What is Corporate Strategy?
Corporate Strategy centers on finding the value (aka WHERE to look for value – choosing the businesses to compete in based on company’s vision).
Most corporations have a portfolio of businesses, capabilities and relationships spread across different industries and markets where they chose to operate. The corporate level strategy decides across all of these company’s portfolios in order to create value for its stakeholders and answers these key questions:
- What products? What markets? What capabilities? What stream of expertise?
There are two different type of strategies: deliberate and emergent. The way I look at it is that either the strategy is well defined top-down (deliberate), or is defined incrementally through trial and error. I personally think that an emergent strategy can be employed at a lower level of the business where the risk is less. However, at the corporate level “If you don’t know where you are going, how will you know when you have arrived?” and how can you empower people to follow?!
Setting up a corporate strategy
I personally like to set a strategy, that will meet the company’s mission, that can be adaptable based on factors that are carefully analyzed. Hence, to set a strategy one needs to analyze/understand the lay of the land in order to employ specific strategic techniques.
Analysis/ Lay of the Land
While there are many tools to gather information, I prefer to talk about the most common ones. I usually assess the current portfolio of the company (using the framework BCG-matrix) then based on opportunities I see I will do a SWOT analysis assessing the external and internal environment.
BCG-Matrix Analysis
BCG (Boston Growth-Share) matrix is a framework to evaluate the strategic position of the business brand portfolio and its potential. The general purpose of the analysis is to help understand, which brands the firm should invest in and which ones should be divested.
SWOT Analysis
It’s bringing together the Strengths, Weaknesses, Opportunities, Threats based on other analysis:
PESTEL
This analysis will informed the Opportunities and Threats.
Porter 5 Forces
This analysis will informed the Strengths and Weaknesses.
Industry Life Cycle Stages Analysis
This analysis will inform the Opportunities and Threats in the industry.
SWOT/TOWS
Finally all of them will put together a TOWS analysis that will help coming up with the best strategic techniques.
Strategic Techniques
In order to define the strategic direction based on the SWOT, one technique that I like to use is choosing the options from Ansoff Matrix.
An example of when you might think to apply these strategy it could be based on industry lifecycle, obviously based on the SWOT.
Please note that when the corporation has only one product (not a portfolio of products) the corporate strategy coincides with the product strategy.