What Should A Corporate Strategy Include and Cover?: Organization Goals Strategic Management

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Corporate strategy is hierarchically the highest strategic plan of the organization, which defines the corporate

overall goals and directions and the way in which will be achieved within strategic management activities.
It is a long-term, clearly defined vision of the direction of a company or organization. It helps determine the
overall value of the organization, sets strategic goals and motivates workers to achieve them. It sets out a basic
plan for what is to be achieved and when. This is done by using strategic goals and basic milestones. However,
corporate strategy is also a continuous process that must be able to respond appropriately to changing
conditions and surroundings - the market situation.
Corporate strategy must include and influence all aspects of the organization and its entire product portfolio.

What should a corporate strategy include and cover?


Clearly named vision and mission should be part of the strategy. Numerous analytical techniques are used to
develop the strategy (see PESTLE, SWOT, VRIO). When implementing the strategy, for example the BSC is
used in for the implementation.
Corporate strategy influences how a company creates value. This means that it must cover both the product
portfolio and the assumptions - resources and organizational aspects.
 The product portfoliois the basis for the whole company and therefore the strategy. The company
needs to be clear about what it wants to deliver, who it wants to deliver, what are the key competitive
advantages, pricing strategies and many other things. They are either part of a corporate strategy or are
elaborated in detail in separate but subordinate strategic documents such as business
strategies, marketing strategy and the like.
 Company resources are necessary to deliver products and to propel processes. The corporate strategy
must include at least a basic assessment of existing resources (eg using VRIO) and a plan of how new
resources will be acquired so that the strategic goals can be achieved. Again, this description is either
part of the corporate strategy as such or it is elaborated in detail in partial strategic
documents (human resources strategy, financial strategy, IT strategy, etc.). Resources are a key
limitation of the operation of companies. Most often lacking human resources. Sometimes companies
face a lack of financial resources, sometimes they do not have sufficient technology, sometimes they
miss a building permit to build a production hall. The most limiting resource is people - the lack of
suitably qualified workers is the most common reason for not achieving the company’s business goals.
 The organizational model then tells how to set up processes, organizational structure and overall
operating principles to achieve strategic goals. It is necessary to set rules of operation, the policies,
guidelines, organizational structure, management system and powers and responsibilities of people so
that they effectively support to achieve strategic goals. In this respect, there is no optimal model - it is
always necessary to use a management system, set processes and organization appropriately to the
resources, culture and overall situation in the organization and the market. What works great in one
company can cause problems for another company.
Thus, corporate strategy must not only define the product and business direction (business, market and financial
goals) but also what a firm has to do to achieve these goals. What resources must invest to and how to organize
them. What people’s skill profiles need, which competencies must be developed and how they must be used to
develop the business.

Corporate level strategies generally pertain to large corporations with multi-


businesses as to how they manage and allocate resources among these
businesses. Such a strategy helps the management in balancing resources with
market opportunities in each business area. Top managers are responsible for
formulating corporate level strategy, and they generally look ahead for five
years or longer.

At the corporate level, top managers have two types of decisions to make when
formulating a strategy. First, they must develop a master plan also known as
“grand strategy” which is consistent with the overall direction for the
organization. Second, they must develop a “portfolio strategy” that will
determine the types of organization activities and allocation of resources to
these activities.

Grand Strategy:
A “grand strategy” is a comprehensive general strategy which provides the
basis for strategic direction that will accomplish the organization’s long- term
goals. Grand strategies include three types of strategies, namely growth,
stability and retrenchment.

While in stability strategy, management maintains the status quo if the


company is doing well and does not want to take risks associated with more
aggressive growth, both the growth strategy and retrenchment strategy have a
number of different ways to achieve the results.

Growth Strategies:
Growth means expansion of the operations of the company and addition of
new areas of operation. This would mean more sales, more revenues, more
employees and more of the market share.

This expansion can be achieved by introducing the existing product into new
markets or by differentiating the product or service and increasing the
consumer base in the existing market or new products can be developed to
diversify a company’s product line.

Growth strategies can be very risky and involve forecasting and analysis of
many factors that affect expansion such as availability of resources and
markets. Growth is not only necessary but also desirable since growth is an
indication of effective management and it attracts quality amployees as a
result. However, growth must be properly planned and controlled, otherwise
organizations can fail. This is evident from failure of Laker Airways and W.T.
Grant Company. Both these companies tried to expand without building the
necessary infra-structure and resources to handle such an expansion.

