What is a corporate strategy?

A corporate strategy is a long-term plan that outlines clear goals for a company. While the objective of each goal may differ, the ultimate purpose of a corporate strategy is to improve the company. A company's corporate strategy may be to focus on sales, growth or leadership. For example, a business might implement a corporate strategy to expand its sales to different markets or consumers. It may also use corporate strategy to prioritize resources. Another purpose of corporate strategy is to create company value and to motivate employees to work toward that value or set of goals.
Read more: What Is a Corporate-Level Strategy?
Types of corporate strategies
Here are some types of corporate strategies you can implement into your business:

Growth
A growth strategy is a plan or goal for the company to create considerable growth in different areas. It could refer to overall growth, but it could also encompass only specific areas, such as sales, revenue, following or company size. Companies can accomplish growth strategies through concentration or diversification. Concentration refers to a company developing the core of its business, such as a bookstore investing in selling more books. Diversification is when a company enters new markets to expand its business.

Stability
Stability strategies refer to a company staying within its current industry or market because it's already succeeding in its current situation. This strategy maintains the company's success by continuing practices that work for the company. To do this, the company might invest in areas in which they're doing well, such as customer satisfaction. For example, the marketing team might create advertisements with coupons on them to send to customers to further improve customer appraisal.

Retrenchment
The retrenchment strategy encourages the company to change paths to improve the business. This might mean switching business models or changing markets. The goal of this is to reduce or manage parts of the business that don't work for the company. A company might achieve this by either switching the business's pathway or by removing parts of the business. For example, if a product line is decreasing company sales, the product management team might remove the line to save profit.

Reinvention
Reinvention strategies are when a company reinvents, or redesigns, an aspect of the business that may be old or irrelevant. The company might update it with new designs, technologies or products. To accomplish this strategy, a project manager could reinvent a function by significantly changing a good or service. An example of this could be converting a physical store into an online .

Key components of a corporate strategy

Here are several key components of a corporate strategy:

Portfolio management
Portfolio management analyzes the different components of a business to see if they work well together. A corporate strategy uses portfolio management to decide which areas of the company to work on or invest in, which could include:
Deciding on a market
Using vertical integration
Investing in new opportunities
Diversifying the company
Analyzing competition
Employees use portfolio management to seek security and growth for their business.

Objectives
To create and implement a corporate strategy, employees typically need to set objectives. A corporate strategy is a plan, goal or course for the company to follow, and the plan consists of tasks that describe the company's mission. Objectives allow a company to record and measure its progress because employees can track whether they've completed a goal.

Resources
Resources refer to the people, materials and capital that run the company. A key component of corporate strategy is to allocate resources to best support the company's development. To do this, a manager may assign resources to different areas of the business. For example, if a project manager wants to start a large product launch, they might allocate team members from a different department to work on the launch.

Design
In a corporate strategy, design ensures that the employees organize the structure of the company in a way that maximizes efficiency. This can refer to distributing power within a company, such as determining the hierarchy of the company or how the company makes decisions. An example of this could be deciding how much freedom or authority a certain department receives.

How to evaluate a corporate strategy
Here are five steps to evaluate a corporate strategy:

1. Check for consistency
Consistency can help ensure a standardized corporate strategy, meaning that the components work similarly. Consistent processes can also help identify errors within a system. To check for consistency, assess the steps or objectives of the strategy. Consider if they're working well together or if they're the same. For example, look to see if all of your production processes are the same or at least similar. If you find inconsistencies, try to revise the strategy.

2. Evaluate resources
Evaluating your resources refers to deciding whether they're relevant. It can also mean seeing if your company is using all of its resources to increase growth or profits. To evaluate your resources, identify how each resource is working to benefit your corporate strategy. You can always reallocate your resources if you think they could support the company in more beneficial ways.

3. Analyze the involved risk
You can also analyze the involved risk within your business to evaluate your corporate strategy. To analyze the risk within your business, look at how your decision-making is affecting your business and decide how much risk you want your company to have. For example, you can have more risk by making an uncertain financial decision that you think could boost your business.

4. Examine the timeline
Having a timeline to guide your corporate strategy is important for completing your tasks or goals on time. To evaluate the effectiveness of your strategy, you may want to examine your timeline. Consider if your deadlines are reasonable or achievable and ask yourself if you should reduce or extend certain ones. For example, you might extend deadlines for tasks that your team needs more time to complete.

5. Assess how the plan works
Finally, assess how your plan works, which means identifying how it functions. Understanding how your corporate strategy works can help you think of ways to improve it. You could examine the measurable progress of your processes, such as sales, views or approval rates. Based on your progress, you can assess how efficiently your strategy works and make changes as necessary.
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Examples of corporate strategies
Some examples of corporate strategies may include:

Growth
Mike's car dealership is a successful company, and he wants to further expand his company through the growth strategy. First, he implements vertical integration, which means he controls the supply chain for his company's production. To do this, Mike purchases a plant that produces car parts and a plant that produces car accessories. Next, Mike diversifies his car dealership by producing other vehicles, like buses and motorcycles. By implementing these steps, Mike grows his company through ownership and increased sales.

Stability
Luciana works for a cellphone business that is currently thriving. Sales are growing steadily, and the cost of production is low. Due to this success, Luciana wants to incorporate the stability strategy. She plans to follow the same process she has employed without diversifying or changing the business. Instead, Luciana wants to invest in the business process model to continue to expand the organization at a consistent pace.

Retrenchment
Derek recently took over his brother's bakery. His brother was a risky owner, and he took a few actions that decreased business instead of increasing it. To reduce future risk, Derek implements the retrenchment strategy. He starts by removing the unnecessary costs for the bakery, such as the unused equipment. He then tries to alter the course of the bakery by revising the marketing strategy and advertising to a new target audience who is more likely to buy baked goods.

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