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.
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.
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!
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 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:
Concerns of business-level strategies include -
For more on how corporate level strategy related to major business restructures such as mergers check out this link -Strategic synergy
Among other things, functional areas include -
Each function contributes to individual business unit strategies and the corporate strategy.
Functional strategies deal with these matters -
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.
Like to know more on how the headquarters strategy can add value? Check out the Parenting Advantage Model.
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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