Developing a corporate strategy
Corporate strategy looks at strategic decision-making across all portfolios of an organisation and assessing how the various businesses fit together, how they impact each other, and how the parent company is structured, in order to optimise human capital, processes, and governance. Corporate strategy builds on top of business strategy, which is concerned with the strategic decision-making for an individual business.
Your corporate business strategy might include consideration of the following:
- Deciding what business to be in or out of
- Adjusting the allocation of capital across businesses so it earns the highest return
- Analysing external opportunities (mergers and acquisitions)
- Moving leaders to the places they are needed most and to where they add the most value
- Analysing funding across internal projects
- Monitoring the competitive landscape and ensuring the portfolio is well-balanced relative to trends in the market
- Identifying where ‘cash burn’ exists and how to manage it
- Being brave enough to cull what is no longer fit for purpose
Head office (centralised vs decentralised)
- Determining how much autonomy to give business units
- Deciding whether decisions are made top-down or bottom-up
- Influence on the strategy of a business unit
- Ensuring legacy systems aren’t holding the organisation back
Organisational structure
- Developing centres of excellence
- Determining the appropriate delegation of authority
- Identifying employees and ensuring their competencies are well distributed across the firm
- Determine how large initiatives and commitments will be divided into smaller projects
- Integrating business units and business functions
One of the most challenging aspects of corporate strategy is balancing the trade-offs between risk and return across the firm. It’s important to have a holistic view of all the businesses combined and ensure that the desired levels of risk management and return generation are being pursued.
