Essential Elements of Corporate Strategy
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The major focus of corporate strategy is to present a method by which any business can adapt to a changing environment. The focus of corporate strategy is to enable a business to improve it's competitive advantage.

Corporate strategy theory presents us with the following questions:




Let us now expand our corporate thinking.

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Corporate self analysis is about answering the first question, where are we now?.

The logic is to examine the current status of the business. Areas to look at within corporate self analysis include:

  • Is the business aware of who it's stakeholders are?

  • Does your business have a mission statement?

  • What are the long term objectives of your business?

  • What are your current business strategies? - Are they simple to understand and communicate to the workforce?, or Are they difficult to understand and communicate? 

  • What is the state of the marketplace? - Is it in growth/decline?, Who are your biggest competitors? Apply the PEST/SWOT models described in the marketing section of this web-site.

  • Review your business internally, look at your business - Does it support growth and adaptability to change?, How effective are your production processes?, How well do Sales/Personnel/Marketing/Finance perform?

  • How well does the business control its internal resources?  

Use the corporate self-analysis model we provide to develop your thinking.

From the corporate self analysis we can then look at where the business would like to see itself positioned and develop a strategy to help it reach that position.

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When devising any business strategy, you need to consider:

  • The reasoning behind the strategy, what are your objectives? - Achieve x amount of growth/cost reduction?

  • What are all your options? -Does it have to be done in a certain manner? 

  • Examine all options, what strategy is going to the most feasible in terms of acceptance?

The best model of corporate analysis in relation to strategy formulation has been developed by Johnson and Scholes during the 1980's. The logic of the model is shown below:


The basic premise of this model is that strategic analysis/choice/implementation all effect each other. These three main elements need their internal facets to be observed in any business strategy.

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When evaluating the different strategic directions a business can take there are several routes a business can explore:

  • DO NOTHING - In this scenario, the business does little in terms of reacting to changes in the marketplace.

  • DEVELOPMENT - Spend vast amounts of money on research, developing new product ranges.

  • INTEGRATION - Integrate in a backward manner by going back and buying up your business suppliers to achieve growth by getting lower priced raw materials. Integrate in a forward manner by buying your product distributors, sell your products direct to the consumers, thereby generating increased profits. Integrate in a horizontal manner, by buying your competitors to gain increased market shares.

  • STRATEGIC ALLIANCES- Join forces with one of your competitors to develop a stronger position in your marketplace.

  • NEW MARKETS - The business decides to embark on positioning itself into new markets.

The overriding logic of formulating strategy is that any strategy must be in line with the business objectives, ensuring stakeholder needs are maintained and that needs of the surrounding environment are adhered to.

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After developing several potential strategies, the next step in the process is to look at the different strategies to see which one will be the most suitable:

  • What is the cost of each potential strategy likely to be?

  • Does the business have the correct current machining capabilities (if applicable) to achieve the strategy?

  • Does the business need any additional manpower for the strategy?

  • How will the business fund the strategy?

  • How is the business marketing plan affected by the strategy? (if applicable - new product?)

In terms of evaluating any potential strategy, two key elements need to be observed, the first is the financial viability of the strategy, how soon will the costs be recouped?, and will the benefits to the business be long-term?. The second element must be the effect of a strategy on the current facilities and resources, does the business require additional employees to both implement the strategy and maintain it?

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There is no clear cut advice that can be given on how to implement a strategy. The only advice we can give is to keep it simple, clear, precise. But above all make sure everyone understands what is expected of them.

Studies of how to implement a strategy by Nutt showed that the success rate for strategies was greater when the strategic managers spent more time looking at how implementation issues, as opposed to merely forcing a strategy, questions raised by Nutt on implementing a strategy include:

  • Does implementation exceed the managers authority to act?

  • Does a technically sound plan exist?

  • Can the manager shape the plan so it falls under his/her control?

  • Does the plan deal with a recurring problem?

  • Can plan acceptance be negotiated with the affected parties?

  • Should consultants be used?

  • Do time constraints exist?

When looking at the implementing strategy it is advisable that you keep the aim and text of the strategy as simple as possible.

From the outline of the strategy, the next step is to define the processes and tasks which are needed to implement the strategy. From identifying the tasks for implementation the next phase will be identify who will be responsible to carry out the implementation stages, and finally to ensure the review of the strategy:

  1. Break the aim of the strategy into clear implementation tasks

  2. Decide who will be responsible for implementing the strategy.

  3. Ensure regular reviews and adjustments to the targets set within the strategy as and when necessary.

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If a business is to remain competitive in an ever changing environment, then strategic reviews need to take place from the management of the business to assess the business in relation to it's environment, accordingly adjusting the strategic focus of the business.

When developing a strategy for your business, never overlook what the core competencies of your business are, as it is these fundamental areas which have made your business successful and it is these areas which need to harnessed in future strategy

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(c)  Est 08/00 - Last Updated 28/05//2001