Corporate Level Strategy

Strategy Levels
Corporate strategy is the general direction for the growth of
Creating a strategy involves the determination of the long-term
multiple businesses as defined in the corporation's vision and
goals and objectives of an enterprise and the adoption of
mission. A corporation's business portfolio and market are also
courses of action that are necessary to meet these objectives.
clearly defined in its corporate strategy just like that of a locally
created conglomerate.
Strategy can be formulated on three different levels, namely,
corporate level, business unit level, and functional or
departmental level.
Board of Directors
After choosing the general direction of a company, managers
can determine the strategy level that needs work, and the one
On a corporate level, the board of directors is responsible for
that will allow for growth in sales, assets, profits, or some
setting and implementing the strategic plans and directions of
combination.
the different companies or business units under its helm. They
are also responsible for seeking market opportunities and the
Companies that do business in expanding industries must
businesses they should invest in while creating synergies
grow to survive.
across the businesses. The strategic synergy produces a result
that is bigger than the sum of the individual corporate
organizations.

Board members and executives require a certain level of

maturity, skill, talent,and experience to effectively set the
corporation's direction, and determine the resources to acquire,
develop, dispose, and compete in the various industries It sees
fit in its overall strategy.

Business Unit Strategy

Continuing growth means increasing sales and a chance to A business strategy determines where and how a company
take advantage of the experience curve to reduce per unit cost should compete by creating a competitive market advantage to
of products sold, thereby increasing profits.This cost reduction generate sustainable and profitable returns. This requires a
becomes extremely important if a corporation's industry is clear understanding of the market landscape, key industry
growing quickly and competitors are engaging in price wars in players, macro-environmental factors, forces that shape
attempts to increase their shares of the market. competition, and more importantly, technological disruptions
and innovations that have changed business models as we
Firms that have not gained the necessary economy of know them.
large-scale production will face large losses unless they can
find and fill a small, but profitable, niche where higher prices Operational effectiveness allows an organization to maximize
can be offset by special product or service features. available resources to quickly manufacture products with
near-zero defects compared to its competitors. Some
A company can grow internally by expanding its operations pervasive management practices and disciplines such as
both globally and domestically, or it can grow externally business reengineering, quality management systems,
through mergers, acquisition, and strategic alliances. benchmarking, and process improvements contribute to
operational effectiveness. The result of such efforts is better
Strategy Levels and more profitable returns.

Strategic initiatives are implemented on two distinct levels - However, operational efficiency is not enough to support a
corporate and business units. strategy because the competition can quickly duplicate or
adopt industry best practices. Over time, competitors can play
●​ Corporate strategy relates to how a corporation catch-up as market share tips over in favor of another. Should
manages and creates value among diverse this happen, it defeats the purpose of any strategy because it
businesses. fails to create a distinct and competitive advantage in the
●​ Business unit strategy relates to how a strategic market.
business unit (SBU), either a stand-alone firm or a
division of a larger corporation, competes in a
particular market.
Functional Strategy strategy has two variants or approaches combining
Business thrives or fails because of the concerted efforts and focus with either differentiation or cost leadership.
individual results of functional or departmental units like Customers in this market are usually loyal to the
human resources, operations, finance, IT, as well as sales and brand and the business enjoye,cult-like following. This
marketing. company's main product enjoys this competitive
advantage because of its deliberate and carefully
Functional strategies are confined within a department that planned branding strategies. Apple products offer a
operates with set goals, objectives, and performance sense of prestige and status that i clearly beyond
metrics..The results are coordinated and synchronized to product features and price.
maximize business outcomes. Goals and objectives should
strive to create value to support both the business and, if These generic strategies apply to firms of any business type or
applicable, corporate-wide strategy. size to gain competitive advantage to outperform rivals in the
marketplace.
Porter's Generic Competitive Strategies

Michael Porter, a Harvard Business School professor, Strategic Management Model

introduced a framework that outlines generic competitive
strategies for businesses to gain a sustainable market The strategic management model provides the basic
advantage. Another framework Porter developed is the Five framework for understanding how strategic management can
Forces of Competition. It is used to determine the be operationalized at the company level.
attractiveness of an industry and provide unique product value
or benefits to gain long-term profitability. It begins with the development of the organization’s mission
and vision.

It involves External, Internal, and Industry analysis.

Strategic Management is the art and science of formulating,

implementing, and evaluating cross- functional decisions that
enable an organization to achieve its objectives.

Strategic Management is also the process of developing a

game plan to guide a company as it strives to accomplish its
vision, mission, goals, and objectives and to keep it from
straying off course.

