Google corporate strategy and you will get hundreds of millions of articles, websites, and blogs. Thousands of consultants and academics stand ready to help you out with your corporate strategy. But whether you are a multi-national corporation with multiple companies, a large company with several divisions, or a five-person shop, corporate strategy is still important – and not that difficult to achieve.
Corporate or Business strategy, as defined by BusinessDictionary.com, is “The overall scope and direction of a corporation and the way in which its various business operations work together to achieve particular goals.” So, whether you need employees in Division A to work with employees in Division B, or whether you need the wait-staff to work with your restaurant’s kitchen staff, you must help everyone understand how that will help achieve certain specific goals.
How to Produce an Effective Strategy
There are three basic approaches to business strategy that apply across industries and business types:
- Products and Markets. Your approach to providing products to customers can drive your strategy. There are four directions you could take. You can provide current products to existing customers, current products to new customers, new products to existing customers, or new products to new customers. Each approach requires a different set of tactics – and a very different marketing plan.
- Competitive Advantage. Your business strategy could be focused on outperforming your competitors by providing something your target market values. Michael Porter, the Harvard Business School professor and “father of competitive advantage,” identified three different ways to achieve competitive advantage:
- Cost Leadership: providing a comparable service at a better price, such as Wal-Mart and Southwest Airlines do in their markets.
- Differentiation: delivering benefits better than others. That may mean you have a unique product (e.g., higher quality) or service advantage (e.g., delivered faster), or that you deliver it better than others (e.g., online ordering).
- Focus. Understanding your target market and customers better than any other competitor. For example, Carvana targets the Gen X and younger Millennial car buyers, small community banks target small business needs, and Aspen Dental only serves patients who need dentures.
- Value. Have a value-based business strategy where you focus on building long-term relationships and repeat purchases. You can do this through delivering a unique value, either in the form of the best price, the best product, or the best service. Value, of course, is determined by the customer and is a combination of benefits delivered for the price paid.
Benefits of Establishing Corporate Strategy
Having a single direction for your business or company can deliver many benefits. You might be able to charge more with a differentiation strategy. You may find that you can operate more efficiently and at a lower cost due to higher volume. You might create higher productivity and lower employee attrition due to less confusion, conflict, and chaos. You might even be more innovative, as everyone is driving in the same direction and good ideas are bound to surface.
Most importantly, corporate and business strategy is about saying “No.” As Porter said, “The essence of strategy is choosing what not to do.” By selecting your strategy, and sticking to it, you create a strong direction for your business that helps you decide what you should do and what you should avoid.