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  • Lorea Lastiri

Evaluate Your Corporate Strategy: Essential Steps for Success

Corporate strategy is an important aspect of business success, as it guides an organization toward achieving its long-term goals.

However, in today’s dynamic business environment, a clearly defined corporate strategy may not be enough. As the business environment changes, an organization needs to be agile to succeed. This is where evaluating your corporate strategy comes in!

Evaluating your corporate strategy helps you assess the effectiveness of your current approaches in order to make informed decisions to remain competitive.

So, how do you evaluate your corporate strategy? This guide will highlight how you can achieve this, ensuring your strategies effectively achieve your corporate goals.

What are the key components of a corporate strategy?

A corporate strategy is the approach an organization plans to take to achieve its long-term goal. This plan guides the organization when deciding on specific initiatives and resource allocation.

Several components make up a comprehensive corporate strategy. Some key components of a successful corporate strategy are:

Vision statement

The vision statement is a foundational element of corporate strategy as it provides a sense of purpose. A vision statement is a simple statement of what an organization aspires to become in the future.

To develop such a statement, managers only need to think of what they want the company to evolve into.

Vision statements are often braggy. But that’s what they are about. How else do you state what you’ll want to become in the future? If you sell running shoes, you’ll want to be the best running shoe seller in your target market.

The loft ambitions of vision statements make these statements inspirational. A vision motivates everyone in the organization to put in their best work to help the organization reach its desired future state.

Examples of companies that have crafted great vision statements are:

  • Ford: To become the world’s most trusted company, designing smart vehicles for a smart world

  • Apple: To make the best products on earth and leave the world better than we found.

  • Procter & Gamble: Be, and be recognized as, the best consumer products and services company in the world.

Mission statement

The mission statement is another fundamental element of corporate strategy as it influences the development and execution of strategic initiatives.

The mission statement is a simple statement that describes why an organization exists and what purpose it serves. Thus, the mission gives an organization clarity of purpose.

When you answer “why” your organization exists, you can better align actions with the overall purpose.

You can draft your mission statement from three angles.

  • Use your organization’s purpose: What your products or services do. An example is Apple’s mission statement, which is “bringing the best user experience to customers through innovative hardware, software, and services.”

  • Use what your organization stands for: For example, Tesla, which is known for sustainable solutions in the automobile industry, has its mission statement as “accelerating the world’s transition to sustainable energy.”

  • Use your organization’s goals: What your organization accomplishes for its customers. An example is Microsoft’s mission statement, which is “to empower every person and every organization on the planet to achieve more.

Goals and objectives

Objective setting is crucial in corporate strategy development because it describes what the organization will do to fulfill its mission.

You have described the desired future state of your organization (vision) and what it lives for (mission statement). But what will your organization do to try to achieve its mission and vision? This is the basis of goal-setting.

For example, consider Tesla, whose mission is to accelerate the world’s transition to sustainable energy. A good high-level strategic objective would be to “expand market share.”

This objective guides the organization's efforts and provides a way to measure success.

Competitive advantage

Competitive advantage is an essential consideration in corporate strategy because it ensures that an organization outperforms its rivals and remains resilient over time.

The only time you shouldn’t bother about competitive advantage is when your company has a monopoly in the market. If not, competitive advantage should be a key consideration when formulating corporate strategy.

It is about defining how your organization will differentiate itself from the horde of competitors. This could be through cost leadership, product differentiation, superior customer service, etc.

In strategic business management, having a competitive advantage allows your company to establish a solid and favorable position in the market relative to competitors.

Strategic tradeoffs

Strategic tradeoff is a crucial component of corporate strategy development because it is not always possible to take advantage of every opportunity.

When you think of it, there are often many opportunities an organization can exploit to achieve its strategic goal. However, because of resource constraints (or other limiting factors), not every available opportunity can be pursued simultaneously.

Thus, when making corporate strategies, you need to make conscious decisions about forgoing certain opportunities or initiatives in favor of others.

