corporate strategy

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Corporate strategy pertains to the overall enterprise consisting of more than one business unit. This is the aspect of strategy that addresses the advantage provided the business units due to their affiliation with the corporation. For this affiliation to be justified, the competitive advantage gained by the business unit must be outweigh the corporate burden. Porter provides a classification of approaches to corporate strategy --

Spectrum of corporate strategic approaches (Porter, 1987) --

  • Portfolio management -- Not sustainable in mature financial markets. Very low cost corporate staff.
  • Restructuring -- Hold BU's until restructured. Corporate staff focuses on turnaround and strategic repositioning.
  • Transfer skills -- Can be sustainable in the long-term with ongoing skills transfer. Corporate staff serve as integrators and skills managers.
  • Sharing activities (processes & competencies) -- Sustainable in the long-term due to the synergy between BU's. Corporate Staff very active in the strategic planning and integration roles.

Key questions a corporate strategy needs to answer (Collis, 1995) --

  • What businesses should the company be in?
  • How should it coordinate activities across businesses?
  • What role should the corporate office play?
  • How should the corporation measure and control performance?

See David J. Collis & Cynthia Montgomery, Creating Corporate Advantage, HBR, Jul-Aug, 1995 for a methodological approach to defining corporate strategy.