Answer:
The three main types of corporate strategies are growth, stability, and renewal.
a. Growth - A growth strategy is when an organization expands the number of markets served or
products offered, either through its current business(es) or through new business(es). Because of its
growth strategy, an organization may increase revenues, number of employees, or market share.
Organizations grow by using concentration, vertical integration, horizontal integration, or diversification.

b. Stability - A stability strategy is a corporate strategy in which an organization continues to do what it


is currently doing. Examples of this strategy include continuing to serve the same clients by offering the
same product or service, maintaining market share, and sustaining the organization's current business
operations. The organization does not grow, but does not fall behind, either.

c. Renewal - When an organization is in trouble, something needs to be done. Managers need to


develop strategies, called renewal strategies, that address declining performance. The two main types of
renewal strategies are retrenchment and turnaround strategies.

In evolving an effective system of communication, the management


should consider the following essentials for effective
communication:
(1) Clarity of Information:
Commenting on the ‘communication realism’ Terry says that first essential of
effective communication is to ‘inform yourself fully’. It implies that first of all
the communicator must be clear in his mind with the information he wants to
communicate. Communication should always be in common and easily
understandable language so that it may not be misunderstood by the persons
receiving it.

(2) Adequacy of Message:


The message to be communicated should be adequate and complete in all
respects since incomplete information turns out to be dangerous from the
viewpoint of business. The adequacy of information being transmitted
depends upon the intellectual capabilities of parties concerned.

(3) Consistency of Message:


The message to be communicated should not be mutually conflicting rather it
should be in line with the overall objectives, policies, programmes and
procedures of the organisation. Self-contradictory messages always create
chaos and confusion in the organisation which is highly detrimental to the
efficient running of the enterprise. If the message is amended from the
previous one, the fact should be clearly stated so that the chances of confusion
can be reduced.
(4) Feedback:
Feedback is an important method of ensuring effective communication. It
refers to the confirmation of the idea communicated whether the message has
been understood by the receiver in the same sense in which the sender makes
or whether the recipient is agreed or disagreed to the proposal of the
communicator, makes it essential on the part of the sender to confirm it from
the receiver.

In case of face to face communication, it is easier to get feedback information


observing the emotions and expressions on the face of the receiver. But, for
written communication, the management should devise or evolve suitable
means and ways for making communication more effective.

(5) Understanding the Receiver:


Understanding is the main aim of communication. The communication must
create proper understanding in the mind of the receiver. Killian advised,
“communicate with an awareness of the total physical and human setting in
which the information will be received.

Picture the place of work; determine the receptivity and understanding levels
of the receivers; be aware of social climate and customs, question the
information’s timeliness. Ask what, when and in which manner you would like
to be communicated with if you were in a similar environment and position.”

(6) Consultation:
It is generally desirable to consult others in planning communication. This will
provide additional insight and objectivity to the message. An important
advantage of consultation will be that those who have been taken into
confidence while planning communication will lend active support.

(7) Determine Medium:


After having decided the subject matter it should be determined as to how best
this message is to be communicated. All aspects of oral or written
communication must be carefully examined.
(8) Tone and Content:
The communicator must be careful about the language he uses while speaking
or writing. His tone, expression and emotion will have a definite impact on the
effectiveness or otherwise of what he is trying to communicate.

(9) Timing and Timeliness:


Proper attention should be given to the timing and timeliness of the
communication. The same message will be received or responded differently
by different individuals and groups at one time and differently by the same
individuals and groups at different times.

Even in an emergency one dare not overlook the situational, psychological and
technical aspect of timing. Moreover, it is also necessary that information
should be given in time as out-of-date information is as bad as or worse than
none at all.

(10) Support with Action:


It is highly necessary that the actions of the communicator should support his
communication. This is because action speaks louder than words. The most
persuasive communication, it should be noted, is not what one says but what
one does.

(11) Listening:
A very important aspect of effective communication is that executives and
supervisors should be good listeners. It is dangerous to be inattentive or
indifferent when others are attempting to communicate. The ten
commandments of American Management Association state: “Listening is one
of the most important, most difficult and most neglected Skills M
communications.

It demands that we concentrate not only on the explicit meanings another


person is expressing, but on the implicit meanings, unspoken words, and
undertones that may be far more significant. Thus, we must learn to listen
with the inner ear if we are to know the inner man. ”
(12) Environment of Trust and Confidence:
F.E. Fischer has pointed out that ‘communication grows best in a climate of
trust and confidence’. Every effort should, therefore, be made to win
confidence by reporting facts honestly. Employees need to be convinced and
feel that the company is truthful and sincere in its contacts.

Paul Arnold, President of Arnold Bakeries: “If your employee’s relation


programme is a sound one, if your intent is true, if your people believe in that
intent, and in that truth, then and only then you are successfully
communicating.”

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