Corporate strategies are the most critical strategy level within a company. When clearly outlined, it helps establish the overall value of a business and motivates the company’s employees to achieve the goals the strategy aims to achieve.
What is Corporate Strategy?
In simple terms, corporate strategy is the strategic level that concerns itself with an entire organization, especially relating to decisions involving the overall growth and development of the company.
A few components must be in place to develop a functional corporate strategy. The four most widely accepted elements of the corporate system are visioning, objective setting, prioritization, and resource allocation.
The primary purpose of the visioning component is to set a high-level direction and aim for the company, namely the company’s mission, vision, and corporate values.
The primary goal of a vision statement should be to respond to how the organization’s leadership projects the company’s growth and evolution.
Subsequently, the organization’s vision is developed into a series of high-level objectives for the company, typically projecting for the next three to five years, thereby setting clear goals.
Prioritizations or strategic trade-offs form an essential pillar of corporate strategy. All business decisions usually entail a degree of risk, and it is not always possible to take advantage of every opportunity.
This is why organizations must balance strategic trade-offs between risks and returns to manage risks optimally and maximize return generation.
For a company to achieve the goals of its corporate strategy, it is essential to determine the most efficient way to allocate resources of capital and human resources. Resource allocation also involves planning, managing, and assigning resources in a way that helps the company achieve its goals.
What do Corporate Strategy Consultants Do?
Corporate strategy consultants work with company CEOs, boards, and senior managers to provide strategic, professional advice for business goals and decisions.
Usually, strategy consultants are vast in about eight disciplines. These disciplines include
- Business Model Transformation
- Corporate strategy
- Digital strategy
- Functional strategy
- Economic policy
- Organization strategy
- Mergers and acquisition (M&A)
- Strategy and Operations.
Corporate strategy consultants help organizations to improve their performance and help them achieve their goals. Some of their duties include.
- Analyzing the organisation’s current processes
- Identifying problems, solutions, and other areas that require improvement
- Conducting market research to find solutions
- Creating reports and presentations
- Devising strategies and making great recommendations
Some consultants also oversee the implementation of the recommended strategies.
Difference between business strategy and corporate strategy
A business strategy is designed to help a company compete in the market. It is a plan for attracting customers and selling products or services to make a profit. Usually, a business strategy seeks to aid a company’s growth by getting customers, increasing profit, increasing customer satisfaction, and choosing which product to offer.
The corporate strategy seeks to guide a company’s growth. Corporate systems address what market the organisation wants to compete in, and different business units can increase the organisation’s value. Also, it sets the pace of the company’s growth and makes it more competitive when it enters a new market.
Corporate strategy and business strategy differ in their primary objectives. While a corporate strategy focuses on business growth and profit, a business strategy focuses on actively competing in the marketplace.
Other key differences between corporate and business strategy can be categorised into four.
Companies use corporate strategies to define the niche the company wants to occupy in the market and provide managers with guidance for reaching long-term goals. Corporate plans also increase efficiency by combining departments and efficiently managing business units.
Business strategies are used to create a business plan and determine the resources and steps to become more competitive in the market.
Business strategies are also used to assess the company’s product, target audience, and competitors to identify and strengthen its comparative advantage.
In cases where a business already exists, business strategies can help managers better understand the model and recommend improvements.
Ultimately, great business strategies attract investors.
Corporate strategies are generally long-term, while business strategies are short-term. Business strategies are created to solve routine operations issues or current problems and reach feasible goals.
Corporate strategies are designed to reach long-term goals and solve the company’s issues like growth and diversification. Usually, a company’s corporate strategy aligns with the company’s permanent vision.
The benefits of having a clear business strategy include the following:
- Better decision-making.
- Gaining a competitive advantage in the market.
- Improving a product or company’s performance.
- Satisfying and retaining customers and employees.
On the other hand, great corporate strategies ensure efficient operations and provide long-term sustainability. It also maximises profits, minimises loss, ensures the company remains on track with its long-term vision and mission and generally improves management.
Types of corporate strategy
Corporate strategies can be categorised into four main types.
Growth strategies are aimed at achieving business growth. Growth could be estimated in revenue, penetration, and market share. Growth strategies involve concentration strategies or diversification strategies.
Concentration strategies are applied when the company intends to focus on its core business and growth while remaining in the same space.
Diversification strategies are more comprehensive strategies usually applied when an organisation aspires to grow based on changes in products/services offered, introduce new products/services, or move into an entirely new sector.
Stability strategies focus on improving the output of an existing business- profitability-driven process or maintaining the existing performance of a company if the current system is already yielding the desired results- status-quo strategy.
The main objectives of this strategy are to change the negative trajectory and improve the company’s position either through strategic changes – Turnaround strategy or eliminating parts that hinder its growth – Divestiture strategy.
Reinvention strategies redesign existing businesses that have existed for a time, often with technology. An evolutionary and reinvention strategy changes how a service is delivered. In comparison, a revolutionary design, on the other hand, leads to a significant shift in the market dynamics.
Corporate Strategy planning
Corporate strategy planning is a corporate-wide approach at the corporate level and business unit for developing strategic plans to achieve the long-term vision. The procedure entails identifying the organisation’s overall strategic objectives and intentions and cascading them down to every level.
The corporate strategy provides a company with the necessary tools to succeed in the competitive market. The type of corporate strategy implemented depends on the company’s goal. A well-structured corporate plan will provide significant insights into the organisation’s operations and yield great benefits.