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A corporate strategy is an overall plan made by management to meet a specific goal. It is characterized by being in concert with all of the corporate goals, being executable within the corporate resources, and being supported by smaller tactical plans. The development of corporate strategies is a key responsibility of management.
Strategic plans were first developed by military units, as warfare became more of a planned activity rather than just massing opposing soldiers on the field. The concept of strategic planning as applied to a corporate strategy involves many of the same factors employed by the military planner. These factors include a clear statement of objective, an evaluation of the potential for gain or loss, and an analysis of the resources necessary to support the strategy.
The objective of the corporate strategy must first mesh with the stated objective of the company. It may broaden the company’s mission but usually does not narrow it unless that is itself an objective. A company may be national and adopt a mission of becoming international. Corporate strategy is then developed to support that broadened objective. A struggling company might choose a survival strategy of ceasing international efforts to focus on national sales after realizing that the new company mission is to survive.
With insufficient resources, a new corporate strategy is a dream, not a plan. The strategy is reworked to open more resources, changed in scope, or otherwise revised to be a workable plan, or abandoned. Brute force planning is often not successful, and seldom strategic in nature. Being strategic encourages resourceful thinking, not dreaming.
A winning corporate strategy is broken down into tactical plans to allow sufficient detail for resource specification. While strategic planning is the focus of management, tactical level planning will often occur at functional levels within the corporation. Lower levels of management usually have more current and accurate knowledge of the requirements necessary to perform their portion of the overall plan.
Contingency planning throughout the organization may itself be a corporate strategy. These plans address actions that should be taken should certain human or natural events occur. Death of a key employee or delay of delivery due to a storm are examples of everyday occurrences that companies might face. Contingency plans of a corporate strategic level might include plans specifying how to handle public reaction to a chemical spill, when to implement stock sales or buyback during market swings, or whether to establish travel restrictions to avoid loss of an entire management team in an airplane crash.
Management is responsible for the development of corporate strategy. Its ability to communicate its strategic objectives to those who must implement the plans is often reflected in the success of the plans. Many strategic plans are held in secret to avoid competition. Management’s challenge is to share these plans appropriately.