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  • Lorea Lastiri

9 Reasons Why Corporate Strategy Matters (w/Practical Tips)

Updated: Jun 12, 2023



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Corporate strategy is a unique long-term plan or framework that outlines the direction a company should take in order to achieve its goals. Moreover, it defines a mission and vision for the whole organization, striving to create value, develop competitive marketing advantage, and seize maximum market share.

Corporate strategy is important because it helps companies identify trends and opportunities, creates a vision, encourages innovation, offers a competitive advantage in the market, and optimizes your business model.

This post will discuss in detail the role corporate strategy plays in a company’s success and why it matters. You’ll also find some practical tips on how corporate strategy can help your business grow.

1. Identify trends and opportunities

No one knows the future. But there are ways of investigating future strategic possibilities that will likely affect the market. A corporate strategy allows you to examine upcoming broader changes in the market and how they will affect your business.

These changes may be:

Political

Political changes include government policies, regulations, and laws your company adheres to during operations. If the government alters or introduces a new policy that favors a specific industry, you can adjust your strategy accordingly to gain from it.

Political changes can also present risks to your business. For example, the government can impose new taxes on the products you deal with. You may have to adjust your prices or find new products not subjected to the taxes.

This may not fair well with customers, and you risk losing a lot. But it is a necessity for your business to remain afloat.

Economic

Inflation, unemployment, and fluctuations in currency exchange rates are some of the most common economic changes occurring worldwide. They have led to business closures and sales due to improper planning and resource allocation.

A corporate strategy includes an analysis stage where you analyze all the micro and macroeconomic changes that can affect your business. Your business can take advantage of opportunities that arise from such changes and prepare for potential challenges.

Technological

The technology world is ever-developing with the discovery of new technologies and software breakthroughs. These advancements can help your business gain a competitive edge by improving efficiency, customer service, or marketing, but you need to know how to adopt them.

For instance, new and more effective software in the market could help boost your productivity, but your hardware cannot support it. Corporate strategies can predict the best time to update your hardware and stay ahead of the competition.

Proper planning allows you to allocate resources for technological advancements in your budget.

Customer changes

Even customers are bound to change now and then. New trends and products can cause them to take a different direction. They may try something new or switch to a product in the same market.

A corporate strategy helps you track incoming products and trends in the market and how they may affect your business. It involves staying in touch with customers to keep track of their preferences, anticipate their needs, and adjust services and products accordingly.

2. Create a vision

Whether you run a small or large organization, having a vision gives your employees a sense of purpose and direction. Your vision should be tailored to your specific organization, its market share, the products you offer, and the unique customer demands.

A corporate strategy helps you align your vision with your long-term organizational objectives. It clarifies how you want to accomplish your goals and what strategies you should implement. Using a corporate strategy helps you create a vision that is:

Purpose-driven

You should unite your employees and stakeholders around a common purpose. It might be an overall or small-scale organizational goal.

A clear vision makes it easier for everyone to understand how they contribute to the company's success, their role within different departments, and why they should be passionate about their work.

Inspiring

A good vision presents a challenge to all stakeholders in the organization. It should be hard to achieve but, at the same time, inspiring enough for everyone to be willing to work hard and strive for success. An inspiring vision can prompt action, drive innovation, and create enthusiasm around the organization's objectives.

Future-oriented

Your organization's direction should be based on what you want to achieve long-term, not just short-term successes.

A corporate strategy can help you map a path that will take your organization where it needs to be. It should include achievable steps and milestones that you can work towards to reach your long-term objectives.

Motivational

Every business environment needs motivation to keep your team enthusiastic about their work. A corporate strategy helps you recognize employees who have gone above and beyond in their work and reward them in a way that motivates everyone else to follow suit.

An environment with motivation instead of competition can lead to a more productive workplace and better results. Your company should help employees reach their full potential while working together towards a common goal.

Unique

There will always be competition in the market, and you should find ways to stand out from the rest if you want your business to succeed. A corporate strategy helps you define your vision and create a unique market identity based on your strengths, weaknesses, and goals.

Having distinct objectives from your competitors gives you a better chance of growing and increasing productivity. It also helps you create a relationship with a specific customer base that is more advantageous for you.

3. Offers a competitive advantage

A competitive advantage involves evaluating your competitor's strengths and weaknesses and finding ways to fill gaps or improvements. Your organization can stay ahead of your competitors and remain profitable.

A corporate strategy allows you to differentiate yourself from competitors by identifying how to fill those gaps and increase profits. It equips you with various strategies for competitive advantage, including:

Emphasize product features

Your product is the most critical element of your business. It should have features and benefits your competitors don't offer, such as quality. This makes it easier to draw in customers and remain competitive.

You can also use deceptive design packaging to make the exterior of your product more attractive and draw customers in. For example, if you sell tablets, you can make them look thinner and lighter by curving and rounding out edges.

Invest in customer service

Customers are the lifeblood of any business. You don't have a business without them, so you must ensure they get the best possible service.

