Communicators should know the 5 levels of strategy.

Communicators should work to 4 levels of strategy

Communication is universal, and business communication is a component of it. We need to clarify the role of professional communicators in business strategy. The answers are untidy because all organizations and their management are different. To tidy this up, we can consider the communication function for the different levels of strategy developed by organizations. The overall conclusion is that communicators should work to 4 levels of strategy.

Main organizational stakeholder groups

  • Employees
  • Customers
  • Shareholders
  • Suppliers
  • Service providers
  • Industry groups
  • Business partners
  • Business regulators
  • Government at applicable levels
  • Community groups and broader society.

Research has found that employees are the most important stakeholder group – by a long way. They have the most impact on organizational financial performance. Corporate communicators need to ensure their organization’s relationships with these groups and subgroups are maintained actively and positively at each relevant level of strategy.

Summary of organizational strategy levels

There is not just a single level of strategy for an organization. Instead, different levels and types of strategies are applicable, depending on the type and size of the organization, and its operating environment. The concept of four levels of strategy takes account of all the potential levels of strategy an organization needs. Each level usually comprises the content and focus of a strategy. Four strategy levels are most relevant to large organizations, especially multinational businesses, and conglomerates like Amazon. (A conglomerate comprises multiple business entities operating in completely different industries within one corporate group,) Understanding the function of strategy at all of these levels helps you to form a comprehensive overall picture. As a communicator, you should work to 4 levels of strategy so you can knowledgeably engage with management in strategic planning activities and discussions.

3 levels of strategy

Smaller organizations have fewer strategy levels because they combine aspects of some of the four strategy levels into other strategy levels. For instance, Lars de Bruin in his 2020 article, “Three levels of strategy – corporate strategy, business strategy and functional strategy,” discusses the requirements at each of those three levels. However, de Bruin completely overlooks discussing the enterprise strategy and its role in society. We can see what happens when a company ignores societal issues from the two cases below of Wall St firms in the US and Uber in the UK, who were recently penalized severely by their respective industry regulator.

4 levels of strategy

Writers from the Cascade strategy execution platform, wrote a similar article in 2023, “The 4 levels of strategy – The difference and how to apply them,” that also completely overlooks enterprise strategy, despite the overarching implications of enterprise strategy to an organization’s success. Cascade has added operational strategy to the three core strategy levels of corporate, business and functional strategy advocated by de Bruin.

Communication researcher Benita Steyn² even proposes 5 levels of strategy. She adds a 5th level of Operational strategy to the four levels of Enterprise strategy, Corporate strategy, Business-level strategy, and Functional strategy level. In my view, the factors in the Operational strategy can be included in the Function strategy level because operational factors are required a successful Functional level strategy. Even though Steyn wrote her articles 15-20 years ago, much of the articles are still largely relevant because management concepts don’t change quickly. Just think of Edward Freeman, the originator of the stakeholder concept, who wrote his renowned book, Strategic management: A stakeholder approach, in 1984. Still a valuable reference today.

Four levels of strategy are proposed by contributors to the 2017 publication, “How to Play the Game: Strategic tools for managing corporate communications and creating value for your organization.” This is an extremely useful, free, 44-page PDF published by the Academic Society for Management & Communication, based in Leipzig, Germany and representing European communicators from 45 countries.

The Academic Society says a strategy provides a description of an organization’s positioning for the future, focusing on what should be done rather than how it should be done. [Italics are my emphasis.] Strategies ensure the best possible fit between an organization and its environment. They combine both plans for the future and patterns from the past.

The four levels and types of strategies discussed by the Academic Society are:

  1. Enterprise strategy: addresses the broadest level of strategy and describes how to secure the societal and political legitimacy
    of the organization (license to operate, as discussed below)
  2. Corporate strategy: defines the focused markets and products/services, how to compete in principle, and which unique combination of resources is necessary to stay successful (financially oriented)
  3. Business-unit strategy: provides directions on how to compete specifically in the chosen markets or product segments (marketing oriented)
  4. Functional strategies: provide information on how functional areas, such as corporate communication, HR or finance, should work together in order to support higher-level strategies.

Overall, it is worth keeping the 4 strategy levels in mind even if some of their content is absorbed into other strategy levels. This helps you to stay mindful over time of the implications of the details, even if some are located within other levels.

Most discussions about the scope of strategy are intuitive – we don’t think of the application of strategy at clear, distinct levels, but considering them in several levels simplifies their role. Parts of this article are adapted from two papers by communication researcher Benita Steyn.¹ ²

5 levels of strategy?

