Christos Ioannou, CMA, ask the very crucial question, ‘What is Corporate Strategy?’ In this article specifically written On Target, he focuses on the theory of Strategy and Corporate Strategy and highlights the fundamental role of effective Corporate Strategy especially in this era.
The purpose of this article is to briefly examine the term of “What is Corporate Strategy?” Furthermore, it is to indicate the effectiveness of Corporate Strategy and its contribution to the success of organisations in this era. Sources of information have been taken from the Internet, books and business journal articles.
Peter Drucker (1994) stated effectively the rules and regulations of the business game when he said that “No business can do everything, it has to set priorities, and the worst is to do a little bit of everything, which definitely will lead to failure.”
All the corporate activities must be based on and must be in line with corporate strategy. The word strategy, which is the means of achieving one’s objectives, is derived from the Greek word strategos which means the leader of the army.
Two critical questions arise:
What is strategy? There are several of definitions of strategy in the previous literature, but the classic definition is attributed to Alfred Chandler (1962) who stated that “strategy is the determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals”. An effective and efficient strategy implementation “…helps to marshal and allocate an organisation’s resources…” which in combination with the assessment of internal and external environment will help the organisations to compete in this era. Furthermore, the adoption of effective and efficient corporate strategy will lead to successful allocation of resources, which at the end will lead to competitive advantage.
What is Corporate Strategy? Johnson, Scholes, and Whittington (2007) stated that “…corporate strategy, concerned with the overall scope of an organisation and how value will be added to the different parts (business units) of the organisation.” Corporate strategy is the eye of every organisation. It gives the direction to every part of organisation. Without organising and implementing effective corporate strategy, nobody can survive. It is like a ship in the middle of the ocean without a clear direction. Corporate strategy is a fundamental key element for the success of every organisation independently to the field of business.
The “Concept Strategy” is very big and very complex. There is not an easy task to formulate a strategy; but without it an organisation will surely fail. Michael Porter (2006) stated very effectively of how complicated the above concept is asking “Why Do Good Managers Set Bad Strategies?” The phrase indicates that the strategy concept is a very big and complex, thus organisations’ needs to recruit astute and effective managers. The role of a manager is very crucial to the success of every organisation. Organisations’ needs strategic managers and not “yes man” managers in order to compete in this fast changing environment.
From the above discussion it is obvious that corporate strategy is part of the overall strategy of organisations. Corporate strategy is an important element of the success of every organisation. Nothing is done by chance in the world of business especially in this era where the competition is very strong. Thus, organisations, in order to survive, must plan, organise and implement effective corporate strategy. Consequently, the long-term success of every organisation is interconnected with its corporate strategy. Finally, organisations that succeed in implementing sustainable corporate strategies can gain a sustainable competitive advantage, which is the most important key element for long-term survival.
No organisation can stand still or alone in the world of business; even if it has the money, people or the tangible resources. Even in ancient times, the business game was played by organisation’s moving forward by formulating strategies that made use of both internal capabilities and forming strategic alliances. Consequently, the most effective part of the business game is to evaluate what Corporate Strategy will ensure the success of the organisation in the long-term. Finally, it is of paramount importance to indicate the contribution of the corporate culture. The adoption of effective corporate culture is a key and fundamental element to success. Previous literature (see Prahalad and Hamel, 1990) has shown that many organisations have failed to survive due to the luck of culture.
Christos Ioannou BA (Hons), MBA (Finance), CMA, C. Mgr, CFC, DBA (Cand) is a Business & Management Consultant. He is the Representative of the ICMA Cyprus Division and AFMA Marketing Coordinator and Course Leader of Certified Executive Manager Program. He can be conducted at [email protected].
