7 Types of Corporate Level Strategy for Business Growth
Are you looking for ways to grow your business and achieve your goals? If so, you need a corporate level strategy that guides your overall direction and objectives. A corporate level strategy is the top-level plan that covers all of your business operations and determines how you create value for your stakeholders.
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There are different types of corporate level strategy, depending on your growth objectives, competitive advantage, and portfolio management. In this article, we will explain what a corporate level strategy is, why it is important, and how to choose the best one for your business. We will also provide some examples of successful corporate level strategies from well-known companies.
What is a corporate level strategy?
A corporate level strategy is the highest level of strategy in a business. It defines the purpose, vision, mission, and long-term goals of the organization. It also determines how the organization will allocate resources, manage its portfolio of businesses, and compete in the market.
A corporate level strategy covers all of the diverse operations of a business, from product development to marketing to finance. It affects all the other levels of strategy, such as business level strategy (which focuses on how to gain a competitive advantage in a specific market) and functional level strategy (which focuses on how to execute the daily operations of each department).
Why is a corporate level strategy important?
A corporate level strategy is important because it provides direction and guidance for the entire organization. It helps the organization to:
- Align its activities with its vision, mission, and values
- Identify and pursue growth opportunities
- Achieve a sustainable competitive advantage
- Optimize its portfolio of businesses
- Enhance its performance and profitability
- Create value for its stakeholders
How to choose a corporate level strategy?
Choosing a corporate level strategy depends on several factors, such as:
- The external environment: The opportunities and threats in the industry, market, and economy
- The internal environment: The strengths and weaknesses of the organization, its resources, capabilities, and culture
- The stakeholders’ expectations: The needs and preferences of the customers, employees, shareholders, and other parties
- The organizational objectives: The desired outcomes and targets of the organization
Based on these factors, you can choose one or more types of corporate level strategy that suit your situation and goals. Here are some common types of corporate level strategy:
1. Stability strategy:
This type of strategy involves maintaining the current position and performance of the organization. It is suitable for organizations that are satisfied with their growth rate, market share, and profitability. It is also suitable for organizations that operate in stable or mature markets with low competition or uncertainty. A stability strategy can help an organization to consolidate its strengths, improve its efficiency, and avoid unnecessary risks.
Example: Coca-Cola has adopted a stability strategy by focusing on its core products and markets. It has maintained its leadership position in the global soft drink industry by offering consistent quality, innovation, and customer satisfaction.
2. Expansion/growth strategy:
This type of strategy involves entering new markets or businesses to increase the organization’s growth and profitability. It is suitable for organizations that have high growth potential, strong resources, and competitive advantages. It is also suitable for organizations that operate in dynamic or emerging markets with high demand or opportunities. An expansion/growth strategy can help an organization to diversify its revenue streams, enhance its market presence, and gain economies of scale.
Example: Amazon has adopted an expansion/growth strategy by expanding its product line from books to various categories such as electronics, clothing, groceries, and more. It has also entered new business areas such as cloud computing services (Amazon Web Services), streaming services (Amazon Prime Video), and smart devices (Amazon Echo).
3. Retrenchment/turnaround strategy:
This type of strategy involves reducing the size or scope of the organization to cope with environmental challenges or decline. It is suitable for organizations that face significant problems such as low performance, high costs, or loss of market share. It is also suitable for organizations that operate in turbulent or declining markets with high competition or threats. A retrenchment/turnaround strategy can help an organization to realign its resources, improve its efficiency, and restore its profitability.
Example: Starbucks has adopted a retrenchment/turnaround strategy by closing down underperforming stores, cutting costs, and refocusing on its core products and customers. It has also improved its quality, service, and innovation to regain its competitive edge.
4. Combination strategy:
This type of strategy involves pursuing more than one type of strategy simultaneously to achieve multiple objectives. It is suitable for organizations that have diverse businesses or operations that require different approaches. It is also suitable for organizations that operate in complex or uncertain markets with multiple opportunities or challenges. A combination strategy can help an organization to balance its risks and rewards, leverage its synergies, and optimize its performance.