In descending order, the 5 strategy levels discussed by Benita Steyn¹ are

  1. Enterprise strategy
  2. Corporate strategy
  3. Business-unit strategy
  4. Functional strategy
  5. Operational strategy,

The strategy level details are shown below in her helpful chart. You can see the relevance to communicators at every level. This is why communicators should understand the 5 levels of strategy, even if other reviewers combine the Functional strategy and Operational strategy levels to develop 4 strategy levels in total.

Strategy Formulation Levels

Image: Contribution of Public Relations to Organizational Strategy Formulation. Chapter by Benita Steyn in the 2007 handbook, “The Future of Excellence in Public Relations and Communication Management: Challenges for the Next Generation.

Details of organizational strategy levels and the communication role at each level

1. Enterprise strategy

Enterprise strategy is the overarching strategy level for an organization to be fully responsive to today’s complex and dynamic operating environment. It is the suggested strategy process for including societal and stakeholder expectations into the organization’s strategy development processes. Enterprise strategy focuses on an organization achieving non-financial goals such as attaining legitimacy, trust, a good reputation, socially responsible behavior, with sound values, standards and ethical conduct.

Turning these concepts into reality means they do affect the operating performance of an organization, directly and indirectly, short term and long term. All these have implications for the HR and corporate communication functions and budgets, along with implications to other functions – and obviously to the high-level decision makers / policy makers.

‘Enterprise strategy’ is not a common term. Personally, I don’t think it is a suitable term because many people are likely to be confused between ‘enterprise strategy’ and ‘corporate strategy.’ But the fact is that all organizations have the elements of an enterprise strategy, whether formally developed and included or not at a strategy level.

The fundamental issues that need to be addressed in enterprise strategy are (Steyn¹ quotes Freeman¹):

  1. What is the role of the organization in society?
  2. What principles and values does the organization represent?
  3. What obligations does the organization have to society at large; including to regulators, whose role it is to represent customers and broader society? Therefore, what are the implications for the organization and its allocation of resources?

Government entities and non-profit organizations can adapt most of these principles to their development of public services.

Social license to operate

The social license to operate (SLO), or simply social license, is an important concept to communicators because it involves the ongoing acceptance of a company or industry’s standard business practices and operating procedures by its employees, stakeholders, and the general public. An industry regulator is usually the key decision maker about a social license to operate because they can apply penalties or even close down offending companies. Refer the Uber example below. A social license to operate is created slowly over time as a company builds trust with the community in which it operates, and with other stakeholders.

In order to protect and develop a social license, companies are encouraged to first do the right thing and then be seen to be doing the right thing. Willingness to give an organization the ‘benefit of the doubt’ is a key indicator of a license to operate.

Recent cases impacting the social license to operate

  • The Boeing Company has a recent dubious history involving its flagship aircraft, the 737 MAX. Two crashes in 2018 and 2019 killed 346 people and led to 5 years of design changes and regulatory action. Aggressive cost cutting (quick fixes) and forced changes in leadership had eroded the company’s culture, which emphasized short-term profits and hefty cash distributions to shareholders, according to an industry expert. The company’s reputation for quality has suffered due to continuing problems such as flawed attachment of panel doors to the sides of 737s. The US Federal Aviation forced Boeing to ground its 737 MAX fleet, pushing Boeing into a lengthy set of regulatory inspections, tests, and design changes lasting 20 months. A March 2024 report by the US Federal Aviation Administration found that Boeing failed to comply with manufacturing quality control requirements for process control, parts handling and storage, and product control. Potential passengers are worried! Boeing’s literal license to operate was impacted, along with its social license to operate.
  • The total of US$1.8 billion worth of fines charged by the US Securities and Exchange Commission in 2022 against 16 Wall St bankers, brokers and other financial firms after their staff illegally discussed deals and trades on their personal devices and apps. Staff used personal apps to evade oversight, sometimes at the direction of senior executives who knew they were violating policies but wanted to conceal trading communications. This violation of policies and trust became acute as bankers and traders worked from home during the pandemic, according to a 2022 Reuters report.
  • The case of a company literally losing its license to operate. Ride-hailing firm Uber initially lost its license to operate in London in 2019 due to concerns about passenger security and fraudulent accounts of some drivers. Uber later succeeded in improving its operational procedures and was granted a 30-month license to operate from 2022, Reuters reported.

