Business Strategy Key Elements – Corporate strategy takes a portfolio approach to making strategic decisions by looking at all of a company’s businesses to determine how to create the most value. To develop strategic alliances, companies must look at how the different businesses they own fit together, how they influence each other, and how the parent company is structured, to improve human capital, processes, and governance. Corporate strategy builds on business strategy, which is concerned with strategic decision-making for individual businesses.
There are several key areas of corporate strategy that organizational leaders focus on. The main strategic activities of the company are:
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Resource allocation in a company focuses on two resources: people and capital. In an effort to increase the value of the company as a whole, leaders must determine how to allocate these resources to the various companies or business units so that the whole is greater than the sum of the parts.
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Organizational planning involves ensuring that the company has the necessary corporate structure and related systems to create the maximum amount of value. What leaders should consider is the role of the company’s head office (intermediate vs control system) and the reporting systems of individuals and business units – vertical positioning, metrics reporting, etc.
Portfolio management looks at how business units are connected to each other, their relationships, and determines where the company will “play” (ie, what business it will participate in or not).
One of the most challenging issues in corporate strategy is balancing the trade-off between risk and return within a company. It is important to have a comprehensive view of all the businesses involved and ensure that the desired levels of risk management and recovery are being adhered to.
Corporate strategy differs from business strategy because it focuses on how to manage resources, risk, and returns within a company, as opposed to looking at competitive advantages.
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Leaders responsible for making strategic decisions must consider many factors, including resource allocation, organizational design, portfolio management, and business strategy.
By optimizing all of the above, a leader can hopefully create a business portfolio that is greater than the sum of its parts.
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Managing without a strategic plan is like sitting in the passenger seat of your business. You will see him accelerating in overdrive and passing level after level. In the end, however, you watch helplessly as it gets carried away from the mission or, worse, crashes and burns. Strategic planning puts you behind the wheel. It serves as a road map that defines the direction the company should take, and it helps prepare leaders for potential obstacles. Companies and businesses without this foundation and vision are likely to get lost, stuck or collapsed.
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What are strategic business plans? Organizational planning is a systematic process for developing the direction of an organization. It also describes the goals and actions needed to achieve this future vision, and outlines metrics to measure success. By helping you refocus on your roots, goals, growth, and opportunities, strategic planning re-introduces you to the “big picture.” It is a foundation for business owners to achieve their goals, which they communicate to stakeholders in the business plan and plan. It’s common to confuse a strategic plan with a business plan, which is used to start a business, get financing, or direct operations, and usually lasts a year. A strategic plan, on the other hand, is about high-level thinking and typically looks 3 to 5 years out. It can be made at any time and should be reviewed regularly. Important things to review the plan include whenever a company begins a new venture (such as launching a new product), if the economy or competition changes, or when new regulations or factors affect the business environment.
Taking the time to figure out where your business and executive team are going (and how to get there) can help mitigate the risks associated with business growth. In fact, strategic planning can lead to long-term success by strengthening these five key areas:
A clear picture of your company’s future and a road map to get there allows your company to be more proactive. Instead of constantly reacting to external forces beyond your control, you can take strategies designed to help you achieve your long-term goals.
Strategic planning can help you anticipate bad situations before they happen and take precautions to avoid them. You can continue to grow your business and avoid common industry hot spots.
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Every company has a limited amount of human and financial resources. By defining the specific activities needed to achieve goals, a strategic plan helps you determine costs and ways to allocate resources in the most efficient way.
Executives must be selective about which new opportunities to invest in and which to avoid. The strategic planning process defines when to hit and when to pass.
The business environment is changing rapidly. CEOs must contend with new government regulations, changing workforce demographics, technological advances like Facebook, and economic uncertainty. Strategic planning puts these challenges into perspective.
The process of reviewing your company’s strengths, weaknesses, and opportunities can help you rise above difficult situations. You may be ready to respond to a competitor’s new product launch, a technological advance in your product area, or an unhappy customer base. This level of visibility can increase profits and market share.
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A strategic plan is important for communicating the vision to investors, managers, and employees. It ensures that all key stakeholders are on the same page instead of (perhaps inadvertently) fighting against each other.
More than consensus building, strategic planning can improve performance. For example, it can generate ideas for restructuring to help employees reach their full potential. Sharing realistic goals and metrics to measure them also motivates employees to continue their efforts.
Running a business is stressful work; Many leaders are familiar with the feast-famine, bust-bust cycle. And organizations that do not have a strong foundation—such as that provided by institutional systems—are more likely to struggle.
According to the TAB Pulse study, business owners who say they have a good plan are more likely to predict growth in profits and sales revenue in the coming year than those who have no plan.
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How do you create a valuable business plan? There are many different frameworks you can use, but generally the planning process addresses four things.
Consider where your business is today. This includes analyzing and writing basic business information (such as key customers, invoices) or…
Consider where your business is today. This includes analyzing basic business information (such as important financial documents) and writing or revising the vision, mission statement, and core values. Do they still fit your vision?
Environmental, leadership or market changes may require you to rethink your core business from time to time. Take the time to think deeply to come up with something truly meaningful. You can also seek information from your employees, an entrepreneurial advisory board, or a business coach.
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When writing these basic business documents, eliminate jargon. What is the best version of your business? What is your most ambitious goal? What is your biggest vision for what your company can be?
A SWOT analysis is a tool for evaluating your company’s strengths, weaknesses, opportunities, and threats. It can provide detailed information about …
A SWOT analysis is a tool for evaluating your company’s strengths, weaknesses, opportunities, and threats. It can provide insight into where your business should focus its marketing efforts, give you a better understanding of your industry and your customers, give you competitive advantages, and guide you through potential threats to your progress.
Even if you’ve done a SWOT analysis before, it’s still useful to do one as part of your strategic planning process.
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Break down specific goals that will help you achieve your vision. This can include things like launching a new product, testing different…
Break down specific goals that will help you achieve your vision. This could include things like launching a new product, trying it out