Question

What is a corporate-level strategy and why is it important? 400 words

Answer 1

CORPORATE – LEVEL STRATEGY

A typical large organization is a multi-divisional organization that competes in several different businesses. It has separate self-contained divisions to manage each of these. There are three main levels of management; corporate, business and functional. Corporate level strategy occupies the highest level of strategic decision making and covers actions dealing with the objectives of firm, acquisition and allocation of resources and coordination of strategies of various SBU’s for optimal performance.

A corporate-level strategy affects a company's finances, management, human resources, and where the products are sold. The purpose of a corporate-level strategy is to maximize its profitability and maintain its financial success in the future. A corporate-level strategy is utilized to help increase competitive advantage over its competitors and to continue to offer a unique product or service to consumers.

There are various corporate strategic alternatives such as stability strategy, expansion strategy, combination strategy and turnaround strategy

• STABILITY STRATEGY –one of the important goals of a business Enterprises stability to safeguard is existing interest and strength, to pursue well established and tested objectives , to continue the chosen business path , to maintain operational efficiency on a sustained basis , to consolidate the commanding position already reached and to optimize returns on the resources committed in the business. Stability strategy is pursued by a firm when it continues to serve in the same or similar markets and deals in same or similar products and services.
• EXPANSION STRATEGY-growth / expansion strategy is implemented by redefining the business by enlarging the scope of business and substantially increasing investments in the business. It is often characterized by significant reformulation of goals and directions, major initiatives and moves involving investments, exploration and on slot into new products, new technology and new markets, innovative design and action programmes and so on. Expansion also includes diversifying, acquiring and merging business.
• COMBINATION STRATEGY –the strategies can never be fully mutually exclusive. It is possible to adopt a mix of the above to suit particular situations. An enterprise will seek stability in some areas of activity, expansion in some and retrenchment in the others .retrenchment of ailing products followed by stability and caped by expansion in some situations maybe thought of.
• TURNAROUND STRATEGY- this strategy involves retrenchment/ divestment of some of the activities in a given business of the firm or sells out of some of the businesses as such .Divestment is to be viewed as an integral part of corporate strategy without any stigma attached.