ISO 26000

I have included a summary of the ISO 26000 standards that apply internationally to social issues. The International Organization for Standardization (ISO) addresses social issues in its ISO 26000 international standard, as outlined at the end of this article. ISO is a non-government organization based in Geneva, Switzerland, with 170 member countries.

Corporate communication role at the enterprise level

Enterprise strategy indicates the strategic contribution of the corporate communication/PR function at the macro‐organizational level. The head of corporate communication / Chief Communication Officer should be the communication strategist dealing with the top management level of the organization. These CCOs should develop communication strategies based on research and analysis, and play an important role in decision-making processes. They would also participate in strategy meetings, if not executive committee meetings, and would make recommendations on organizational policies, particularly policies in which communication issues and relationships with key stakeholder are an important factor.

The communication function is central to developing an effective enterprise strategy, and communicating about the importance of these decisions and the strengthening of relationships with stakeholders. This will ultimately lead to the organization being trusted by its stakeholders as well as being regarded as sustainable, legitimate and socially responsible within the society in which it operates.

Corporate communication strategy is guided by the organization’s enterprise strategy (whether this is stated or not) and also delivers inputs into the enterprise strategy.

Very few enterprise business decisions don’t require communication. Even if the process of forming strategy at this level is focused on complex financial and/or operational matters, senior communicators attending such meetings can advise on communication actions stemming from the decisions being made. They can also contribute to the decision-making by adding consideration of communication implications to the discussion. The fact of being present at executive meetings when business issues are discussed enables the communication head to influence decisions, especially when there is a significant communication component.

However, communication representatives tend to be excluded from many enterprise-level meetings because corporate planners and senior managers often don’t recognize the importance of communication. They don’t consider how communication issues should affect and shape their decisions. Hence the advice from the Director General of a government department:

You have to stick your nose in, ask the questions and get in the loop early when planning takes place and decisions made. Attend as many meetings as possible to get early input on these matters.

In addition, we have to reluctantly face the fact that most senior communicators don’t have sufficient business knowledge and experience to contribute meaningfully to high-level decision making.

2. Corporate strategy

The corporate strategy defines the organization’s overall direction and the high-level ideas of how to move towards it. The corporate-level strategy takes into account the foundational elements of the organization: its vision statement, mission statement and corporate goals.

At the corporate level, main responsibilities for strategy formulation include defining the types of business activities the organization should engage in (eg. decision making on mergers and acquisitions, strategic alliances, joint ventures etc), selecting tactics for diversification and growth, and managing corporate resources and capabilities.

Corporate-level decisions are typically made at the highest levels of large organizations by the CEO and/or the board of directors, with likely input from senior managers. Corporate strategy can be described as the board and top management’s responsibility for the organization’s financial performance. Focus is on the overall operating environment, especially the way economic and technological issues may affect future performance. Similar for government.

Communication strategists can also make a useful contribution to various aspects of decision-making at this level.

3. Business-unit strategy

Positioned under the corporate strategy, a business-level strategy is developed for each business unit to achieve the goals agreed by top management. Business-unit strategies are the most common level of strategy, providing direction to gain competitive advantage in each selected market/product/industry segment.

If there is more than a single business unit, management needs to develop an overarching corporate strategy that connects all business units together under the corporate umbrella.  In government, this would consist of specific services offered to the public. Business strategies usually deal with a single product or group of related products, and vary widely to support the organizations that create them.

Management of each business unit must translate the statements of direction generated at the corporate level into a business-unit strategy, with goals, objectives and tactics for their unit. This includes selecting and managing resources to produce a sustainable competitive advantage.

At the business-unit level, strategies are often marketing-oriented, taking into account relevant economic, technological and regulatory factors. The focus is on helping to achieve the organization’s financial goals and objectives. Most important at this level are customers, as well as other stakeholders such as employees, suppliers, distributors, regulators, and service providers.

Experts say that implementing this strategy level is only useful for organizations with multiple business units, who may sell products and services or may sell multiple product lines and services in different industries.

Include representatives from other business units in each business-unit strategy meeting

This has two main benefits:

  1. It increases buy-in. Managers and relevant team members from other business units who have had the opportunity to contribute to the strategy formulation feel included in the decision-making of these business units. Therefore, they’re more likely to agree with the strategy and support its implementation.
  2. It improves ownership. Employees who are given the opportunity to contribute to the strategy development are more likely to take ownership of its completion.

