Corporate Strategy

Strategy means different things to different organizations and people. At the essence of corporate strategy are fundamental questions of where and how to compete to earn a rate of return above cost. Another way to see it is where is the company now and where does it want to be and how to get there. Some of it requires intuition but increasingly analytical tools are increasing relevant. It helps to frame decisions and articulate goals. Strategy can used at all levels of corporation at the executive level to business units, department levels, and finally day-to-day operations.
The next step in understanding strategy is to see that companies will often craft mission statements which lay down what the purpose of the company's existence is : i.e. To make cheeseburgers to feed the world and deliver value to employees, customers, and the shareholders.
Secondly they will create vision statements that define specific goals: i.e. deliver a higher return on equity than the previous year. (All goals are measured by certain predetermined metrics)
Another step in laying out strategy is to conduct intelligence on the business environment also known as PEST Analysis or Political Economics Social and Technological. This analysis then helps to formulate an understanding of the industry in which a firm operates. Harvard Professor Michael Porter developed an analytical tool coined Porter's Fives of Competition to assist in industry analysis. The essence of this model is examining industry rivalry, barriers to enter an industry, barriers to leave an industry, the power of suppliers, the power of buyers, and the threat posed by substitute products and services.
Extending this theme, a firm could also conduct competitor analysis such the strategy of a competitor, its goals and performance, the way a competitor sees itself and its resources and abilities.
Good strategy also involves to examine specific elements within an industry to see which segments provide attractive markets. A firm then can determine how to differentiate itself by looking at buyer characteristics and product characteristics.
A firm can then determine whether or not it should compete by in terms of cost leadership or distinguishing/differentiation its products/services from the "rest of the pack." Recently firms are seeking to achieve both.
Whatever strategy a firm chooses, its success hinges heavily on proper implementation. A firm must assess which key resources it needs to pursue its strategy like physical resources (plants, equipment)
financial resources, cultural, technology, brand management, motivation of key executive and employees, etc.
A corporation may have to specifically allocate budgets, operational procedures, and use well crafted communications to signal to the rest of the firm strategic measures.
In order to determine what abilities a firm has to make a strategy happen, it can use Michael Porter's famous value chain. Porter recommends breaking down activities into primary activities such as inbound logistics, operations, marketing/sales/distribution and services, and support activities like firm infrastructure, human resources, technology development and procurement.
The organization structure of a corporation is essential to facilitate strategy since it creates the mechanism through which communication, procedures, and information flows. Structures vary from a top-down hierarchal model to flat, egalitarian models. Organization structures should be based on the type of industry, business in which corporations operate. Organization structure should also be based the type of strategy used. For example, companies that focus on making a standardized products may use a function based design with a hierarchal reporting structure to insure that standardized procedures and efficiencies are implemented. Companies that make products with variety tailored to local markets should use an organization design that allows its businesses more autonomy to be responsive to local conditions. Without any synergy between the strategy and structure, the strategy will fall apart. If a company wants creativity and innovation but has a strong hierarchal organization with tight operational controls, then the strategy becomes empty.
Finally, strategy and its implemented should involve developing benchmarks and metrics to assess a strategy's progress. Then targets should be established. As a strategy is rolled out, there should be regular assessments to see if the targets are being met and then adjustments can be made to steer the strategy.
As an addendum, corporation should become media savvy not only to improve advertising and marketing efforts but to understand that new media and technology are making it easier for corporate reputations to be jeopardized by rumors(inaccurate or accurate). The next thing that happens is that a company could be caught off guard by a corporate crisis that damages reputation and stock value.
Media savvy companies also understand the changing environment better than those that don't