Creating A Relevant Corporate Strategy
Achieving high performance is the goal of companies everywhere. In today’s business environment, successful companies are those that have established a strong foundation to weather the storms of economic uncertainty, workforce changes, market shifts and the competition. We need to take a step back and look at the big picture, notice where we are performing well and notice what our competitors are doing. Developing a corporate strategy involves establishing the purpose and scope of the organization’s activities and the nature of the business it is in, taking the environment in which it operates, its position in the marketplace, and the competition it faces into consideration.
“You may not be interested in strategy but strategy is interested in you” – Leon Trotsky
Strategy is often overlooked or undervalued in many organizations yet having a well-defined and articulated strategy is a core element of success. By exploring corporate strategy you can make the difference between success and failure in a fast-moving business environment. In tough business times, it is easy to become overwhelmed with day-to-day operations and lose sight of what is up ahead. Successful companies understand that they have to evaluate each strategy to determine how it has been implemented and whether it has succeeded or needs to be replaced by a new strategy to meet new circumstances, changing technology, new competitors, or a new economic environment.
“Our real problem is not our strength today; it is rather the vital necessity of action today to ensure our strength tomorrow.” – Calvin Coolidge
A successful business can create a sustainable competitive advantage by staying aware of the internal and external factors that have the potential of having a positive or negative impact on their business efforts, such as:
- Overview of market conditions — understanding your customers’ needs and how best to care for them.
- Evaluation of the competition — understanding their offers and what they do well, comparing what you can do better.
- Preparing a comprehensive SWOT analysis — evaluating your company’s strengths, weaknesses, opportunities and threats.
- Efficient planning for increased margins — a strategy to enhance the bottom line.
Business leaders can ensure continuous profits and long-term viability with the formulation of relevant corporate strategies. How can business leaders formulate relevant strategies? By making informed decisions that drive their business forward to guide the day-to-day decision-making by creating a road map by which an organization operates. A strategy should be relevant to the business environment and the corporate entity. When a business takes the time to map out where it wants to go and how it wants to get there, then the business leaders are better able to make good decisions.
A corporate strategy depicts the perception of the current conditions and potential growth. A corporate strategy comprises a directional strategy through a corporate vision and a mission statement. The corporate strategy is important to depict the best image of the company. A combination of strategy formulation and strategy implementation involves:
- A situation analysis: both internal and external.
- Objectives are set concurrent with the assessment. This involves crafting vision and mission statements, overall corporate objectives and strategic business unit objectives – both financial and strategic.
- These objectives should, in the light of the analysis, suggest a strategic plan. The plan provides the details of how to obtain these goals.
To create appropriate strategic objectives, businesses need to understand their capabilities as well as their environment. We also need to clarify our purpose or mission with a keen understanding of the history and current performance of our business to craft a strategic mission and vision that is attainable in terms of competencies and market dynamics .Mission and vision statements provide direction for the organization and as the business engages in its strategic planning process it compares its objectives with the path it has set for itself.
Once you have established your purpose and vision, you will need to analyze the state of the organization. Business leaders need to take a serious view of its recent performance. The analysis should be based on profitability, market share, revenue growth, and customer satisfaction. We need to examine the strengths, weaknesses, opportunities, and threats by performing a (SWOT) analysis. Strengths consist of things the business does well relative to its competition that provides a competitive advantage. Weaknesses, on the other hand, diminish the competitiveness of a company. Opportunities are external conditions that are helpful to achieving the objectives and Threats are the external conditions which could do damage to those objectives.
It is important that objectives clearly indicate what is to be achieved and the individuals responsible for each objective. The objectives serve as the basis for budgets and performance standards. Having the financial requirements for each objective, the cost is then allocated to the operating budget for each department so that they can fulfill the set objectives. The objectives are also added to the performance standards for each department and become part of the performance evaluation. The progress of each objective is tracked and a specific and measurement exists for each department and an individual’s performance.
“He who cherishes a beautiful vision in his heart will one day realize it. Cherish your vision; for if you do, your world will be built at last.” – James Allen
As strategic leaders, our prime responsibility is to ensure that our organization is going in the right direction. Our work and our passion reside at the intersection of analysis and strategy. We should be grounded in the past and poised for the future. Strategy is a creative art: It is a frame of mind that requires intuition and intellectual flexibility. One of the most fundamental skills of creativity is the ability to recognize an opportunity and seize it.
Jamie Wood, Avatel EVP
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