By: Ankita Tiwari

Functional Strategies
Deals with a relatively restricted plan designed to
achieve objectives in a specific functional area,
allocation of resources among different operations
within that functional area and coordination among
different functional areas for optimal contribution to
the achievement of the business and corporate level
objectives.
 Corporate Level strategies

Business Level Strategies

Functional-Level Strategies

Marketing
Plan & Financial
Policies Plan & Operational
Policies Plan & personal
Policies Plan & Information
Policies Management
Plan &
Policies
Functional Plans and Policies
Functional strategies defined in terms of
functional plans and policies-plans or
tactics to implement business strategies-
are made within the guidelines set at the
higher levels.
PLANS are made to select a course of
action while POLICIES are required to act
as guidelines to action
Need for Functional Plans and
Policies
To implement strategic decisions by all parts of an
organization;
To control activities in different functional areas of
business;
To reduce time spent by functional managers in
decision making
To handle similar situations occurring in different
functional areas in a consistent manner;
Coordination across the different functions takes
place
 Financial Plans and Policies
1. Sources of Funds: Capital Mix Decisions: Capital
structure, procurement of capital and working capital
borrowings, reserves and surplus, relationship with
lenders, banks and financial institutions.

2. Usage of Funds: Investment or asset-mix decisions:

Capital investment, fixed asset acquisition, current
assets, loan and advances , dividend decisions etc.

3. Management of Funds: The system of finance,

accounting and budgeting, cash, credit and risk
management, cost control and reduction etc.
 Marketing Plans and Policies
1. Product: quality, features, choice of models ,
brand names, packaging etc.
2. Pricing: Discount, mode of payment,
allowances, payment period, credit terms etc.
3. Place: Channels to be used, transportation,
logistics and inventory storage management and
coverage of markets etc.
4. Promotion: Advertising, personal selling, sales
promotion and publicity.
 Operations Plans and Policies
 Production system - capacity, location, layout, product or
service design, work systems, degree of automation, extent of
vertical integration.

 Operations Planning and control – aggregate production

planning; materials supply; inventory, cost and quality
management; and maintenance of plant and equipment.

 Research and development- product development, personnel

and facilities, level of technology used, technology transfer and
absorption, technological collaboration and support.
 Personnel Plans and Policies
 Personnel System - manpower planning, selection,
development, compensation, communication and appraisal.

 Organizational and employee characteristics – corporate

image, quality of managers, staff and workers, perception
about and image of the organization as an employer,
availability of development opportunities for employees,
working conditions.

 Industrial Relations – union-management relationship,

collective bargaining, safety, welfare and security, employee
satisfaction and morale.
Information Management Plans and
Policies
 Acquisition and retention of information- sources, quantity,
quality and timeliness of information, retention capacity and
security of information.

 Processing and synthesis of information – database

management, computer systems, software capability and the
ability to synthesize information.

 Integrative, Systemic and supportive factors – Availability

of IT infrastructure, its relevance and compatibility to
organizational needs, upgradation of facilities, willingness to
invest in state-of-the-art systems, availability of computer
professionals and top management support.
 Plans and Policies of Public sector banks
The public sector banks (the State Bank group and the
nationalized banks) had to face a tough challenge when
the new private sector banks made their entry in early
nineties.

The new banks had the benefit of starting on a clean slate

and had started with state-of-the-art technology which in
turn helped them save on man power costs and provide
better services.

The older banks had not kept up-to-date with technology

and were facing competition of this kind for the first time.
Integaration of personal plan
and policies
 INTEGARATION OF PERSONAL PLAN AND POLICIES

 The functional areas of any organization are based on the segregation

of the key activities. But what has been segregated will have to be
brought together, since all activities are performed to achieve the
overall objectives of any org.

 Integration of functional plans & policies provides the mean for such
an aggregation. Strategy have to arrange for mechanisms that will
ensure that such an integrations takes place. These mechanisms can
take the form of commitees, consisting the top management and
functional heads.