Corporate level strategy
tops other strategies

Corporate level strategy defines the future of the organization as a whole. We speak of corporate level strategy to distinguish it from other kinds of planning.

Group Strategy

An organization has various parts. In some cases, parts of the enterprise could operate as viable entities on their own. These include business conglomerates, multi-divisional and multinational entities.

These ‘multi-organizations’ do strategic planning as group exercise. Each sub unit has its own planning process and plan. But a key input to each divisions’ strategic planning is the output of the corporate plan. These inputs from corporate strategy are performance targets for the divisions. The subsidiary units cannot ignore them!

The corporate strategic plan may also set a small number of other factors. The sub-units also allow for these in their plans. These might include guidance on market definition. For example the subsidiaries of a multinational bank in various countries. The bank corporate business strategy would set profit targets for each country bank. The country banks would work out their own strategies for achieving them.

Note - Why 'corporate level strategy'? To distinguish it from other things called ‘strategic’. The word strategy has acquired a kind of aura. Many people want to use it. This is regardless of whether something has a major affect on organizational performance. So, we see strategic plans for every level, part and function in the organization.

Here we emphasize the use of strategic plan according to this definition.

Strategic planning is a systematic, documented process. It is a process for deciding a handful of key decisions. These are decisions that an organization must get right to thrive over the next few years.

Cooperation among various units helps with successful execution of corporate strategy.

It is useful to distinguish the various levels of strategy.

Corporate strategy and other levels of planning

This table shows the place of strategic planning among other plans.

Other words for 'business unit', include strategic business unit or division.

Note when we say business unit, it may also, among other designations, be known as strategic business unit strategy or divisional strategy. Moreover, functional strategy may apply to cross-divisional or cross-functional processes, or major projects. Confusing isn’t it!

Decisions in corporate level strategy

Corporate level strategies present the "big picture" of the organization. These may include deciding in which product or service markets to compete. They may define the geographic boundaries of the organization’s operations.

The corporate centre may also guide allocating capital, staffing, and other resources. Corporate level strategy may guide decisions about the adding new products or services. Corporate level strategy may shape whether to compete head on with other companies. Or it may set up partnering with the entities. 

Business level strategies

Business-level strategies focus on business unit performance. Corporate strategy focuses on a range of businesses. It is like a strategy for managing an investment portfolio.

Business units are usually individual enterprise-like entities. They focus on a particular industry, product or service type, and or market. Business-level strategies concern these things:

  1. Managing unit activities to fit with corporate level strategies. This sometimes includes cooperation with other business units to achieve ‘strategic synergy’.

  2. Developing distinctive capabilities, resources, and competitive advantage in each unit

  3. Identifying product or service-market opportunities and developing strategies for succeeding in each

  4. Monitoring the relevant business industry environment 

Concerns of business-level strategies include -

  1. matching their operations with the objectives of larger enterprise

  2. being among the better performers in their industry

For more on how corporate level strategy related to major business restructures such as mergers check out this link -

Strategic synergy

Functional-Level Strategies

Among other things, functional areas include -

  • product or service development and design
  • marketing and sales
  • finance
  • human resources
  • production
  • research and development
  • physical and information technology infrastructure 

Each function contributes to individual business unit strategies and the corporate strategy.
Functional strategies deal with these matters -

  • Efficient deployment of specialists within the functional area.
  • Integrating activities within the functional area, and with other functions
  • Efficient and effective linking functional strategies with business strategies and the corporate-level strategy. 

Help is not far away

Strategic planning for a group structure can be more complex than for a single entity. It pays to have a facilitator to guide the process. Someone from outside can see and say things that the insiders do not feel able to discuss.

Like to talk to an experienced facilitator? Go here.

Useful Resources

Like to know more on how the headquarters strategy can add value?  Check out the Parenting Advantage Model.

Corporate-Level Strategy: Creating Value in the Multibusiness Companyrel="nofollow"

The Organization practice of The Boston Consulting Group has done research on how the corporate headquarters can create value.
They have presented their findings in the report First Do No Harm: How to Be a Good Corporate Parent.

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