Example: Google has adopted a combination strategy by pursuing both stability and expansion/growth strategies. It has maintained its dominance in the search engine market by offering reliable and relevant results. It has also diversified into various sectors such as online advertising, social media, cloud computing, and self-driving cars by acquiring or developing innovative products and services.
5. Portfolio management strategy:
This type of strategy involves managing the organization’s portfolio of businesses effectively. It is suitable for organizations that have multiple business units or divisions that operate in different markets or industries. It is also suitable for organizations that want to optimize their resource allocation, strategic fit, and value creation. A portfolio management strategy can help an organization to decide which businesses to invest in, hold, harvest, or divest.
Example: Unilever has adopted a portfolio management strategy by using the Boston Consulting Group (BCG) matrix to classify its businesses into four categories: stars (high growth, high market share), cash cows (low growth, high market share), question marks (high growth, low market share), and dogs (low growth, low market share). It has invested in its stars and question marks, maintained its cash cows, and divested its dogs.
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6. Geographic strategy:
This type of strategy involves deciding on the organization’s geographic scope, from local to global. It is suitable for organizations that want to expand or consolidate their market reach, customer base, and brand awareness. It is also suitable for organizations that want to adapt to different cultural, legal, political, and economic environments. A geographic strategy can help an organization to decide which markets to enter, when, and on what scale.
Example: McDonald’s has adopted a geographic strategy by expanding its operations to more than 100 countries around the world. It has also adapted its menu, pricing, and marketing to suit the preferences and needs of different regions and cultures.
7. Competitive strategy:
This type of strategy involves developing a plan of action that enables the organization to gain a competitive advantage in its market. It is suitable for organizations that want to differentiate themselves from their rivals and attract more customers. It is also suitable for organizations that want to enhance their value proposition, customer loyalty, and profitability. A competitive strategy can help an organization to decide how to position itself in the market, such as cost leadership, differentiation, or focus.
Example: Apple has adopted a competitive strategy by offering premium products that are innovative, stylish, and user-friendly. It has also created a loyal customer base by providing excellent service, quality, and experience.
A corporate level strategy is the top-level plan that determines the direction and objectives of your business. It affects all the other levels of strategy and influences your performance and profitability. Choosing the right corporate level strategy depends on your external and internal environment, your stakeholders’ expectations, and your organizational objectives. There are different types of corporate level strategy that you can choose from, such as stability, expansion/growth, retrenchment/turnaround, combination, portfolio management, geographic, and competitive strategies.
Types of Corporate Level Strategy and Their Impact on Global Demand
Corporate level strategy is the top-level strategy made by the top management of the organization to determine the direction and objectives of the firm. There are different types of corporate level strategy, but the most commonly mentioned are four: stability, expansion, retrenchment, and combination. Each type of strategy has a different impact on the global demand for the products or services of the firm.
Stability strategy means maintaining the current position and performance of the firm. It is often adopted by firms that are satisfied with their market share, profitability, and growth rate. Stability strategy does not imply that the firm is stagnant or passive; rather, it means that the firm continues to improve its operations, products, and services within its existing markets and businesses. Stability strategy has a low impact on global demand, as it does not involve entering new markets or creating new products.
Expansion strategy means entering new markets or businesses to increase the firm’s growth and profitability. It can be achieved through internal development (new products, new markets), external methods (acquisitions, mergers, strategic alliances), or a combination of both. Expansion strategy has a high impact on global demand, as it allows the firm to reach new customers, regions, and segments, as well as to offer new or improved products or services.
Retrenchment strategy means reducing the size or scope of the firm to cope with environmental challenges or decline. It can involve selling off unprofitable or non-core businesses, cutting costs, downsizing, restructuring, or reorganizing. Retrenchment strategy has a negative impact on global demand, as it reduces the firm’s presence and offerings in the market.
Combination strategy means pursuing more than one type of strategy simultaneously to achieve multiple objectives. For example, a firm may combine expansion and retrenchment strategies by acquiring a new business in a growing market while divesting an old business in a declining market. Combination strategy has a mixed impact on global demand, depending on the balance and synergy between the different strategies.
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