IDENTIFYING THE COMPETITIVE ADVANTAGE

1.​ Cost Leadership Strategy - This refers to a company's Competitive Advantage is the aggregation of factors that sets
ability to efficiently reduce production costs a business apart from its competitors and gives it a unique
compared to its competitors. Customers will favor position in the market.
sellers that have the lowest price in a market that
offers similar products.Take the case of phone Goal: Create a distinct image in the minds of potential
accessories such as screen protectors, charging customers.
cables, and phone cases, found in shopping malls or
flea markets or tiangge. Buyers would scour the place Reminder: No business can be everything to everyone.
for the best deal or price without deference to a Differentiation is critical.
certain brand, reputation, and quality. The items are
usually cheap and readily replaceable if it doesn't FEATURES OF STRATEGIC MANAGEMENT
work. 1.​ Use a relatively short planning horizon fit for small
2.​ Differentiation Strategy - The company offers its companies.
customers products with superior features unique to 2.​ Be informal and not overly structured.
the marketplace compared to its competitors. 3.​ Encourage the participation of employees and
Customers in this market chose to purchase external parties.
differentiated products because of the perceived 4.​ Focus on the needs and wants of customers. Do not
value they get. begin with setting objectives ahead of time.
3.​ Focus Strategy - The company offers its products to a 5.​ Focus on strategic thinking, not just planning
narrow industry segment or market niche. This
 Triple Bottom Line
THE STRATEGIC MANAGEMENT PROCESS 1.​ Social
2.​ Environmental
1. Visioning 3.​ Financial Performance
2. Positioning
3. Internal Analysis Beyond the more obvious economic value of sustainable
4. External Analysis business management to the long-term prosperity of
5. Defining Competitive Advantage enterprises, there are many other reasons why pursuing
6. Competitor Analysis sustainability is a smart business move. This includes:
7. Create Goals and Objectives ●​ attracting and retaining employees who seek a more
8. Strategy Formulation purpose-driven life;
9. Strategic Action ●​ developing more resilient supply chains;
10. Strategic Control ●​ creating a more loyal customer base; and
●​ greater acceptance in the local communities where
they operate.
ADVANTAGES AND DISADVANTAGES OF STRATEGIC
PLANNING

Advantages:

1.​ Structured analysis of complex problems

2.​ Involves people in strategy development
3.​ Effective communication tool
4.​ Means of control through performance review

Disadvantages:

1.​ Difficult and Time-consuming

2.​ Rare immediate results The Core of Strategic Management
3.​ Limits to rational and risk-free options
Basic elements of Strategic Management
1.​ Environmental scanning
SUSTAINABILITY MANAGEMENT 2.​ Strategy formulation
3.​ Strategy implementation
Corporate Social Responsibility - CSR emphasizes the 4.​ Evaluation and control
corporation's ethical responsibilities to shareholders,
customers, societies, and future generations. This goal is to Environmental Scanning - includes the comparison of the
pursued despite the obvious differences in the decisions and threats and opportunities of the organization in the external
actions taken by these sectors. business environment. SWOT Analysis is performed.

This have 4 categories: Strategy Formulation - is the generation of long-term plans for
1. Environmental Responsibility the proper management of environmental openings and fears
2. Ethical Responsibility considering the fortes and faintness of the business or the
3. Philanthropic Responsibility company. It consists of defining the mission. attainable
4. Economic Responsibility objectives, forming strategies, and setting policies.

Shared Value ❖​ Mission: An organization's purpose or the reason for

its survival is called misason. It mentions how it is
The key is to promote the sustained attainment of societal serving society. An ideal mission statement specifies
value, that includes shareholder value, the value of the shared the unique purpose that differs the company from
natural environment and the common economic stage where other similar companies and defines the scope of its
everyone is an actor. The biggest opportunities for creating functions in the form of the products and services
shared value may require a longer time to materialize and is served to the market.
not realistic for those whose interest remains shortsighted and ❖​ Objectives: The outcomes of the planned functions
who only plans in the short-term period. are called objectives. Objectives mention what is to
be attained by when. The attainment of the objectives
 should lead to the fulfillment of the company's
mission. Integrating Cost Leadership with Other Strategies
❖​ Strategies: A strategy is a broad master plan ●​ Combining Strategies:
expressing how a company will accomplish its ❖​ Cost leadership can be paired with
mission and objectives, maximizing competitive differentiation or focus strategies
advantages and minimizing competitive
disadvantages. Generally, a company or business ●​ Key Activities to Sustain Cost Leadership:
takes into consideration three kinds of strategy:
corporate, business, and functional. ❖​ Maximizing production output.
❖​ Policies: A policy is a comprehensive guideline for ❖​ Tight cost control and process engineering.
making decisions linking the formation and ❖​ Investing in technology and outsourcing
implementation of a strategy. non-core functions.