These decisions require carefully considering the costs and benefits of the different choices. Making strategic tradeoffs helps you optimize resource usage to enhance your competitive advantage.

Resource allocation

Resource allocation is a key component in corporate strategy development because it impacts the organization’s ability to execute its strategy and succeed.

A company’s success is directly impacted by how it distributes its assets, capabilities, time, and funds among different business units or initiatives to achieve corporate objectives.

Even the best initiatives will fail to move the company towards its goals if they do not get the necessary human and capital financial resources for execution.

Thus, when crafting its corporate strategy, leaders must determine how to allocate resources to the different initiatives.

Portfolio management

Portfolio management is a key component of corporate strategy as it helps you analyze how the different components of your business will work together toward achieving the strategy.

Portfolio management is about managing a business’s different products, services, and assets.

When developing strategies, you need to assess your entire portfolio to ensure everything aligns with strategic objectives.

Types of corporate strategies

There are different types of corporate strategies. They are as follows:

Growth strategy

A growth strategy refers to action plans for increasing market share or expanding a business. As its name suggests, the focus of the growth strategy is achieving business growth.

A company using it focuses on capturing a larger market share, sometimes even at the expense of short-term profits.

Companies employ growth strategies via concentration or diversification.

Concentration refers to a company developing the core of its business in order to achieve dominance in a specific market segment.

For example, a footwear company focuses on designing, manufacturing, and marketing high-quality shoes so it can sell more shoes.

Diversification means expanding operations into new markets or industries. It’s about expanding your product or service portfolio to cater to a broader range of customer demands. The expansion can be related to your core business or unrelated to it.

An example of a related diversification is Samsung. Samsung was a major electronics manufacturer when it diversified into the mobile phone market in 2000.

The component leveraged its expertise in electronic components to enter the phone market and is now one of the world’s best manufacturers of smartphones.

An example of unrelated diversification is the Virgin Group. The company started as a record shop. However, it has expanded across a diverse range of businesses.

It now operates in unrelated sectors such as airline (Virgin Atlantic), financial services (Virgin Money), telecommunications (Virgin Mobile), and more.

Stability strategy

Stability strategy refers to a type of corporate strategy that helps an organization maintain its current level of performance and stay within its existing market scope without significant changes.

That you’re doing well in a market doesn’t mean you should sit back and watch. A sit-back attitude can make competitors overtake you in the market or, worse still, make performance nosedive.

This is where a stability strategy comes in! This type of corporate strategy is perfect when you are already doing well in a market and perceive that making substantial changes carries more risks than benefits.

Thus, you move to sustain your current market position without making major disruptions.

When using a stability strategy, you focus on your current products, services, and operational processes. Instead of making major innovations or changes, you place emphasis on optimizing existing processes and improving efficiency.

Instead of expanding into new markets, you prioritize consolidating your existing market position by offering your customers the same products/ services.

Coca-Cola is an excellent example of a company that uses a stability strategy very well. It has maintained a consistent product portfolio, offering customers its Coca-Cola and Diet Coke products.

Instead of introducing new products, the company focuses on optimizing its distribution and marketing channels to sustain its market position.

Retrenchment strategy

Retrenchment strategy is a type of corporate strategy that involves changing paths in order to improve business performance. Sometimes, things may not be working well - a business may experience financial difficulties, declining performance, etc.

As you know, continuing on a path that isn’t working can kill a business. A retrenchment strategy helps you arrest whatever isn’t working in your organization in order to improve performance.

Organizations can employ different forms of retrenchment strategies to improve performance. These include:

  • Turnaround: This refers to making dramatic changes in the company’s products, services, or processes in order to improve performance.

  • Divestiture: It means getting rid of parts that don’t work. That is, identify underperforming or non-strategic assets, business divisions, or product lines, then close or sell them.

Reinvention strategy

A reinvention strategy is a type of corporate strategy that involves making a total or near-total transformation of a company’s business models, operations, and, sometimes, identity.

