Corporate Strategy is defines as the art, science and
craft of formulating, implementing and evaluating cross-functional decisions
that will enable an organization to achieve its long-term objectives.
It is the process of specifying the organization's mission, vision and
objectives, developing policies and plans, often in terms of projects
and programs, which are designed to achieve these objectives and then
allocating resources to implement the policies, and plans, projects
In a world increasingly obsessed with private equity, the power of focus,
and the discipline of debt, is there really a role for even the most
mildly diversified firm and the corporate layer of management that such
diversification necessarily creates?
Strategic management seeks to coordinate and integrate the activities
of the various functional areas of a business in order to achieve long-term
organizational objectives. A balanced scorecard is often used to evaluate
the overall performance of the business and its progress towards objectives.
If we expand our horizons beyond merely adding value to including the
critically important but typically overlooked problem of managing strategic
Strategic management is the highest level of managerial activity. Strategies
are typically planned, crafted or guided by the Chief Executive Officer,
approved or authorized by the Board of directors, and then implemented
under the supervision of the organization's top management team or senior
Strategy is about how to create and capture value in a specific product
market. This highlights the importance of defining clearly the organization
and product market that are the focus of strategy. Improving the competitive
strategies of the operating units is the essence of corporate strategy.
The corporate office should be focused on, for example, the identification
and capture of synergies between operating units.
Strategic management provides overall direction to the enterprise and
is closely related to the field of organization studies. In the field
of business administration it is useful to talk about strategic alignment
between the organization and its environment or strategic consistency.
There is strategic consistency when the actions of an organization are
consistent with the expectations of management, and these in turn are
with the market and the context.
Strategic management is an ongoing process that evaluates and controls
the business and the industries in which the company is involved; assesses
its competitors and sets goals and strategies to meet all existing and
potential competitors; and then reassesses each strategy annually or
quarterly [i.e. regularly] to determine how it has been implemented
and whether it has succeeded or needs replacement by a new strategy
to meet changed circumstances, new technology, new competitors, a new
economic environment., or a new social, financial, or political environment.
Strategic management techniques can be viewed as bottom-up, top-down
or collaborative processes. In the bottom-up approach, employees submit
proposals to their managers who, in turn, funnel the best ideas further
up the organization. This is often accomplished by a capital budgeting
process. Proposals are assessed using financial criteria such as return
on investment or cost-benefit analysis. Cost underestimation and benefit
overestimation are major sources of error.
The proposals that are approved form the substance of a new strategy,
all of which is done without a grand strategic design or a strategic
architect. The top-down approach is the most common by far. In it, the
CEO, possibly with the assistance of a strategic planning team, decides
on the overall direction the company should take. Some organizations
are starting to experiment with collaborative strategic planning techniques
that recognize the emergent nature of strategic decisions.
Corporate strategy is thinking more carefully and deliberately about
how to enable operating divisions to pursue outsized returns without
having merely to accept the risk that has historically accompanied such
boldness. Greater returns at greater risk is, frankly, meaningless.
Greater returns and the same or reduced risk? Now that's a worthwhile