Corporate strategy is hierarchically the highest strategic plan of the organization, which defines the corporate overall goals and directions and the way in which will be achieved within strategic management activities.
It is a long-term, clearly defined vision of the direction of a company or organization. It helps determine the overall value of the organization, sets strategic goals and motivates workers to achieve them. It sets out a basic plan for what is to be achieved and when. This is done by using strategic goals and basic milestones. However, corporate strategy is also a continuous process that must be able to respond appropriately to changing conditions and surroundings - the market situation.
Corporate strategy must include and influence all aspects of the organization and its entire product portfolio.
What should a corporate strategy include and cover?
Clearly named vision and mission should be part of the strategy. Numerous analytical techniques are used to develop the strategy (see PESTLE, SWOT, VRIO). When implementing the strategy, for example the BSC is used in for the implementation.
Corporate strategy influences how a company creates value. This means that it must cover both the product portfolio and the assumptions - resources and organizational aspects.
The product portfolio is the basis for the whole company and therefore for the strategy direction. The company needs to be clear about what it wants to deliver, to who it wants to deliver, what are the key competitive advantages, pricing strategies and many other things. They are either part of a corporate strategy or are elaborated in detail in separate but subordinate strategic documents such as business strategies, marketing strategy and the like.
Company resources are necessary to deliver products and to propel processes. The corporate strategy must include at least a basic assessment of existing resources (eg using VRIO) and a plan of how new resources will be acquired so that the strategic goals can be achieved. Again, this description is either part of the corporate strategy as such or it is elaborated in detail in partial strategic documents (human resources strategy, financial strategy, IT strategy, etc.). Resources are a key limitation of the operation of companies. Most often lacking human resources. Sometimes companies face a lack of financial resources, sometimes they do not have sufficient technology, sometimes they miss a building permit to build a production hall. The most limiting resource is people - the lack of suitably qualified workers is the most common reason for not achieving the company’s business goals.
The organizational model then tells how to set up processes, organizational structure and overall operating principles to achieve strategic goals. It is necessary to set rules of operation, the policies, guidelines, organizational structure, management system and powers and responsibilities of people so that they effectively support to achieve strategic goals. In this respect, there is no optimal model - it is always necessary to use a management system, set processes and organization appropriately to the resources, culture and overall situation in the organization and the market. What works great in one company can cause problems for another company.
Thus, corporate strategy must not only define the product and business direction (business, market and financial goals) but also what a firm has to do to achieve these goals. What resources must invest to and how to organize them. What people’s skill profiles need, which competencies must be developed and how they must be used to develop the business.