A corporate-level strategy refers to the overarching strategic plan that dictates the direction of the entire organization. It’s the highest level of strategy, covering all of the firm’s diverse operations, and is typically set by top management and the board of directors.
Key aspects of corporate-level strategy include:
- Growth strategy: Determining how the corporation plans to grow, whether through internal development (new products, new markets), external methods (acquisitions, mergers, strategic alliances), or a combination of both.
- Stability strategy: If a corporation is satisfied with its current growth and success rate, it may opt for a stability strategy, which involves maintaining the status quo.
- Retrenchment/turnaround strategy: When a corporation faces significant problems, it may adopt a retrenchment strategy to realign resources, reduce the size, or improve efficiency to improve financial performance.
- Portfolio management: At the corporate level, the organization must manage its portfolio of businesses effectively. This can involve deciding to invest in, hold, harvest (reduce investment), or divest certain business units.
- Geographic strategy: Corporations must also decide on their geographic scope, from local to global. This involves deciding which markets to enter, when, and on what scale.
- Competitive strategy: This involves the plan of action that a company develops to gain a competitive advantage in its market, such as cost leadership, differentiation, or a focus strategy.
In large corporations with several business units, a corporate strategy also involves deciding how much autonomy to give each business unit, how to allocate resources, and how they should interact with each other. This holistic strategy must align with the organization’s overall mission, vision, and long-term objectives.
Examples of Corporate-Level Strategy
Sure, here are a few examples of corporate-level strategies that well-known companies have implemented:
- Amazon’s Growth Strategy: Amazon began as an online bookstore but didn’t stop there. It expanded its product line to include electronics, clothing, and more, developing into a comprehensive online retail giant. It also expanded into new business areas like cloud computing services with Amazon Web Services (AWS), which has become a significant part of its business.
- Google’s Diversification Strategy: Google started as a search engine but, over time, diversified into various other sectors. For example, it acquired YouTube, created Android OS, launched Google Cloud, and ventured into self-driving cars with Waymo. These initiatives have helped Google stay competitive and innovative while spreading risk across various sectors.
- Coca-Cola’s Geographic Expansion Strategy: Coca-Cola’s corporate strategy involved expanding its geographic footprint from its original base in the US to almost every country in the world. This international expansion allowed Coca-Cola to become one of the most recognized brands globally and helped them diversify their markets, reducing dependence on any single region.
- Facebook’s Acquisition Strategy: Facebook’s corporate strategy involves acquiring and integrating potential competitors into its portfolio. Some notable examples include Instagram and WhatsApp. These acquisitions helped Facebook grow its user base, diversify its services, and maintain its competitive edge in the social networking industry.
- Microsoft’s Turnaround Strategy: In the mid-2010s, Microsoft underwent a strategic shift under CEO Satya Nadella. The company transitioned from a “devices and services” strategy to a “cloud-first, mobile-first” approach. This shift led to significant growth in cloud services like Azure and Office 365 and helped Microsoft regain its position as one of the leading tech companies.
- Unilever’s Sustainability Strategy: Unilever launched the Unilever Sustainable Living Plan in 2010 to reduce its environmental footprint and increase its positive social impact. This strategy, which involves every aspect of the corporation, reflects a commitment to sustainability that is becoming increasingly important to consumers, employees, and stakeholders.
Remember that the success of a corporate-level strategy depends on many factors, including the company’s context, resources, and capabilities, as well as external factors like market trends and competitive landscape.
Types of Corporate-Level Strategy
Corporate-level strategies essentially focus on decisions about what business areas to compete in and how to manage these business areas to achieve corporate goals. Some of the key types of corporate-level strategy include:
- Growth Strategy: A corporation may decide to expand its activities. This can be accomplished in various ways, such as by developing new products, entering new markets, increasing market share in existing markets, or through mergers and acquisitions. Growth Hacking Strategy: Examples, Case Study, B2B
- Stability Strategy: This strategy is pursued when a corporation is satisfied with the same business and wants to continue the same activities. It’s often used in a predictable and stable environment where the business operations are successful and there are minimal opportunities or needs for growth.
- Retrenchment Strategy: This strategy involves reducing the company’s size or diversity, often through selling or closing certain businesses or divisions. This is typically used when a company faces difficulties and needs to refocus its resources on areas where it can be more competitive. What is a Retrenchment strategy: Explained with types & examples
- Diversification Strategy: Under this strategy, a corporation decides to enter into new markets with new products. Diversification can be related (where the new businesses have some connection to the existing businesses) or unrelated (where the new businesses are not connected to the existing businesses).
- International Strategy: Companies that expand their operations beyond their home country must adopt an international strategy. This could involve exporting, licensing, franchising, establishing joint ventures with a foreign company, or setting up a wholly-owned subsidiary in another country. International Business, Marketing Strategy & Strategic Management
- Portfolio Strategy: In this strategy, a corporation manages its businesses as a portfolio, similar to how an investor would manage a portfolio of investments. The corporation invests in business units expected to perform well and divests from those that do not.
Each type of corporate-level strategy provides different ways for a corporation to define and pursue its goals. The best choice of strategy depends on the corporation’s current situation, its resources and capabilities, the environment in which it operates, and the vision of its leadership.
Case Study on Corporate Level Strategy
Let’s take a look at the corporate-level strategy of Disney:
Disney’s Diversification and Expansion Strategy:
Disney, which started in the 1920s as a motion picture company, has successfully adopted a diversification and expansion strategy to evolve into a diversified global entertainment company. This strategy can be seen in the various segments of the company’s operations:
- Theme Parks and Resorts: Disney’s decision to create Disneyland in the 1950s was a key part of its diversification strategy. The company later expanded this segment by establishing Disney World and international theme parks in Paris, Tokyo, Hong Kong, and Shanghai.
- Media Networks: Disney diversified into television with the creation of the Disney Channel and later expanded into network television with the acquisition of ABC. It also purchased ESPN to enter into the sports broadcasting market.
- Studio Entertainment: Disney has continuously expanded its studio entertainment segment by acquiring other studios such as Pixar, Marvel, Lucasfilm (Star Wars franchise), and most recently, 21st Century Fox. These acquisitions have allowed Disney to expand its movie portfolio and capitalize on popular franchises.
- Consumer Products and Interactive Media: Disney has used its brand and characters to diversify into consumer products and digital games, creating a comprehensive entertainment experience for consumers.
- Disney+: Seeing the success of streaming services like Netflix and Amazon Prime, Disney launched its streaming service, Disney+, which rapidly gained a substantial subscriber base.
Disney’s corporate-level strategy has been successful because of the synergy between its business units. For example, a movie from Marvel can drive consumer product sales, visits to theme parks, viewership on their media networks, and subscribers for Disney+. This synergy, along with the strong Disney brand, has allowed the company to succeed across various entertainment segments.
Disney’s corporate-level strategy shows how diversification and expansion, coupled with strong execution, can create a leading position in a competitive industry. It’s also a good example of how a company can use its resources (in this case, Disney’s brand and characters) to create synergies between different business units.
Disney’s journey to becoming the World’s greatest storyteller
