Corporate Strategies

  • Corporate strategies determine the overall path that an enterprise intends to follow to achieve its goals and objectives. The purpose of these long-term strategies is to guide the actions of the business towards sustainable growth and to enhance competitive advantage.

  • Four primary types of corporate strategy can be identified: growth strategy, stability strategy, retrenchment strategy, and combination strategy. Each approach has unique objectives and methods for their realisation.

  • A growth strategy aims to increase a company’s market share, sales, or range of products. This could be achieved through market penetration (selling more to existing customers), market development (seeking new markets for current products), product development (creating new products for existing markets), or diversification (launching new products in new markets).

  • Stability strategies seek to maintain the status quo, particularly when a firm is satisfied with its current success or when the market environment is uncertain or adverse. This conservative approach focuses on improving existing operations rather than exploring new yet risky opportunities.

  • Retrenchment strategies opt for reducing the size or diversity of an organisation’s operations. This is usually a response to severe financial and competitive challenges. It could take the form of turnaround strategies (to reverse poor performance quickly), divestment (selling off business units), or liquidation (selling off the company’s assets when the business is no longer viable).

  • Combination strategies use a mix of growth, stability, and retrenchment strategies, across different parts of a business simultaneously.

  • The formulation of corporate strategy involves assessing the business’s environment, resources, and competencies, including PESTEL and SWOT analysis, and deciding on its scope.

  • The implementation of strategy requires effective leadership, organisational structure, and control systems.

  • Monitoring and evaluation of the corporate strategy’s performance ensures it supports the business’s vision, mission, and objectives. Where necessary, strategies should be revised in response to internal or external changes.

Remember, when discussing corporate strategy, you may be required to analyse related issues such as globalisation, ethics, and corporate social responsibility. You should also be prepared to assess the advantages and disadvantages of different strategies, as well as relevant real-world examples.