Corporate Strategy is the development of alternative courses of action that specify the means by which the corporate mission and objectives are to be accomplished.
Corporate strategy specifies the firm’s overall strategic direction in terms of its general orientation toward Growth, Stabilsation and Turnaround/Retrenchment and the management of its various businesses and product lines to make a balanced portfolio of products and services.
It is the pattern of decisions about the type of business and industries in which the firm should be involved, the flow of financial and the resources to and from its divisions, the relationship of the corporation to key groups in its environment, and the approach a corporation takes to meet its mission and objectives.
Even the smallest company operating in only one industry with one product line must at one time or another, consider the questions embedded within corporate strategy:
Corporate strategy is composed of three general orientations (sometimes called grand strategies): retrenchment, stability and growth.
Should we expand, cut back, or continue our operations unchanged.
- Retrenchment Strategy (Cut back)
- Stabilise (stay as we are )
- Growth (If we want to grow and expand should we do so through internal development or through external acquisition, mergers or joint venture?)
Executive Managers must decide the overall strategic direction of the firm through its corporate strategy.
A popular way of doing this is to combine the industry attractiveness with the company’s business strength/competitive place within its primary or core business into a 9 cell matrix .
The matrix depicted below may be used to plot some of the alternative corporate strategic directions that might fit the company’s situation. (This assumes a SWOT Analysis has been done) It is important that you use the complimentary Industry Attractiveness Spreadsheet.
Download a Free Industry Attractiveness Spreadsheet
WHAT STRATEGY SHOULD YOU ADOPT?
The Strategy Wizard.
The Wizard below has been designed around this concept and helps you find which you should be using. It will give you an idea if you should be cutting back – retrenchment strategy, adopting a stabilisation strategy or adopting a growth strategy.
Once clicked you will be asked to save. Please do so to desktop at this stage. Some Computers give a warning but I assure you that the Wizard is safe and virus free.
Please don’t be too shocked when those of you who think you are doing great, get your answer.
The Premise of the Strategy wizard is that Corporate Strategy is composed of three generic strategies: Retrenchment, Stabilisation or Growth. (Strategic Management and Business Policy: Wheelen and Hunger. 1992.) See above for links to each type.