Corporate strategy helps a business shape decisions about where it should go in order to be competitive.
The need for corporate strategies is essential because most of the time there are things you can do as an individual that can cause problems for your organization like making acquisitions that may not serve a corporate goal or taking on debt that looks more advantageous in the short-term but will ultimately end up hurting the company's growth prospects in the future.
Both the market-based/industry structure view and the resource-based view of the firm traditionally focus on how successful companies could stay ahead in their respective industries with the advantage of being the only ones who have what it takes to be one of "the best". But these don't really work in today's business.
No one size fits all
When a company operates in two or more industries or businesses, its corporate strategies need to be clear.
For example, as someone who has invested in Google and other internet companies, you might know that Google's success is attributed to Strategy A, while Microsoft has been successful with Strategy B.
What this means is that it is important to understand your business area and assess what your strategy will be so as to avoid wasting time and resources; ultimately the goal is to ensure that everyone within the organization can better communicate their objectives.
So although the two companies mentioned may have started out very differently using different strategies, over time one strategy might be deemed more effective than another; which makes strategic planning so vitally important for all businesses of all sizes.
Formal corporate strategies are essential to successful businesses.
They play a vital role in helping companies focus on single objectives which makes it easier for a corporation to know what needs to be done and how quickly they can achieve the desired goal. In its general definition, a formal corporate strategy assists any organization with specific direction in its diversity of departments, divisions and staff members.
Formally written strategies help companies stay focused and reach their highest potential.
Corporate strategies can be a bit more conservative, however, as one has to take measures that will secure their future growth over time or make plans for managing retrenchments. Stability strategies are less risky than growth and corporate, but they need careful attention in order to make sure profit levels don't fall and production costs aren't cut too much as this could eventually have negative effects on the marketplace!
Strategy is, of course, not the only factor determining a company's success or failure. Competency and leadership are likewise important facets that play a role.
Although economic principles will be in opposition to corporate strategy, this is not necessarily true. Strategies that add value often help diversify a corporation and give it a competitive advantage over others.
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