Corporate Strategy: The Foundation of Any Corporate Framework

By kwproduction

January 14, 2022

Corporate Strategy: The Foundation of Any Corporate Framework

Corporate strategy is akin to an appraisal. It takes a portfolio approach to strategic decision-making by assessing all of a firm’s businesses to determine how to create the most value. The organization’s strategic plan defines the overall corporate goals and directions and how they will be achieved within the strategic management activities. Corporate strategy management, in essence, is what the organization uses to monitor itself on an abstract level, where decisions are made with regard to the overall progress and direction of the company.

It is essential for every organization, regardless of its size or discipline, to have a detailed corporate-level strategy. It enables strategic decision-making and gives a much-needed clarity and focus to the organization’s continuing activity. The benefits of a corporate strategy include:

Corporate Strategy Offers your Business Strategic Direction: It forms the link between the abstract needs and goals of an organization and the core competencies and resources that businesses and resources that business and functional units can utilize to realize these goals.
Corporate Strategy Allows you to Adapt: It helps your company stay relevant with the changing times and helps to respond to opportunities and challenges the way they present themselves.
Corporate Strategy Improves Decision-Making: This is a source of motivation for all your employees as it imparts a unified purpose for the organization.

There are Four Components to Corporate Strategy Management:

Visioning and Setting Objectives: This sets the overall direction of the organization, and this vision trickles down through each level of management. This translates as the vision, mission, and corporate values and, through each step of management, contributes to the setting of objectives for day-to-day functioning.

Allocation of Resources: Resource allocation is essential for corporate-level strategy. It mostly focuses two resources: manpower and capital. In an effort to maximize value of the entire organization, the key factors related to these two resources include:

  1. People: Shuffle staff around so as to maximize capability in a way that maximizes value both in the long and short term. Optimized distribution of core competencies across the organization. This also includes the acquisition of new talent.
  2. Capital: Optimized distribution of capital across the business. This includes allocating capital for external opportunities and internal processes.

Organizational Design and Portfolio Management: Organizational design sets the framework for the corporate structure to implement all its activities and satisfy objectives. It includes Head office—centralized vs decentralized chain of command including autonomy—and Organizational structure—deciding initiatives, integrating business units, and accounting for balance between risk and return by separating responsibilities. Portfolio Management, on the other hand, decides the form of interlinking between business units—deciding what businesses to be a part of, determining vertical integration, and managing diversification.

Strategic Trade-offs: Maintaining a balance between risk and return is a vital requirement of any corporate structure. Thus strategic trade-offs include managing risk, generating returns, and handling incentives.

At KW Productions, we are very aware of the tools required to direct your organization toward success and effectiveness. We offer a fresh perspective for leadership to spark change and predict future potential. Our behaviorally-based tools help in the valid and reliable assessment of your organization’s management and ensure that you have all the tools required for a better and more efficient career. So, book your tools today!

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