Corporate Level Strategy - Definition, Examples, Types

What is corporate-level strategy? A business plan can be quite beneficial in establishing your company's objectives for the coming year. You must break down all stages in such a way that your staff understands the path they are intended to take.

The corporate-level approach you choose might be indicative of the company's financial performance and the way through which earnings are generated.

What is a corporate-level strategy?

A corporate strategy is a multi-tiered business plan used by executives to identify, describe, and accomplish particular business objectives. A small company can utilize a corporate strategy to improve earnings in the coming fiscal year, but a big corporation can be responsible for supervising the operations of many businesses in order to accomplish more complicated goals such as selling the company or entering a new market.

Types of growth strategies

The majority of small businesses have ambitions to expand their operations and boost their sales and earnings. However, specific techniques must be followed while adopting a growth strategy. The manner by which a corporation expands is highly dependent on its financial condition, competitive environment, and even government legislation. Market penetration, market expansion, product expansion, diversification, and acquisition are all typical corporate growth methods.

Market penetration strategy

Market penetration is one technique for corporate growth. When a small business decides to advertise existing items in the same market as before, it employs a market penetration strategy. According to small company experts, the only option to expand utilizing existing products and markets is to increase market share. Market share is the percentage of unit and dollar sales that a business controls in comparison to all other rivals in a certain market.

One strategy for increasing market share is to reduce prices. For instance, in markets with minimal product differences, a lower price can help a company gain its market share.

Market expansion or development strategy

Market expansion, also known as market development, is a growth strategy that includes selling existing items in new markets. There are several reasons why a business would consider pursuing a market growth plan. To begin, the competition in the present market can be so intense that there is no space for development. Without fresh markets for its products, a business's sales and earnings will remain stagnant.

A small business can also pursue market expansion if it discovers new applications for its product. For instance, a small soap distributor selling to retail stores can learn that their product is also used by manufacturing employees.

Product expansion strategy

Additionally, a small business might improve its sales and earnings by expanding its product range or adding new features. When small businesses pursue a product growth strategy, often referred to as product development, they maintain sales in their present market. When technology begins to evolve, a strategy of product expansion frequently works effectively. Additionally, a small business can be compelled to introduce new items when previous ones become obsolete.

Growth through diversification strategy

Diversification is another component of business growth methods, in which a small business sells new items to new markets. This sort of technique carries a high degree of risk. When implementing a diversified growth strategy, a small business must exercise caution. Marketing research is critical since a business must ascertain whether consumers in a new market would enjoy the new items.

Acquisition of other companies strategy

Acquisitions can also be part of a business's growth strategy. A company acquires another business in order to expand its operations. A small business can employ this technique to diversify its product range and reach new markets. While an acquisition growth plan is hazardous, it is not as risky as diversification.

A cause for this is that the items and market have already been established. A business must have a clear objective in mind while pursuing an acquisition strategy, owing to the considerable expenditure necessary to accomplish it.

Types of corporate-level strategies

When developing your company's corporate strategy, you're looking for the most efficient approach to distribute resources equally to meet the company's demands and accomplish specified objectives. Additionally, it can assist you in developing a contingency plan, ensuring that you are prepared to function in the event of unanticipated events.

Stability strategy

When you begin dealing with clients in your sector, this is your stability strategy. Additionally, this method presupposes that your company is performing effectively under its present business model. Because the route to growth is unpredictable, you should pursue a stability strategy that incorporates techniques like research and development and product innovation. Offering free trials of your existing items to your target audience might be one way to improve engagement.

Expansion strategy

The growth strategy is ideal if your business intends to develop new goods and reach new customers. It can also be used to increase the amount of activity inside your company, for as by acquiring more clients or recruiting additional workers. This method is appropriate if the region in which you operate has a robust economy or if your primary objective is to improve your performance. In aggregate, this method offers significant profits potential for CEOs, which can result in increases and growth of employee benefit packages.

Retrenchment strategy

A retrenchment plan necessitates a thorough examination of your company model. This can entail discontinuing the production of a product or significantly decreasing its functioning. You can need to devote additional resources to accounts receivable to guarantee that you continue to get paid for services rendered in order to preserve your organization's cash flow.

This technique is only utilized when a company wishes to take precautionary steps in order to maintain its solvency. You should conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to determine the type of marketing in which you can succeed.

