Managing Corporate Strategy

Abstract

It is commonplace to distinguish three distinct levels of strategy and strategy making. While the precise terms may change, the focus is usually on identifying strategy at the corporate, business and operating levels. The focus of strategy at the business level will usually be on how a strategic business unit (SBU) can compete in a particular industry or marketplace with particular products, marketing and advertising strategies and so on. At the operational level the focus is on how the various parts or functions in an SBU contribute to business strategy. So far we have discussed business and operational strategy; this chapter is concerned with corporate strategy. Corporate strategy is a matter of deciding which businesses the corporation as a whole should be in and determining the overall scope and mission of the entire organisation. It is primarily about: Deciding which businesses and industries are attractive. Making decisions about the opportunity costs and benefits of allocating resources across and between SBUs. Making decisions as to how excess cash flows from trading will be appropriated as dividends or for reinvestment funds. How the corporation is to be structured and controlled. How the overall activities are to be financed. How growth is to be achieved, and what kind of growth is sought. Corporate strategy is not a closed system. Decisions taken at the corporate level often have implications for managers throughout the corporation. Strategy should not become compartmentalised as many researchers (for example Miles and Snow, 1984) have concluded that one of the prerequisites for superior performance is likely to be ‘fit’ or ‘coherence’ throughout the corporation. Stakeholder strategy is another important influence, particularly in the case of corporate strategy where key stakeholders (most notably owners and senior corporate managers) can play a crucial role. Finally, much discussion has centred recently on strategy at the national level (for example Porter, 1990) which can be a key influence on a corporation’s international activities.