Corporate Level Strategy

Corporate Level Strategy Guides the Organization as a Whole. Corporate level strategy covers the strategic scope of the organization as a whole. For most organizations the corporate strategic plan is the only strategic plan required. Often strategy at the corporate level is simply referred to as corporate strategy, or in unified companies the corporate business strategy.  The process that produces it is called corporate strategic planning, or sometimes simply corporate planning.  In a few situations however, it may be justified to speak of corporate level strategy to distinguish it from other kinds of planning.

In the first case the organisation may be multidivisional in nature to the extent that in principle or even in law, separate parts of the enterprise could operate as viable entities in their own right.

These ‘group structures’ may undertake strategic planning as group exercise where under the corporate level strategy, each separate subsidiary or division has its own strategic planning process and strategic plan. In these cases however, one of the most significant inputs to each divisions’ strategic planning is the output of the corporate strategic planning. These outputs from corporate level strategy; usually in the form of performance targets for the divisions cannot be ignored by the subsidiary unit.

The corporate business strategy may also set down a small number of other factors that the divisions, or strategic business units as they may sometimes be called. These might include guidance on market definition, including geographic scope. For example the subsidiaries of a multinational bank may be defined by the country they operate in. In this case the corporate business strategy would set profit targets for each country bank. The corporate strategy would yield to the country banks as to the strategies they pursue in generating these profits. The country level banks would have their own business unit level strategies.

In the second case corporate level strategy is used to distinguish it from the many other plans and planning processes that get the term ‘strategic’ in their names. The word strategy has acquired a kind of aura that seems to make many people want to use it, regardless of how actually strategic the matter at hand is in relation to the overall performance of an organisation. So we can end up with strategic plans for every level, part and functional process in the organization.

Strategic planning is a systematic, formally documented process for deciding the handful of key decisions that an organisation, viewed as a corporate whole, must get right in order to thrive over the next few years.

Decisions in corporate level strategy

Remember that at the beginning we said that corporate-level strategies address the entire strategic scope of the enterprise. This is the "big picture" view of the organization and may include deciding in which product or service markets to compete and the geographic boundaries of the organizations’ operations.

For multi-divisional organizations or enterprises, how capital, staffing, and other resources are allocated is usually established at the corporate level. Additionally, because market definition is usually the domain of corporate-level strategy, the responsibility for diversification, or the addition of new products or services to the existing offerings, also mostly comes within the responsibility of corporate-level strategy. Also, whether to compete head on with other companies or to selectively establish cooperative partnering arrangements, or ‘strategic alliances’ is a decision for corporate-level strategy, while requiring ongoing input from business unit or divisional level managers.

Corporate level strategic questions

So crucial questions addressed by corporate-level strategy, among other possibilities may include:

What should be the scope of operations; i.e.; what businesses should the firm be in? And where should it be in business?

How should the organization allocate its resources its various existing lines of business or business units?

What level of diversity should exist in the business as it moves into the future? Are there other activities the enterprise should be in or are there current activities that should be targeted for stopped or sold off to others?

What should be the nature of this diversity or how diversified should the organization be? Should it diversify in similar product or service markets, or into completely different areas; becoming a more conglomerate entity.

How should the firm be organized? What will be the boundaries of the enterprise? How will these boundaries impact relationships among parts of the business, with suppliers, customers and other interest groups? How will the organizational functions such as product development, production, distribution finance, marketing, sales customer service, etc. fit together? Are the responsibilities for each business unit clearly identified and is accountability established? Which will be carried out in-house, and which will be contracted out?

Should the firm enter into cooperative, mutually-beneficial relationships or alliances with others? If so, on what basis? If not, what impact might this have on future organizational performance?

As these questions show, corporate strategies address the long-term direction for the organization as a whole. Corporate strategies deal with plans for the entire organization and change as the capabilities of the organization develop and as the environment of the organization changes.