CORPORATE STRATEGIES

Por María Victoria Retondaro Costaguta

…”Good plans are meant to achieve something—this something is captured in verbal and written statements of an organization’s mission and vision (its purpose, in addition to specific goals and objectives). With a mission and vision, you can craft a strategy for achieving them, and your benchmarks for judging your progress and success are clear goals and objectives. The three “planning” topics of your principles of management cover (1) mission and vision, (2) strategy, and (3) goals and objectives...” (Carpenter, Bauer, Erdogan)

Corporate strategy is the global scope and direction of a corporation and the way in which its different departments work together to accomplish particular goals and therefore achieving business success in the long term. The corporate strategy provides clear direction for all the business units working in concert to meet shareholder expectations while providing value to their customers and employees. It is how an organization creates and captures value in a specific product market.

Issues of corporate strategy apply to firms of every size and in every sector.

In 1998, Henry Mintzberg, Canadian academic and author on business and management, defined five definitions of strategy:

-As plan: a directed course of action to achieve an intended set of goals;

-As pattern: a consistent pattern of past behavior, with a strategy realized over time rather than planned or intended;

-As position: a strategy determined primarily by external factors of the firm;

-As ploy: a specific maneuver intended to outwit a competitor;

-As perspective: executing strategy based on a "theory of the business" or natural extension of the mindset or ideological perspective of the organization.

The development of a corporate strategy involves establishing the purpose and scope of the organization's activities and the nature of its business, taking the environment in which it operates, its position in the marketplace, and the competition it faces into consideration.

Recent approaches have focused on the need for companies to adapt to and anticipate changes in the business environment, i.e. a flexible strategy.

Strategy sprung from the need for people to defeat their enemies. The first essays that discuss strategy are from the Chinese during the period of 400 – 200 B.C. Sun Tzu’s The Art of War, is probably the best work on military strategy.

The word “strategy” is consequent indirectly from the Classic and Byzantine (330 A.D.) Greek “strategos,” that means “general.” One of the most famous Latin works concerning military strategy is written by Frontius and it’s called Strategemata. Strategemata describes a compilation of strategema, or “strategems,” which are literally “tricks of war.” The Roman historians also introduced the term “strategia” to refer to territories under control of a strategus, a military commander in ancient Athens and a member of the Council of War. The word retained this narrow, geographic meaning until a French military thinker introduced the term “La Strategique” in 1799, in the sense that is understood today.

Some of the more important military strategy authors include Niccolo Machiavelli (1469- 1527), Adam Heinrich von Buelow (1752-1807), a German writer who was the first to describe strategy in terms of bases and lines of communication, and B.H. Liddell Hart (1895-1970), author of Strategy. Possibly the military figure with the most impact on strategy is Carl von Clausewitz (1780-1831) who recommended the use of maximum force whenever possible.

In 1934, Professor G.F. Gause published the results of a set of experiments in which he put two protozoans of the same genus in a bottle with sufficient supply of food. If the animals were of different species, they could survive and persist together. If they were of the same species, they could not. This observation led to Gause’s Principle of Competitive Exclusion: No two species can coexist that make their living in the identical way.

Competition existed long before strategy. The first one-cell organisms required certain resources to maintain life. When these resources were adequate, the number grew from one generation to the next. When any pair of species competed for some essential resource, one displaced the other. In the absence of counterbalancing forces that could maintain a stable equilibrium by giving each species an advantage in its own territory, only one of any pair survived. The richer the environment, the greater the number of potentially significant variables that can give each species a unique advantage and the greater the potential number of competitors. For millions of years, natural competition involved no strategy. By chance and probability, competitors found the combinations of resources that best matched their different characteristics.

In both the competition of the ecosphere and the competition of trade and commerce, random chance is probably the major, all-pervasive factor. Chance determines the mutations that survive and thrive from generation to generation. Those that adapt best displace the rest.

Business strategists can use their imagination and ability to reason logically to accelerate the effects of competition and the rate of change. Without imagination and logic behavior and tactics are either intuitive or the result of conditioned reflexes.

Competitors that make their living in the same way cannot coexist—no more in business than in nature. Each must be different enough to have a unique advantage.

What differentiates competitors in business may be price, function, time or place utility. Or it may be the customer’s perception of the product and its supplier. Since businesses can combine these factors in many different ways, there will always be many possibilities for competitive coexistence. But also, many possibilities for each competitor to enlarge the scope of its advantage by changing what differentiates it from its rivals. Strategy is a thoughtful search for a plan of action that will develop a business’s competitive advantage and compound it. For any company, it begins with recognition of where you are and what you have now.

Strategy calls on the commitment and dedication of the whole organization. Strategic commitment is measured, considered, reasoned. Natural competition is evolutionary while strategic competition is revolutionary.

This is why, in geopolitics and military affairs as well as in business, long periods of equilibrium are interrupted by shifts in competitive relationships. It is the pattern of war and peace and then war again. In business, however, peace is becoming increasingly rare. When an aggressive competitor launches an effective strategy, all its competitors must respond with equal sagacity and dedication of resources.

In game theory, a strategy refers to the rules that a player uses to choose between the available actionable options. Every player in a non-trivial game has a set of possible strategies to use when choosing what moves to make.

A strategy may recursively look ahead and consider what actions can happen in each contingent state of the game—e.g. if the player takes action 1, then that presents the opponent with a certain situation, which might be good or bad, whereas if the player takes action 2 then the opponents will be presented with a different situation, and in each case the choices they make will determine their own future situation. This case applies to non-competitive markets for goods and services.

Corporate strategy is based on knowing:

Where your organisation is today

where you want it to be

how you want to get there

The skills needed to develop a strategic plan for an organization are:

Launch compelling vision which sets out where the organisation should be going

Prioritise strategic objectives that are consistent with the vision of the organisation

Balance risk with desired outcomes

Balance innovation with tested solutions

Ensure that your plan is flexible and open to change

Develop policies and values that will guide the work of others towards your vision

Delegate responsibility and allocate resources effectively

Identify methods for monitoring and evaluating the plan

Win the support of key stakeholders and

Management theorist Henri Fayol included planning amongst the prime responsibilities of management.

Strategic planning helps determine the direction of an organisation over the long term, matching its resources to its changing environment and its markets, customers and clients, so as to meet stakeholder expectations.
Strategic planning is a process of envisioning a desired future, and translating this vision into defined goals or objectives and a sequence of steps to achieve them.  

Any formal planning requires time and resources. Strategic planning is important whether the organisation's direction needs reviewing, whether its priorities have changed or whether the means of achieving desired objectives need to be updated due to internal or external forces effecting delivery. 

The 4-Step approach is a simple structure that helps us to look both holistically and in detail at the drafting and development as well as the implementation of our Plan:

STEP 1: Where are we now? Situation analysis

STEP 2: Where do we want to get to? Future direction

STEP 3: How are we going to get there? Strategy development

STEP 4: How will we know when we have got there? Monitoring & Evaluation

Example:

APPLE: In public, all companies criticize the vertical integration of Apple, its exclusive operating system and the closure of its devices to unauthorized modifications. But their actions reveal who want to be like Apple. Vertical integration is not exclusive to Apple or are the only ones to apply, but be realistic with the expected results.