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What is Corporate Strategy and its Types

What is Corporate Strategy?


Corporate strategy refers to a general strategy of any company focusing on its business portfolio to enhance its overall value. Before you start planning a corporate strategy, you should try to define leadership. When you understand ‘what is corporate strategy’, you will know that it focuses on identifying problems in different business areas.

The responsibility of formulating a corporate strategy lies with the top-level executives of a company. They discuss what is corporate strategy and analyze various factors before finalizing one. The primary pillar of the corporate strategy includes portfolio management, resource allocation, organizational design, and more.

While formulating a corporate strategy, you need to understand how different businesses are connected. You also need to figure out the impact of one business on another, along with the structure and functionality of the main company.

Remember that the corporate strategy is crucial for improving the management, procedure, and human capital of an organization, no matter which industry it operates in. Continue browsing to learn more about types of corporate strategies, what is corporate strategy through real-life examples, and more.


Corporate Strategy Vs. Business Strategy


The corporate strategy plan refers to the top management plan surrounding the entire organization. It is usually the master plan that leads to the long-term success of an organization. But what is a business strategy?


It refers to a specific action plan that enables organizations to achieve a certain organizational goal or target. Since the corporate strategy impacts an entire organization, the business strategy usually addresses its concerns.


While the business strategy helps attract new investors, it also familiarizes creditors with the financial health of the organization. Let’s figure out the key differences between the corporate strategy and the business strategy.


Types of Corporate Strategies


Once you define leadership within an organization, it will be easier for you to set up a corporate strategy. Some popular corporate strategy types that you should become familiar with are as follows:

  • Stability strategy: It revolves around maintaining the current market position and share by serving in the same industry with existing products and services. It is one of the corporate strategy types that offers modest and sustainable growth.

  • Expansion strategy: It involves introducing a new line of products or services, expanding services into different markets, and more. It is one of the corporate strategy types that revolves around innovation.

  • Retrenchment strategy: It is one of the corporate strategy types designed to reduce losses. Among all the corporate strategy types, this is the least used.

  • Combination strategy: It involves mixing different corporate strategy types instead of focusing on only one. Large organizations and MNCs usually use a combination strategy.

Examples of Corporate Strategy


Now that you know ‘what is corporate strategy’ and its different types, you should understand more about it from real-life examples.


Facebook


The acquisition of Instagram by Facebook in 2012 is an example of a great corporate strategy. In this case, your answer to what is corporate strategy is eliminating a strong competitor from the market. Facebook continues to make strategic acquisitions, which is evident from its takeover of WhatsApp.


Walmart


Almost everyone is aware of the large hypermarket chain in the US. Their corporate strategy revolves around expanding beyond the retail sector. They have introduced Walmart, a subscription-based service offering benefits like free shipping and unlimited grocery deliveries. They have also set up health clinics to offer affordable medical services. Furthermore, they have established a fintech startup to offer financial products at reasonable rates.





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