The corporate or master strategy also refers to the Corporate Level Strategy. It describes the approach the business will follow to reach its long-term objectives. It is generally divided into four categories: stability, expansion, and retrenchment, as well as combination. Companies with multiple products at different stages of development may use any of these strategies. However, at the same time, any of these four crucial strategies can contribute to reaching the company’s long-term goals.
The overall strategy deals with the scope of the business and the direction it’s going. It deals with issues such as the primary goal of growth for the business and what strategies it should employ to reach those goals, the various branches of the industry within the business, and how these companies work together.
Revolutionary Scope of Corporate Level Strategy
The strategy’s grand scope is concerned with four goals:
- Making decisions about the businesses to pursue and the positions needed in each business. It could also lead to the decision to add or remove a particular line to broaden or narrow the range of diversification available to the business.
- The strategies could include various sub-strategies to suit those business segments. The business lines that show a healthy growth trend may have a growth strategy, while management can maintain stable ones.
- Strategies must also supply businesses with the necessary managerial, financial, and other tools for their accomplishment. Healthy companies that need to meet expectations, but can deliver the expected results, should consider turnaround strategies. Lastly, companies that cannot grow or don’t align with the company’s strategic plan should be eliminated.
- The strategy is comprehensive. It explores approaches to align various business areas and turn them into competitive advantages by utilizing and transferring technology—benefits in operations, procurement distributions, and customers.
- To prioritize investment into the most profitable lines of business.
Remarkable Importance of Corporate Level Strategy
A company’s strategy is essential if a firm is to reach its long-term goals and targets. Only then can it provide the highest quality services and products, meet its objectives and get the most out of the management team. Corporate strategies are essential due to the following reasons:
1. Focus
A well-designed corporate strategy allows the company to focus its resources on the same goal. The corporate strategy, therefore, helps to focus the organization. With an official corporate strategy, the business could save its resources.
2. Measurable Progress
This strategy allows the business to establish a benchmark or yardstick against which it can evaluate its progress or failure. Peter Drucker, the famous management expert, has said, “What is measured gets better.” This approach provides clarity to the company about the things that need to be measured.
3. Long-Term Success
The corporate strategy helps the company navigate highs and lows. It helps withstand recessions as well as market slowdowns. For instance, during the financial crisis of 2008, the world’s demand for petroleum chemicals plummeted. It harmed the performance of Reliance Industries as the demand from its customers decreased. However, due to the company’s strategy, Reliance Industries overcame problems that existed in the external world. As the world economy is recovering, the need for petrochemicals is rising again, which has boosted the bottom line for Reliance Industries.
4. Other Benefits
- Corporate strategy focuses on the distribution of limited resources.
- It communicates the company’s vision to employees and encourages them to do their best.
- The strategy empowers management to address unnoticed market risks.
- The efficiency of the management’s execution is evident in the effectiveness of the company’s strategy.
- Corporate strategy assists the management plan for an uncertain and unpredictable future.
- It helps prepare the company to deal with unexpected external crises.
- The system allows the manager to determine the best option for the situation.
- It serves as a measure to gauge the efficiency of the business.
Unforgettable Limitations of Corporate Level Strategy
Management can describe the flaws of corporate strategy as the following:
1. Complex Process
Making a strategy for a company is a difficult and time taking process.
2. Requires Huge Expenditure
Creating a corporate strategy takes lots of time, money, and effort. It can be beyond the budget of smaller firms. It will require the company to pay for costly consultants.
3. Uncertain Estimates
Forecasts of the future are never straightforward and accurate. A company’s corporate strategy is built upon inaccurate estimates about the near future. It is a significant disadvantage.
4. Difficulty in Achieving Desired Results
The success of corporate strategies is in their implementation. Execution is a result of the organizational, behavioral, and motivational aspects. It is, therefore, common to find an inconsistency between the concept that the method is formulated and the execution.
5. It is only helpful for Long-Term Problems
A grand strategy always takes a future-oriented view. They’re no help when the company’s issues are short-term in the way.
Types of Corporate Level Strategy
There are four kinds of grand strategies. These are:
- Stability Strategies
- Expansion Strategies
- Internationalisation Strategies
- Co-operative strategies