This is done in response to challenges, changes in the business environment, or a need to innovate.

Reinvention is about embracing change - letting go of the old ways of doing things and adopting new ways in order to make your business more relevant and improve overall performance.

Some ways to reinvent yourself include:

  • Digital transformation: It involves using digital technologies to transform business processes and improve efficiency. An example is moving from a brick-and-mortar store to an e-commerce online store.

  • Business model innovation: You change your plan for making profits, like moving from the traditional one-time fee purchase model to a subscription model.

  • Brand repositioning: You change your brand’s identity to resonate with a new audience or market. For example, a kid’s clothing business can reinvent itself to target adult clothing.

Steps to evaluate your corporate strategy

Whether you’re a small business that wants to face off against corporate giants or a corporate giant that needs to sustain its domestic and international operations, you need a sound corporate strategy.

When outlining your strategy, evaluating it will help you ensure it remains effective in achieving organizational goals.

The following steps will help you evaluate corporate strategy:

Define your evaluation criteria

The first step in evaluating your corporate strategy is to establish the standard you’ll use to assess the effectiveness or success of the strategy.

Your evaluation criteria will depend on the aspect of corporate strategy you want to assess. They could be financial metrics, customer satisfaction metrics, market share metrics, or other key performance indicators relevant to your business.

Choosing the right metrics is very important, as the wrong metric can make you focus on the wrong things.

Choosing the right KPIs can be time-consuming and tedious. Thankfully, Kippy makes everything simple. Just enter your objectives into Kippy, and it will furnish accurate KPIs for you in seconds.

Gather relevant data

Your evaluation will involve reviewing data related to your company’s performance and the strategy implemented. So, collect all the relevant data and information.

Specific data sources will depend on the aspect being evaluated. You can collect data from financial records, market research, employee surveys, etc.

Analyze outcomes

After collecting data, plug them into relevant formulas to evaluate whether you achieved KPI targets. Analyze any deviation between KPI targets and actual outcomes.

Conduct a SWOT analysis

The best corporate strategies leverage strengths, address weaknesses, capitalize on opportunities, and mitigate threats. Investigate whether your corporate strategy did these by conducting a SWOT analysis.

Assess how well you leveraged internal capabilities in pursuit of strategic goals. Also, check whether initiatives are addressing your weaknesses.

Assess how well you took advantage of identified opportunities and whether there are new opportunities you can target.

Examine how the identified threats impacted the business and how the strategy minimized them. Also, take note of new external factors you should be wary of.

Review resource usage

A key aspect of corporate strategy evaluation is reviewing how you allocate resources to support the strategy. Look at whether each resource is aligned with strategic priorities, that is, working to benefit your corporate strategy.

Then, you can make adjustments by reallocating resources so they support your strategic objectives in more beneficial ways.

Analyze risks

Since risks can impact the achievement of objectives, reviewing risks is important when evaluating strategies. Evaluate the different challenges that have emerged. Were any of the challenges unexpected?

Unexpected challenges may mean you were not very thorough in the initial risk identification process, resulting in you taking on more risks than you were aware of.

Also, evaluate how effective mitigation strategies have been in addressing expected challenges. Investigate what you could have done differently.

Lastly, using insight from all that has happened, identify the risks still surrounding the achievement of the strategy. Note how much risk you are willing to take on going forward, then map out mitigation strategies for them.

Competitor benchmarking

Another way to evaluate a corporate strategy is to compare it to what competitors are doing. Simply put, place your practices and performance side by side with those of competitors.

This will help you see areas where you are doing better and areas where you are falling behind.

Consider stakeholder perspective

Considering stakeholders’ perspectives is important when doing strategic evaluation because the actions of these individuals and groups can influence the success or failure of the strategy.

Gather feedback from relevant stakeholders, such as customers, employees, suppliers, and investors. Then, assess whether their perception of the company’s strategy aligns with their expectations.