Strategy Implementation - is taking action in order to attain the Advantages of Cost Leadership For Larger Firms:
goals of the organization. It requires organizing all the ●​ Market Dominance: Ability to compete in larger
available and necessary resources to put the strategy into markets and achieve economies of scale.
action. ●​ Negotiating Power: Stronger bargaining power with
suppliers due to large order volumes.
Evaluation and Control - It requires an evaluation of the ●​ Mass Production: Producing in large quantities
strategy to ascertain whether the actual outcome matches the reduces the per-unit cost of production.
expected outcome of the organizational goals. At this stage.
the organization decides which area of planning should be For Smaller Firms:
evaluated and the method of evaluation to be used ●​ Niche Market Share: Smaller firms can secure a niche
market by offering lower prices than global brands.
●​ Competitive Edge: Cost leadership allows smaller
Cost Leadership Strategy firms to compete with larger players in specific
segments.
Cost leadership is a competitive strategy where a company
strives to become the lowest-cost producer in its industry by Disadvantages of Cost Leadership
focusing on mass production, operational efficiency, and cost Challenges for Smaller Firms:
reduction across all business functions. It targets a broad ●​ Limited Resources: Smaller firms may lack the
market with standardized, low-cost products, allowing the resources to compete in larger markets.
company to offer competitive prices while maintaining ●​ Risk of Being Outcompeted: Larger firms with more
profitability. resources can easily replicate cost advantages.

Why Cost Leadership Works Online: General Risks:

●​ Online shoppers are highly price-sensitive and often ●​ Quality Issues: Over-reliance on cost reduction can
seek the lowest prices for identical products. lead to lower product quality.
●​ The internet allows businesses to reach a broad ●​ Market Changes: Changes in market conditions or
market, enabling economies of scale. technology can render cost advantages obsolete.
●​ Price Wars: Competitors may engage in price wars,
Key Cost-Reduction Strategies for Online Firms: eroding profit margin
●​ Economies of Scale: Targeting a broad market to
spread fixed costs over a larger output. Risks of Cost Leadership and Price Wars
●​ Reducing Customer Acquisition Costs: Using digital ●​ Price Wars: Difficult to sustain in the long run,
marketing and social media to attract customers at a especially for smaller firms.
lower cost. ●​ Lack of Differentiation: Products are not unique,
●​ Outsourcing Non-Core Activities: Outsourcing making it hard to retain customers.
functions like IT, HR, and logistics to reduce overhead ●​ Cost Pressures: Constant need to reduce costs can
costs. lead to quality issues.
●​ Market Disruptions: Technological changes or new
Factors Influencing Online Purchases: business models can disrupt the market.
●​ Shipping costs ●​ Import Competition: Cheaper imports from
●​ Delivery time cost-efficient countries like China can undercut prices.
●​ Promotional discounts ●​ Reverse Engineering: Late entrants may copy
●​ Customer feedback products and offer superior features at lower costs.
●​ Product availability
Product Differentiation Strategy

Product Differentiation refers to the process of distinguishing

a product or service from others in the market to make it more
attractive to a specific target audience. It involves highlighting
unique features, benefits, or attributes that set the product
apart from competitors. The goal is to create a competitive
advantage by offering something that customers perceive as
valuable, unique, or superior.

Product Differentiation Strategy

●​ Competitive Advantage: Unique and superior
products.
●​ Examples:
-​ Online shopping convenience (Shopee,
Lazada)
-​ Innovation (Apple, Samsung)
-​ Environmental focus (Patagonia)Prestige
(Rolex)
-​ Safety (Volvo)

Customer Perception and Value

●​ Customers choose products based on attributes other
than price.
●​ Willing to Pay More: If they perceive value and unique
preferences.
●​ Brand Loyalty: Customers become less
price-sensitive, leading to higher profit margins.

How Firms Create Differentiating Attributes

●​ Supply Chain Activities: Cisco Systems’ sustainability
initiatives.
●​ Product R&D: Samsung’s three-level R&D
organizations.
●​ Flexible Manufacturing Systems (FMS): Mazda’s
mixed manufacturing.
●​ Manufacturing Activities: Toyota’s lean manufacturing
system.Distribution and Shipping: Amazon’s
advanced logistics.
●​ Marketing and Customer Service: Tesla’s superior
customer service.

Differentiation in the Value Chain

●​ Supply Chain: Resilient and sustainable practices.
●​ R&D: Innovation and market-ready technologies.
●​ Manufacturing: Efficiency and quality.
●​ Distribution: Quick and accurate delivery.
●​ Marketing: Superior customer experience.