Corporate Level Strategy
Corporate Level Strategy

Corporate Level Strategy

Within any business, it is important to have a strategy in place which encourages growth and stability.

In the case of large companies, this would be known as a corporate level strategy.

What Is a Corporate Level Strategy?

At its core, a corporate level strategy is a set of plans and a series of ways for measuring success and revising practices.

It is a broad, long-term plan which is targeted at achieving goals for an organization as a whole.

Because of this, they are often complex and made up of a variety of sub-strategies that are geared at dealing with a variety of eventualities.

Due to the long-term nature of a corporate level strategy, it should be far-reaching. This enables all employees within a business to know what it is that they need to do and how their actions will impact the company.

The importance of this is that it means that all of the employees are able to work together to achieve a goal.

Corporate level strategies are always created by the most senior levels of staff within a business.

This is often the CEO, owner or board members, which means that they are most commonly found within larger businesses.

However, a plan should be made with input from all areas of a company to achieve a well-rounded view of the possibilities and potential results.

What Are the Key Themes for Corporate Level Strategy?

There are various characteristics or themes which can be found within a corporate level strategy.

Not every strategy will feature all of the characteristics.

Diversification/Concentration

This allows businesses to understand when they need to change the market that they primarily operate in.

Diversifying offers the opportunity to build relationships within a variety of markets.

This can enable companies to broaden their ranges of products, target new audiences or adapt more easily to changes.

Consolidation/Growth

This approach is aimed at gaining more of a percentage share of markets.

It is considered to be a high-reward strategy because there is a high level of demand from other businesses working within the same market.

Profit

This is focused on increasing the amount of profit that a company makes.

Although it takes into account the fact that expenses are also likely to increase, the idea is to ensure that the profits continue to outweigh any expenses or losses.

This can involve a variety of tactics such as: increasing prices, gaining new customers or selling stocks.

Forward/Backward Integration

This is the process of taking over a larger part of the supply chain.

There are many reasons why this would be a positive thing for businesses to do.

However, primarily, it is because it enables businesses to have more control over their supply chain and distribution processes.

Stability

As the name would suggest, this is the process of trying to make sure that elements within a business stay the same. This could refer to a variety of things such as value, customer numbers, profits or even staffing levels.

Although the goal is to ensure stability, this doesn't mean that no action will be taken.

For example, in the case of staffing levels, it could be that strategies need to be put into place to create a better working environment and raise morale.

Benefits of Corporate Strategy

Direction

Having a strategy in place offers a direction. This means that everybody involved knows what they are working for and what it is that they need to do.

It also offers a long-term vision that helps to inspire a workforce.

Motivation

When employees know what it is that they are working for, they are motivated to work harder to achieve it.

Useful for Managing Resources

Part of the process to create a strategy involves understanding and evaluating data. This enables managers and business owners to understand the resources available to them.

It also offers the ability to understand how to manage these resources effectively.

Clearly Defines Success

A corporate level strategy has clearly defined parameters and goals. There is a vision and a long-term ambition that is being worked towards.

All of this means that the strategies involved give a clear definition of what success will look like.

Advantage Over the Competition

Having strategies in place means that companies are prepared for any changes within the markets that they are operating.

This can offer them an advantage over competitors as they are able to adapt and implement changes to their strategies quickly when required.

Often, this will enable them to react more quickly than their competitors for a situation to work to their advantage.

Business Optimization

Strategies are put in place to make sure that a business is using its resources to the best of its ability to achieve targets and goals.

This is no different for corporate level strategies.

These plans can optimize all areas of a business by ensuring that staff and resources are used in the right way, at the right time, by the right people.

When creating a strategy, part of the process is to plan for all possible eventualities. This means that changes can be implemented quickly and easily when required.

The ability to do this allows risks to be minimized.

Corporate Level Strategy: Definition, Benefits and Examples
Corporate Level Strategy: Definition, Benefits and Examples

Sustainability

Corporate level strategies are made up of multiple components which offer a plan for every step of a company's growth and progress.

This means that the plans are designed to offer sustainable solutions which are able to be maintained in the long term.

Types of Corporate Strategy (With Examples)

There are many different corporate level strategies that can be created and implemented.

The type of strategy which is used will depend on the needs of a company, the goal they want to achieve and their long-term ambitions.

Growth Strategy

Growth strategies are developed when a company wants to grow within its sector, market or supply chain.

Often, growth strategies are described as being either horizontal or vertical.

Vertical Growth

Used to describe a growth with a supply chain.

This can mean expanding into areas above and below a company's position within the supply chain to have more influence and control over resources and distribution.

For example:

A company that chooses to either produce their own packaging or take over a packaging company is operating a vertical growth strategy. This enables them to have greater control over their packaging options and may potentially reduce their costs as they will be producing the packaging for themselves.

Horizontal Growth

Used to describe growth within a market. This can mean merging with another business that operates in a similar way to have a larger share of the overall market and customer base.

For example:

If a business that sells mobile phone cases takes over a similar business in a different town, this would be classed as a horizontal growth strategy. This is because they are expanding their potential reach and customer base without needing to diversify their product range.

Another example would be if the same mobile phone case business decided to create a website and sell their products online.

Diversification Strategy

This form of strategy refers to when a company chooses to add new products or services to their brand which are similar to those already provided.

A significant part of the success of this strategy will be the way that it is marketed to make customers aware of the new options that are available.

For example:

A burger company could choose to diversify by adding a vegan option to their menu. The new addition would also involve a marketing campaign and advertising to notify people of the change.

This will offer them the opportunity to reach a new range of customers who wouldn't have necessarily been interested in their products before.

Stability Strategy

Rather than choosing to expand, some companies will choose to stay stable.

This could be because they aren't in a position to grow or because they want to maintain their share of the market while retaining customers and cutting costs.

For example:

An optician might have a steady number of patients and might not be in a position to take on new clients. But, they will need to ensure that their current patients are satisfied to maintain their current levels.

They might consider introducing discounts for existing patients to gain higher rates of satisfaction and retention.

Retrenchment Strategy

This is the process of cutting costs to improve revenue and operations. There are many ways that this can be achieved, including:

  • Selling assets – This can provide a fast injection of funds to a company.
  • Abandoning markets – Leaving markets that are unproductive reduced costs and streamlines a company.
  • Redundancies – Companies avoid redundancies where possible, but they can be useful when trying to reduce unnecessary costs.
  • Downsizing – If a company is using premises, which are too large for them, then they can benefit from downsizing. This will often reduce costs such as rent and utilities.
  • Outsourcing – Asking an external partner to help in areas of production can help to reduce costs.

For example:

If a company is running sites in several locations, they may choose to close sites when one becomes less productive. This enables them to focus resources in more productive areas and reduces costs in locations that aren't likely to bring revenue.

Combination Strategy

As the name suggests, this is a combination of a variety of strategies.

Often, this will be to grow in one area of a business while minimising losses in another. These strategies are applied simultaneously.

For example:

If an international investment firm may decide to apply a combination of strategies to grow in one area while reducing costs in another. This could mean that when a market in one area decreases, they close an office in order.

Simultaneously, they may find that investments in another part of the world are growing, which could result in an office being opened to allow for an increased number of customers.

Final Thoughts

Corporate strategies are a necessary process in the modern business world. Without them, the chances of growth, stability and success are significantly reduced.

Choosing the right strategy is vital for ensuring that growth can be consistent and sustained.

A well chosen corporate level strategy offers employees, managers and business owners a vision that motivates and inspires them.


Read This Next

You might also be interested in these other Wikijob articles:

Or explore the Jobs & Careers / Leadership sections.