from the top: corporate strategy sets overall direction and scope, business strategies operate within it, and functional strategies implement business strategies. Independence between levels would cause misalignment, and day-to-day operations belong to the functional or operational level.

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