Recommendation: If your organization only has only one business unit, you can ignore this strategy level—and can move directly to the functional strategy level.

4. Functional strategy

Functional strategy details how higher-level strategies can be supported by individual functional areas within a business unit and between business units working together.

Strategy at function level is most closely involved with implementation. Functional strategy thus relates to what should be done in each key functional area, the amount of emphasis placed on each, and the resources allocated. Each functional area makes its own unique contribution to strategy formulation at different levels. Functional strategy is reached largely within departments such as Marketing, HR and Production. The focus should be on tactics rather than strategies because of the operational nature of the decisions made within these departments.

In many organizations the communication and marketing functions have the most contact with the external environment, gathering and responding to information on strategic stakeholders such as customers. Marketing strategy evolves from interaction with customers and other stakeholders in the business environment, while taking into account the social, technological, regulatory and ecological aspects of the societal environment. There can be overlaps between corporate communication and marketing responsibilities, and therefore it is important for each function to be represented in strategy planning by the other function.

It is vital for function managers to understand the importance of linkages and mutual dependence with other functions because they are all part of a larger system that depends on them working effectively with each other. Functional strategy should support higher-level enterprise, corporate and business level strategies. Each functional area has its own key stakeholders. For example the marketing function focuses on relationships with customers; HR focuses on relationships with employees, labor unions, regulators; and corporate communication focuses on a wide range of stakeholders.

At this level in a larger organization, you consider how the various departments will contribute to organizational growth and how they will work together to support achievement of the organizational strategy. The marketing, finance, IT, operations and other departments all have goals and responsibilities to deliver, and have a visible functional level of strategy that aligns back to the overall enterprise strategy, which will increase the chances of success. This underlines the fact that communicators should know the 5 levels of strategy, and their overall significance to the organization.

Corporate communication role at the functional level

As a functional strategy, the corporate communication strategy provides focus and direction for an organization’s communication with stakeholders, building symbolic and behavioral relationships. The thinking – the logic – behind the corporate communication function’s actions, determine what should be communicated rather than how it should be communicated. It is therefore not the same as communication plans but provides the framework for the communication plans needed to act on the strategy.

Focusing the efforts of the corporate communication function within a functional strategy, linked to the enterprise strategy, will assist in proving its contribution to organizational effectiveness. In order to formulate corporate communication strategy, practitioners will need to understand the business and societal issues the organization is facing and to be expert in using communication including relationship development to help remove barriers to success.

5. Operational strategy

Operational level strategy, situated at the lowest tier of the strategic hierarchy, focuses on the day-to-day actions and tactics needed to run the business, manage processes, and implement change effectively. It’s the “boots-on-the-ground” aspect of strategy, ensuring that plans are translated into tangible actions and results.

At the operational level, strategies are translated into action. Key operating managers and project leaders establish short-term objectives and implementation activities that contribute to achievement of business and corporate-level goals. Operational strategies are needed to manage operating units cost-effectively. At the functional level and the operating level, the major emphasis is on maximizing the productivity of resources by capitalizing on any possible synergies and distinctive competencies within the organization.

According to Cascade, this is probably the most important level of strategy because, without it, your organization can quickly lose traction and ‘get stuck’ while the competition moves forward. Communicators need to be integral at this level to form a comprehensive overview. There is no doubt that communicators should know the range covered by all the levels of strategy.

Key characteristics of operational level strategy

In simple terms, operational level strategy informs the day-to-day work of employees and will ultimately keep your organization moving in the right direction, according to Cascade. It’s primarily concerned with short-term objectives and the practical execution of plans, detailing the specific actions, procedures, and activities that need to be executed to meet organizational goals.

  1. Tactical execution: Operational strategies focus on executing tactical steps to achieve business objectives, offering a detailed roadmap for execution.
  2. Short-term focus: Geared towards short-term goals and might encompass quarterly, monthly, or even daily activities.
  3. Resource utilization: Deals with resource allocation at a detailed level, including workforce management, budget allocation, and technology deployment for specific projects and initiatives.
  4. Project management: Operational strategies often include project management to coordinate teams and meet time and budget constraints.
  5. Feedback and adaptation: They incorporate feedback loops, allowing adjustments as circumstances change.
  6. Immediate impact: Success at the operational level directly contributes to achieving broader business and corporate goals, serving as a linchpin in strategy execution.

