Strategy Business-Level Strategy Functional-Level Strategy
Source: “The three levels of strategy”, Plunkett and Attner.
In formulating the corporate level strategy a SAI must ask itself, ‘What business is it in?’ and ‘What business should it be in?’ The answers to those questions define what the SAI does and charts the course of business for the SAI. In formulating the business level strategy, a SAI needs to answer the question, ‘How do we do it?’. The functional level strategy answers the question, ‘How do we support the business level strategy?’.
Corporate Level Strategy
The corporate level strategy is an organisation’s process making decisions on allocating its resources to pursue that strategy. In order to determine the direction of the organisation, it is necessary to understand its current position and possible avenues through which it can pursue a particular course of action.
Corporate strategy deals with the major initiatives that are expressly taken by the top level managers involving the utilization of resources, to enhance the performance of the organisation in its external environment. It takes on specifying the organisation’s vision, mission, and objectives by developing policies and plans designed to achieve its goals and objectives. This is supported with the allocation of resources to implement the plans and policies, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the organisation and its progress towards achieving its objectives. A corporate strategy needs to
What business are
we in?
How do we do it?
How do we support business level strategy?
R&D Finance Human IT Public Resources Relations
Pacific Association of Supreme Audit Institutions (PASAI) 34
start with stakeholders’ expectations, agency and government expectations etc., and use a modified balance scorecard that includes all client agencies, stakeholders and the broader community.
The corporate direction is tied together in the corporate planning process and the performance management framework that navigates around the overall corporate plan. The plan is a document that will never cease and is updated and redirected after it expires at the end of its lifespan. When a new corporate plan is being drawn up, all alterations and updates are done based on all the performance reports on the actual outcomes and risks encountered.
Process of Determining the Corporate Level Strategy by SAIs
In order for a SAI to come up with its corporate strategy, decisions have to be made based on certain crucial questions. Answers to these questions will form the basis for the strategy including:
What should be the scope of its operations; i.e.; what businesses should the SAI be in? And where should it be in business?
How should the SAI allocate its resources to the various existing business units or divisions?
What level of diversity should exist in the core business of the SAI as it moves into the future? Are there other activities the SAI should be in or, are there current activities that should be targeted for elimination?
What should be the nature of this diversity or how diversified should the SAI be?
How should the SAI be organised? What will be the boundaries of the SAI? How will these boundaries impact relationships among the various business units or divisions, with suppliers, auditees and other stakeholders? Are the responsibilities for each business unit or division clearly identified and is accountability established? Which will be carried out in-house, and which will be contracted out?
Should the SAI enter into partnership relationships or alliances with stakeholders? If so, on what basis? If not, what impact might this have on its future organisational performance?
As these questions show, corporate strategies address the long-term direction for the organisation as a whole. Corporate strategies deal with plans for the entire organisation and change as the capabilities of the organisation develop and, as the environment of the organisation changes.
In translating the answers to the above critical questions into corporate strategies, this is how SAIs may be able to do it. The examples provided in the table below are not exhaustive and SAIs are encouraged to come up with strategies at their corporate level that meet their long-term goals and objectives as specified in their vision and mission statements.
Pacific Association of Supreme Audit Institutions (PASAI) 35 Table 1: Corporate Strategy
Strategy Initiative Output
Aud it M an d ate Revamp or relook at scope of operations. Relook at nature of diversity and establish whether some activities should be eliminated. Establish what the line of products or service should be.
Current scope of operations established. Establish extent of diversity and eliminate activities not aligned to corporate objectives. Establish policy on line of products and service.
Al lo ca ti o n o f Resou rc es A system to be developed to effectively and efficiently monitor and allocate resources to all divisions within SAI. A framework on the allocation of resources. G o ve rn an ce an d Acc o u n ta b ili
ty Organisational structure and alignment. New structure implemented. organisational
Sta ke h o ld e r Rel ati o n sh ip Partnership relationship to be created and harnessed with key stakeholders.
Support to PASAI
Strategy established to enable head of SAI to deal with key stakeholders.
Active participation.