A corporate strategy allows you to allocate resources for customer service, such as hiring a customer support team or using AI-powered chatbots to answer inquiries quickly.

Create partnerships

While competitors may be out to beat you in the market, they may also be willing to collaborate. With a corporate strategy, you can identify areas where partnering up with them offers mutual benefits.

Your competitor may have a better distribution network, and gaining access to their supply chain could give you access to a new customer base.

However, companies are only willing to collaborate when it's a win-win situation for both sides. Therefore, you need to identify the mutual benefits of any potential partnerships and develop an irresistible proposal.

Create brand awareness

What is your business all about? How can customers recognize you? A corporate strategy allows you to create an effective brand message by considering your target market's needs and creating a unique identity for your business.

You can create brand awareness through social media, content marketing, and other digital channels. These channels help spread the message about your brand and create a loyal customer base.

Appropriate pricing

83% of customers use pricing as a primary factor when deciding which product to buy. A corporate strategy includes pricing strategies that can help you compete in the market and remain profitable.

For instance, you can match or undercut your competitor's prices depending on your customer base. It also provides you with strategies to increase the price without losing customers, such as providing offers, discounts, and loyalty programs.

4. Enable project evaluation

Project evaluation is when the management assesses how successful each project is. It involves collecting data on the cost, time taken, resources used, and other factors associated with the project.

You can measure many aspects during the project evaluation process, including customer satisfaction, employee motivation levels, cost efficiency, and progress made. This gives you an insight into how your project is progressing and provides you with the data to improve.

A corporate strategy helps you define what makes a successful project and allows you to measure it against predetermined criteria. It gives you three points where project evaluation is most critical for an organization. These are:

Pre-project evaluation

Pre-evaluation refers to writing up a project plan, assessing the associated risks, and ensuring you have the resources to complete it. You then pitch it to the relevant stakeholders, who can decide whether the project is feasible.

Pre-project evaluation helps you ensure the project is worth investing in before spending your resources. It's the only way to determine whether the project is worth your time and money.

Ongoing-project evaluation

Ongoing-project assessment involves ensuring that a project is proceeding as previously planned. You check whether you have hit the scheduling and budgeting milestones and can flag any issues that may arise.

Ongoing-project evaluation should be constant and involve a regular review of progress. It allows you to make timely corrections if needed and helps keep everyone on track.

At this point, you need project management software to help you track milestones and deliverables. It should provide real-time updates on progress and a clear view of the project's progress.

Post-project evaluation

If your project is meant for the organization's overall benefit, you must evaluate all business units involved. Post-project evaluation examines how the project has benefited each business unit and whether it aligns with the organization's goals.

During a post-project evaluation, you also interview the project team to understand the challenges they faced and the successes they achieved. This helps you identify any areas of improvement for future projects and areas where you can allocate more resources.

5. Resource allocation

All companies, regardless of size, must make difficult decisions about allocating resources to pursue their goals. Resources are not infinite, so you have to make tough choices about where the money should go.

A corporate strategy helps you prioritize projects and effectively allocate resources. You need to consider the cost of labor, materials, and other resources.

Making informed decisions about allocating your resources is critical for your business. If you mishandle your finances, you could end up in a difficult financial position, such as debt, bankruptcy, or a lawsuit.

Having a corporate strategy helps you make informed decisions and maximize the value of your resources. It allows you to adopt the following strategies for effective resource allocation:

Set up effective communication channels

When planning and executing any company strategy, you must inform various stakeholders about the project. You must establish effective and timely communication channels between the project manager, team members, and other stakeholders.

Communication among stakeholders when allocating resources can help prevent conflicts that arise due to misunderstandings. This critical information also affects employees' morale when they realize some business units are unaware.

Designate a team to oversee resource allocation

A well-defined corporate strategy assigns teams for most tasks, and resource allocation is no different. The team should include experienced individuals with the skills to develop effective resource management strategies.

You should consider people with adequate information about your company's operations to make informed decisions. This team should also include people from different business units to provide comprehensive perspectives on using the resources.

Reprioritize your operations

Reprioritization is the process of evaluating current projects and deciding which ones should be given priority over others. It involves examining whether a project aligns with your company's goals and objectives.

If a project appears to be ineffective or goes against the growth strategies of your business, it should be reprioritized. You can move resources from that project to others, making progress and having a higher chance of success.

Set achievable goals

Organizational growth is gradual and can only be achieved after a while. You should set reasonable, achievable goals that can be met within the allocated resources.

If your company has recently experienced a decline in profits, take a step back and evaluate your growth strategies. Effective resource allocation is only possible when you have realistic short-term and long-term goals aligning with your corporate strategy.

6. Optimize business models

Business models help companies adapt and stay competitive in ever-changing markets. It's a set of core components that define how your company delivers goods and services, generates revenue, and creates value for its customers.

Aligning your business model with your corporate strategy is essential to ensure long-term success. Here are ways a successful corporate strategy can help optimize your business model:

Identify your target customers

Who are you trying to reach with your products or services? How do you differentiate yourself from your competitors? Identifying your target customers helps you focus on the people most likely to be interested in your products or services.