Corporate communication role at the operational level

Attending planning meetings as well as preparing the outline of a communication strategy, including a comms budget, for each major project should be an integral part of the strategic planning process of every organization. One very successful head of a prominent government department will not accept an operational plan unless a detailed communication plan and budget for the project accompanies it.

Communication goals to be addressed in plans/campaigns are based on the corporate communication strategy for each strategic issue.

The implications of the strategic issues on each stakeholder group are identified and become the focus of the communication with stakeholders. Corporate communication strategy entails formulating clearly what should be communicated to strategic stakeholders to solve the problems created by the implications of a strategic issue or to capitalize on the opportunities presented.

ISO 26000

The International Organization for Standardization (ISO), addresses social issues in its ISO 26000 international standard, as below. ISO has standards on:

In Western countries, societal expectations also cover social issues like DEI (diversity, equity and inclusion), ESG (environmental, social and corporate governance). CSR (corporate social responsibility), sustainability, and LGBTIQA+ (lesbian, gay, bisexual, transgender, intersex, queer, asexual and other sexually or gender diverse). Organizations should take account of such social issues and prepare policies that relate to them because these issues can become a major problem if they are not specifically addressed.

The ISO 26000 standard guides organizations on the policies recommended to adopt on 7 broad social issues.

1. Organizational governance

Decisions are to be made in consideration of the expectations of society.

Accountability, transparency, ethics, and stakeholders should be factors in the organization’s decision-making process

2. Human rights

Every person has the right to fair treatment and the elimination of discrimination, torture, and exploitation.

Related issues

  • Due diligence
  • Human rights risk situations
  • Avoidance of complicity
  • Resolving grievances
  • Discrimination and vulnerable groups
  • Civil and political rights
  • Economic, social, and cultural rights
  • Fundamental principles and rights at work

3. Labor practices

Those working on behalf of the organization are not a commodity. The goal is to prevent unfair competition based on exploitation and abuse.

Related issues

  • Employment and employment relationships
  • Conditions of work and social protection
  • Social dialogue
  • Health and safety at work
  • Human development and training in the workplace

4. The environment

The organization has a responsibility to reduce and eliminate unsustainable volume and patterns of production and consumption to ensure that resource consumption per person is efficient and sustainable.

Related issues

  • Prevention of pollution
  • Sustainable resource use
  • Climate change mitigation and adaptation
  • Protection of the environment, biodiversity, and restoration of natural habitats

5. Fair operating practices

Building systems of fair competition, preventing corruption, encouraging fair competition, and promoting the reliability of fair business practices help to build sustainable social systems.

Related issues

  • Anti-corruption
  • Responsible political involvement
  • Fair competition
  • Promoting social responsibility in the value chain
  • Respect for property rights

6. Consumer issues

The promotion of fair, sustainable, and equitable economic and social development concerning consumer health, safety, and access is the organization’s responsibility.

Related issues

  • Fair marketing, factual, and unbiased information and fair contractual practices
  • Protecting consumers’ health and safety
  • Sustainable consumption
  • Consumer service, support, and complaint and dispute resolution
  • Consumer data protection and privacy
  • Access to essential services
  • Education and awareness

7. Community involvement and development

The organization should be involved with creating sustainable social structures where increasing levels of education and well-being can exist.

Related issues

  • Community involvement
  • Education and culture
  • Employment creation and skills development
  • Technology development and access
  • Wealth and income creation
  • Health
  • Social investment

Further reading

You can read more about the fact that communicators should know the several levels of strategy in my article, “The role of communication in effective organizational strategy.”

References

  1. Steyn, Benita. (2004) From strategy to corporate communication strategy: A conceptualisation.
  2. Steyn, Benita. (2007) Contribution of public relations to organizational strategy formulation.
  3. Freeman, R.E. (1984). Strategic management: A stakeholder approach. p. 91. Boston: Pitman.

Kim Harrison

Kim J. Harrison has authored, edited, coordinated, produced and published the material in the articles and ebooks on this website. He brings his experience in professional communication and business management to provide helpful insights to readers around the world. As he has progressed through his wide-ranging career, his roles have included corporate affairs management; PR consulting; authoring many articles, books and ebooks; running a university PR course; and business management. Kim has received several international media relations awards and a website award. He has been quoted in The New York Times and various other news media, and has held elected positions with his State and National PR Institutes.

Content Authenticity Statement. AI is not knowingly used in the writing or editing of any content, including images, in these newsletters, articles or ebooks. If AI-produced content is contained in any published form in future, this will be reported to readers.

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