Table of Contents
Meaning
Corporate-Level Strategy refers to the senior management’s approach or game plan for administering and guiding the entire enterprise. These are determined by the company’s external business environment and internal capabilities. Also referred to as the Grand Strategy. It shows the mix and pattern of business moves, activities, and hidden objectives, in the strategic interest of the organization, taking into account various business divisions, product lines, client groups, technologies, etc.
Principal Characteristics of Corporate-Level Strategy
- Corporate-Level Strategies are established by the company’s highest level of management with the company’s future growth and possibilities in mind
- It specifies the enterprise’s long-term orientation and direction, as well as its general boundaries, and serves as the basis for developing the company’s middle and low-level strategies, i.e. business and functional strategies.
- When establishing corporate-level plans, the company’s existing resources and environmental considerations are considered.
- It focuses on decisions regarding the two-way flow of information and resources between the various levels of management.
In other words, corporate-level strategy refers to the highest level of strategic decision-making, which encompasses those business plans concerned with the company’s objective, acquisition and optimal allocation of resources, and coordination of the business strategies of different units and divisions to ensure satisfactory performance.
Categorization of corporate-level strategies
The four categories of corporate-level strategies are:
Stability Strategy
Stability is a vital corporate objective necessary to defend existing interests and strengths, to pursue business objectives, to continue with the current business, to maintain operational efficiency, etc.
In the stability strategy, the company retains its current business and product markets, as well as its current level of effort, because it is content with its modest growth.
Expansion Strategy
Also known as a growth plan, the reevaluation of a company’s business in order to expand its capacity and breadth, as well as substantially increase its overall investment, is referred to as a business expansion strategy.
In the expansion strategy, the company seeks substantial growth, either from its present business or product market or by establishing a new business, which may or may not be related to its existing business. It entails diversification, mergers & acquisitions, strategic alliances, etc.
Retrenchment Strategy
When a corporation decides to reduce the scope of its activities or operations, this strategy is implemented. As a response to the company’s financial problem, a variety of business activities are retrenched (slashed or decreased) in order to save costs. Sometimes, the business itself is terminated by sale or liquidation.
Then, corrective or remedial measures are done to resolve the identified issues. Therefore, a turnaround strategy is when a company focuses on measures to reverse its downturn.
A divestment or divestiture plan, on the other hand, is one in which a corporation eliminates a loss-making enterprise or portion of the business or reduces the services it performs. If nothing else succeeds, a company may pick a liquidation strategy, which entails shutting down the company.
Combination Strategy
In this strategy, the business integrates any or all of its three corporate strategies in order to meet its needs. The company may decide to stabilize some areas of operation while increasing others and contracting in others (loss-making ones).
The fundamental objective of corporate-level strategies is “directing” managers on “how to manage the scope of various business activities” and “how to make optimal use of the firm’s resources (material, money, people, machines, etc.) on various business activities.”