  • Customers' perspectives can help you determine how the strategy meets customers' needs. This will enable you to understand how to meet customers’ needs to improve satisfaction and loyalty.

  • Employee perspective can help you understand how the strategy affects the workforce and how to increase employee engagement.

  • Investor perspective helps you determine whether the strategy instills confidence in the investment community.

Evaluate timeframes for strategy

In strategic decision-making, it is often not enough to accomplish certain goals. It is almost always important to achieve the goals within a specified timeframe or before a deadline.

Thus, it is important to consider whether an appropriate time horizon has been allocated for the strategy during strategy determination.

Also, when evaluating the strategy’s effectiveness, you should consider whether deadlines were fine.

You’ll want to evaluate whether you are meeting deadlines for completing specific milestones and whether the desired results of the strategy will be achieved within the specified timeframe.

If the desired results are time-sensitive and you’re running out of time, you may consider other strategies. For example, if you must enter a new market at a particular time and you’re running out of time to develop a new product, you may consider a merger or acquisition.

Factors to consider when choosing a corporate strategy

Choosing a corporate strategy is a critical step, as an organization’s future success depends on chosen strategies. Some factors to consider when choosing a corporate strategy include:

Mission and vision

When choosing a corporate strategy, ensure it aligns with your organization’s mission and vision. This way, the strategy will contribute to your organization’s long-term aspirations.

Financial implication

As you know, every initiative has financial implications. So, when choosing a corporate strategy, you should assess the financial implications of the strategy.

Consider what it will cost to achieve the strategy, how you will raise the funds, and the financial benefits (returns) of achieving the strategy.

This consideration helps you determine if the strategy is feasible and whether you can access the financial resources to fund it.

Strength and weaknesses

The best corporate strategy is one that leverages your organization’s strengths to the maximum and addresses any weaknesses you may have. Therefore, when choosing a strategy, it’s important to look internally to identify your strengths and weaknesses.

Market conditions

The best corporate strategy is one that allows you to capitalize on opportunities in your external environment.

Market conditions can help you identify opportunities that you can capitalize on. For example, if you find that customers have a new preference, you may consider developing a strategy that helps you meet their needs.

Thus, conduct a thorough market analysis to understand the different market conditions and identify opportunities you can capitalize on.

Regulatory and legal landscape

You don’t want to be on the wrong side of the law when doing business.

Therefore, when choosing a strategy, it’s important to consider the legal and regulatory requirements in the industry in which your organization operates. Ensure the strategy you choose complies with the relevant laws and regulations.

Social and environmental factors

Know that social and environmental considerations can influence customer preferences and demands. This is why customers would leave a product for one that is ethically sourced or has a smaller environmental footprint.

Thus, when choosing a corporate strategy, consider how it affects the public and the environment.

Takeaway: Evaluate your corporate strategy and ensure strategies remain effective

A corporate strategy serves as a roadmap to guide your organization toward achieving overall goals and objectives.

In today’s business environment, success depends on regularly evaluating strategies to ensure they remain effective in achieving desired outcomes.

The steps listed in this article will help you evaluate your strategy. These include defining your evaluation criteria, gathering data, analyzing outcomes, conducting a SWOT analysis, reviewing resource usage, analyzing risks, benchmarking, considering stakeholders’ perspectives, and evaluating timeframes.

The initial step involves choosing accurate performance metrics for assessing the effectiveness of your corporate strategy. This is where Kippy will play a crucial role!

Kippy is a B2B SaaS product that generates accurate KPIs for objectives in minutes. No other strategy management software in the world does this. Thus, Kippy saves you the headache of finding the right KPIs for objectives and the risks of choosing the wrong KPIs.

Kippy allows organizations to manage their strategy, objectives, KPIs, and projects and then use the information to appraise their staff.

Ready to get closer to achieving your corporate strategy? Book a demo with us today, and see how Kippy can help you.



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