Corporate Level Strategy of Strategic Management
Corporate Level Strategy :
Corporate level strategy involves choices strategic managers must make. (i) deciding in which businesses and industries a company should compete. (ii) selecting which value creation activities it should perform in those businesses. (iii) determining how it should enter, consolidate, exit businesses or industries to maximize long term profitability. When formulating corporate level strategy, managers must adopt a long term perspective. And consider how changes taking place in an industry and in its products, technology, customers, and competitors will affect their company’s current business model and its future strategies. The principal goal if corporate level strategy is to enable a company to sustain or promote its competitive advantage and profitability in its present business. Three corporate level strategy:
- Horizontal integration
- Vertical Integration
- Strategic outsourcing
Corporate level strategy used to be top level management in the organization. The corporate level of management consists of the chief executive officer (CEO), other senior executives, and corporate staff. These individuals occupy the apex of decision making within the organization. The CEO is the principal general manager. In consultation with other senior executives. The role of corporate level managers is to oversee the development of strategies for the whole organization. This role includes define the goals of the organization, determining what business it should be in, allocating resources among the different businesses, formulating. And implementing strategies that span individual businesses, and providing leadership for the entire organization.
Consider general electric as an example. GE is active in a wide range of businesses, including lighting equipment, motor. And transportation equipment, turbine generators, construction and engineering services, medical systems, aircraft engines, and financial services. The main strategic responsibilities of its CEO, are setting overall strategic goals, allocating resources among the different business areas. Deciding whether the firm should divest itself of any of its businesses, and determining whether it should acquire any new ones. In other words, it is up to CEO to develop strategies that span individual businesses. His concern is with building and managing the corporate portfolio of businesses to maximize corporate profitability.
It is not the CEO’s specific responsibility to develop strategies for competing in individual business areas such as financial services. The development of such strategies is the responsibility of the general managers if these different business. However, it is CEO’s responsibility to probe the strategic thinking of business level strategy to make sure that they are pursuing robust business models. And strategies that will contribute to the maximization of GE’s long run profitability.
Corporate level strategies or managers also provide a link between the people who oversee the strategic development of a firm and those who own it (the shareholder). Corporate level managers, particularly the CEO, can be viewed as the agents of shareholders. It is their responsibility to ensure that the corporate. And business level strategies that the company pursues are consistent with superior profitability and profit growth.
