Components of Corporate Strategy
Components of Corporate Strategy
Corporate strategy is the term used to describe the long-term vision an organization sets as its goal to continue to increase the value of the company and provide value to both its customers and shareholders. It’s a continuous process, one that must be revised at intervals to stay relevant in changing marketplaces and with changing financial landscapes. It captures the direction the company wants to take and the concept of what the company should be in the future to be successful and sustaining.
Steps of Corporate Strategy
Developing the strategy itself requires the following steps:
Develop the mission or vision:
In this step, the management team must establish the purpose of their company and what they want it to be in the future. The vision itself consists of the definition of these dreams as to how the company could evolve.
Define the values of the company:
The core values of the company are guide points as to how all employees are expected to perform in order to make the vision a reality. Defining these as part of the strategy sets them as guiding points that become a key part of the company culture.
Analyze the current position:
A strategy needs a starting point, and the starting point needs to capture a snapshot of the company’s current status and potential opportunities. This should include an evaluation of the company’s strengths and weaknesses.
This requires taking the dream concepts from the vision and turning them into actual strategies with timelines and deadlines. Strategies should work together to help guide company growth and change. The objectives should describe how the company intends to turn the vision into reality.
Evaluate resources :
Compile the current resources, which can include funding streams, employee headcount, projected performance and market analysis. It’s important to understand where pockets of skills and opportunity might exist to help meet the objectives that now exist.
Implementing the Strategy
Once the strategy has been developed, there are a few key components to implementing the strategy. They involve looking at the information gathered about the company’s current state and the resources available and then making arrangements as best suits the long-term mission for the company. These components of implementation include:
Once resources have been identified, it’s up to corporate management to allocate them as needed to meet objectives. The main two resources to manage are employees (skill sets, years of experience, etc.) and capital (funding to invest in the business for future yields). Corporate management should initiate any rearrangement, additional hiring or development required to meet the objectives as set out by the vision.
The resources identified above must then be allocated to the appropriate departments; it’s corporate management’s job to ensure there’s a management and organizational structure in place that will support the projects and functions the business will need to perform. It’s also important to set the reporting structure in a way that makes sense for the objectives and strategies that will be required.
Corporate management must also look outside the business and make decisions based on future product development. The overall vision will define what markets the company should be moving into or out of, how the business units relate to one another and how to define potential opportunities that might open up new business.
The strategy should also define the balance at which corporate management should manage risk/reward opportunity scenarios. This includes a standardized method of looking at risk management and potential value streams and should set the tone across all company units as to what sort of opportunities fit within this risk management platform and which would be outside.
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