This helps you create a more effective marketing strategy and optimize resources for maximum results. You must also consider how your customers' needs may change over time and adjust your business model accordingly.

Choose the right channel

The right sales channel will get your products or services in front of more people and increase your chances of success. You can choose a direct sales model, online sales channels, or a combination of both.

Choosing a sales channel relies on various factors, including customer preferences, cost structure, and market conditions. Having strategic initiatives in place helps you make the right decisions and optimize resources for a successful business model.

Review current processes

Your business strategy should include process improvements that maximize your resources. This includes anything from streamlining operations to creating more efficient processes.

For example, you may have a strategic planning process to determine how to reduce customer service costs. An efficient process would involve reviewing the current procedure and identifying areas where you could make changes to increase productivity.

7. Boost operational efficiency among management

The management team leads the company and sets an example for other teams. They are involved in all processes and must ensure that the company is progressing in line with the corporate strategy.

Setting up meetings with the management team and discussing the goals can boost operational efficiency. You should also encourage them to suggest ideas that will make processes faster and result in better outcomes.

Here are more ways a solid corporate strategy can push you to boost operational efficiency among management:

Set up frequent meetings

Regular meetings, such as daily stand-ups or weekly check-ins, can ensure =everyone is on the same page and has access to the same level of information. The meetings should include all management team members and focus on progress made toward achieving organizational goals.

When only shared among top management, critical information can lead to a lack of transparency and accountability. This is one of the most common reasons why corporate strategies fail.

Adopt tech-based solutions

Technology has transformed how companies operate by making processes faster and more accurate. Implementing project management software and giving access to all stakeholders can keep everyone updated on the progress of organizational projects.

Technology-based solutions such as cloud storage, automated reporting, and task management apps can streamline operations and make them more efficient. You can also adopt tools like Slack or Microsoft Teams to facilitate communication among the management team and other stakeholders.

Prioritize employee feedback

During meetings, set aside time to listen to employees' opinions and incorporate their ideas into your strategy. They are the ones who are best positioned to identify potential problems or suggest new approaches to existing tasks.

Most organizations fail to recognize employee feedback's importance, which can lead to a lack of motivation and decreased productivity. Listening and responding to their ideas can help you stay on top of organizational goals and motivate employees.

8. Protect your business strategy from external threats

There are many angles from which external threats can come, such as competition, market volatility, supply chain disruptions, and cyberattacks.

A corporate strategy should take into account potential risks and have a plan for mitigating these threats.

Here are some of the ways a corporate strategy helps you prepare for external threats:

Cyber security

With the rise in cyber crimes such as phishing attacks, data breaches, and ransomware attacks, companies must adopt proper cyber security measures to protect their assets.

A good corporate strategy should include measures for mitigating cyber risks, such as implementing multi-factor authentication, using encryption technologies, and providing cybersecurity training to employees.

Establish contingencies

A contingency plan is a strategy for dealing with unexpected events. It should include procedures and resources that can be used in an emergency.

A contingency plan can reduce the risk of being unprepared for an unforeseen event and help protect your business from external threats.

9. Encourage innovation

Innovation is one of the best stability strategies for companies to stay competitive. It involves finding new and better ways to do things that can positively affect your business operations.

Adopting corporate-level strategies helps define goals and outline steps to help you achieve them. Innovation encourages organizations to proactively identify opportunities and implement solutions that can help them reach their goals.

Let us look at ways you can promote innovation in your organization:

Give employees time and space

Creating an environment that encourages employees to explore and experiment is important for promoting innovation. You can allocate resources, such as time and space, for employees to develop new ideas.

Most organizations schedule time for employees to break from their normal schedule to focus on something creative. You can also set up suggestion boxes or meetings where employees can brainstorm and put forward their ideas.

Implement ideal suggestions as soon as possible

When an employee provides an idea that is in line with the organization’s goals and has the potential to bring about positive change, it should be implemented as soon as possible.

This encourages employees to develop more ideas and helps create a culture of innovation within the organization.

Reward employees

Rewarding employees for their creative efforts can further motivate the entire team. Offer incentives such as bonuses, promotions, or recognition awards to those who come up with innovative solutions.

This helps create a sense of belonging among employees. It also encourages them to think outside the box and develop more ideas for growth strategies.

Takeaway: Corporate strategy for operational efficiency and business growth

Successfully running a business is not everyone's cup of tea. There are many steps involved that require proper planning and implementation. You should understand the core businesses and adopt a business-level strategy.

Corporate strategy is the cornerstone of any business and should be a priority for all organizations. A good corporate strategy will help you achieve your goals, maximize profits, and protect your business from external threats.

It involves making decisions, setting goals, and establishing systems that will ensure the smooth functioning of your organization.

To learn more about creating a successful corporate strategy and promoting organizational growth, visit Kippy Cloud today. We have the resources to help you develop an effective strategy for your business.

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