Here are tips on how to develop corporate strategy effectively:
1. Identify the key success factors.
2. Identify the strengths and weaknesses of your business and its competitors.
3. Assess the opportunities and threats present in your industry.
4. Develop strategies to respond to opportunities and threats, and determine how to capitalize on strengths.
5. Develop strategies to build or rebuild capabilities that enable you to gain or sustain a competitive advantage over rivals.
6. Determine which activities must be done by your business, which activities can be done by others, and which activities can be eliminated.
Let us discuss each of these below in detail:
How to Develop Corporate Strategy
1. Identify the key success factors.
The starting point for developing a corporate strategy is to identify the key drivers of your firm’s business success or failure. Also, determining your business’s key success factors helps you focus on those areas; that are most critical to your business’s future success.
The key success factors of your company are those activities that, if done well, will most likely contribute to your company’s long-run competitive advantage. The main sources of competitive advantage are:
These sources of competitive advantage represent different types of activities that a firm can focus on in developing its corporate strategy. For example, a firm’s competitive strategy can focus on cost leadership and low prices, product leadership, and quality, or differentiation through product features and service.
So, your corporate strategy needs to identify how you intend to compete in the marketplace, and how you intend to use your strengths and resources to gain a competitive advantage over rivals.
2. Identify the strengths and weaknesses of your business and its competitors.
Your corporate strategy should also examine the strengths and weaknesses of your business relative to rivals in the same industry. Weaknesses are also problems that need to be solved for your company. Besides, this is to achieve its goals more effectively; they represent deficiencies within your company that could potentially harm it if they go unaddressed over the long term.
Strengths, on the other hand, are things that make your company more effective than its rivals; they represent positive characteristics about your company that give it an edge in achieving its goals over time. They include attributes such as economies of scale, experience or reputation, product or service quality, superior technology, or access to scarce resources like patents or skilled employees. Strengths enable a firm to outperform rivals in some way or another; they give it an inherent advantage over competitors in meeting customer needs effectively and efficiently.
3. Assess the opportunities and threats present in your industry.
After identifying the strengths and weaknesses of your business and its competitors, the next step in developing a corporate strategy is to consider the opportunities and threats present in your industry.
Opportunities are factors that offer potential benefits for your business, such as new product development, changes in technology, or entry into a new market; if properly exploited, these opportunities can provide your business with a competitive advantage.
Threats, on the other hand, are factors that represent potential sources of harm or loss for your business; if allowed to go unchecked, they might cause your company to lose its competitive advantage over time.
4. Develop strategies to respond to opportunities and threats, and determine how to capitalize on strengths.
Strategies are plans of action designed to achieve certain goals within a certain period; they are an important element of any corporate strategy. Strategies are based on your firm’s analysis of its strengths, weaknesses, opportunities, and threats; by responding strategically to these factors in the marketplace, you can gain a competitive advantage over rivals.
Corporate strategies should be developed for each goal within the business plan—in other words, for each strategic objective.
A corporate strategy helps you determine how each goal will be achieved (the tactical plan); it also helps you determine which activities must be done by your company (core competencies ), which activities can be done by others (outsourcing), and which activities can be eliminated (delegating).