Combination strategy

A combination strategy is a mixture of the three preceding methods used to develop your company model. Its primary objective is to improve the company's performance and to determine which parts of the business can expand or contract in response to market conditions. This technique enables you to make modifications to your strategy more easily since you have greater control over your time and how much should be dedicated to each strategy function.

Characteristics of corporate-level strategy

Consider the following characteristics while determining which corporate-level strategy to pursue:

Diversification

Diversification occurs when you see the need to alter the market in which you operate. Entering new markets enables you to develop new business relationships with clients. It provides an opportunity to establish a long-term connection based on the execution and satisfaction of the products and services you provide. If you have sufficient cash, you can experiment with rebranding your services in order to appeal to a new target audience willing to test a new offering.

Forward integration or backward

Forward integration occurs when you assume the job of a company that formerly performed a function in your supply chain. When your company becomes a distributor, it expands the scope of your operations, necessitating the relocation of resources to assist in the movement and storage of items for local businesses. Backward integration entails beginning in the supply chain and progressing to become a supplier of products and services. You can need to increase production in order to react to the changes in your business.

Horizontal integration

Horizontal integration occurs when two businesses in the same vertical join. If you buy another business, you must ensure that you have the operational ability to manage the merger and work with new workers eager to understand your processes and how they differ from those of the acquired business.

Profit

This technique is only focused on increasing money available for spending once expenditures are deducted. You can need to minimize expenditures or expenses by selling investments such as stocks and bonds, raising the price of services you provide to customers or eliminating non-essential services.

Turnaround

Turnaround refers to enhancing the efficacy of current items in order to increase their sales. This can need increasing your testing methods and quality assurance requirements in order to produce more profit.

Divestment

Divestment is a retrenchment technique used to address issues and improve corporate outcomes. You begin by selling high-performing shares and repaying debts in order to raise capital and present good financial data to internal and external stakeholders.

Market penetration

A market penetration strategy is when a business aims to increase its market share by capitalizing on current goods and markets. It's how a company (that already has a product on the market) can expand its business by boosting sales to existing customers.

Liquidation

If you own a business, the ultimate choice is liquidation. You'll take this step after exhausting all other avenues for increasing your business's revenues. This leads in the sale of your business to another company and the discontinuance of all product lines.

Concentration

Concentration is a growth strategy that aims to increase market share in the industry in which you operate. It is regarded as a high-reward strategy due to the market demand for the sector in which you are investing.

Investigation

The question process involves the examination of growth and retrenchment options. You'll know which approach to pursue once you've decided to prioritize your performance or restructure your company.

Or no change

Finally, there is frequently a correlation between no change and your stability approach. It's critical to identify areas where your product can be improved to ensure user usage and brand loyalty.

Common questions

Questions about corporate-level strategy and growth.

What is a business strategy?

Simply put, business strategy is a well-defined collection of plans, activities, and objectives outlining how a company will compete in a specific market, or markets, with a single product or a portfolio of products or services.

What is a horizontal growth strategy?

Horizontal growth strategy refers to a business expanding its reach of customers. A horizontal growth strategy is entering new markets with products/services. This can be accomplished by creating a new market or by expanding into an existing one. Additionally, you can consider repurposing current assets, such as moving from a product to a SaaS model.

What are targeted corporate-level strategies?

Corporate strategies outline a strategy for achieving a certain objective necessary to accomplish corporate objectives. Although strategies are typically long-term in nature, they permit dynamic modifications in response to uncertainty and changing market conditions.

What is business-level strategy?

• R&D.
• Redesigning a product.
• Marketing.
• Advertising plants.
• Production.
• Changes to infrastructure.

What is a vertical strategy?

A vertical strategy seeks growth from various components of the operations path. Vertical integration is a business technique in which a company seizes total control of one or more phases of a product's manufacturing or distribution. Vertical integration is chosen by a business to ensure complete control over the supply of raw materials used to create its goods.

Sources

• Types of Corporate-Level Strategy
• Stonybrook - Corporate Level Strategies
• Corporate Level Strategies in Business
• Coporate Strategy Defined
• Corporate and Business Strategies
• Corporate Level STrategy
• HBS.edu - Business Strategy
• HBS.edu - Business Strategy Explained
• Emerald - Corporate LEvel Strategies
• Academia.edu - Functional Level Strategies
• Albany.edu - Corporate Level Strategy

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