What is a Corporate Strategy? A Complete Guide

From startups to major enterprises, all types of businesses need to have a strategy or roadmap for how they’d like to be successful.

And while it’s common only to hone in on and get obsessed with short-term goals, don’t forget about the long-term ones—which can often make or break the levels of profit or achievements a company can obtain.

For both long- and short-term goals to come together and work as one, businesses need to develop a corporate strategy, which is a valuable tool for expanding and defining a company’s values.

• What is a corporate strategy?
• Why is a good corporate strategy important? 
• 3 levels of strategies
• 4 types of corporate strategies
• 5 ways to build an effective corporate strategy

What is a corporate strategy?

A corporate strategy, sometimes called a business strategy, is the roadmap for how your organization will achieve its goals. The strategy will establish principles that put in place your company’s decisions, actions, and priorities and how it will motivate employees to achieve success. However, it doesn’t encompass the actual tactics or action plans that will need to happen to execute the strategy.

The principles within the corporate strategy should be shared throughout the entire organization to help everyone involved accomplish these objectives.

Why is a good corporate strategy important? 

So, why invest time and effort into creating a corporate strategy?

This plan is essential to meeting goals and achieving long-term success. Whether your organization is setting new business priorities in place, planning new investment decisions, or outlining ideas for growth, you need a plan of how you’ll make your goals come to fruition. 

Having this strategic roadmap will give your company a competitive advantage by ensuring teams are always thinking about improving and prioritizing the resources at their disposal. Whether the strategy focuses on leadership, growth, or sales, the plan will be the stepping stone for how to get you there.

3 levels of strategies

There are three core levels to consider when it comes to strategies within an organization.

• Corporate strategy level
• Business strategy level
• Functional strategy level

1Corporate strategy level

At the corporate strategy level, the plan will focus on the organization as a whole. It will put in place a path for creating value for clients, customers, and shareholders. It covers a span of the entire business portfolio and the functions that empower the company to succeed. Consider this level the top of the planning pyramid since it’s the primary purpose of a company. 

Some questions that should be answered within this level are:

• How do we add value to shareholders?
• How can we increase enterprise value?

2Business strategy level

Next is the business strategy level. This level will determine the path for a business and the clients and customers on which it focuses. It should consider elements like:

• Sustainability
• Pricing
• Profitability
• The offering of a product or service
• How customers and clients are segmented

While the corporate strategy level explains the what, the business strategy level will break down the how-to of the plan since it focuses on actionable goals.

3Functional strategy level

Last but not least is the functional strategy level. This level is about creating a path for specific areas of function within the company, like human resources or information technology, and how each area adds value to the rest of the company. These strategies typically aim to improve the effectiveness of a company’s operations within each department.

At this level, it’s all about the actions and goals of each department, making these plans the foundation on which the success of the strategy lies.

4 types of corporate strategies

In addition to the three levels of strategies, there are four types of corporate strategies a company can use. 

• Stability strategy
• Retrenchment strategy
• Reinvention strategy
• Growth strategy 

1Stability strategy

The first type of corporate strategy is a stability strategy, which illustrates how businesses will maintain their size and the level of all of their operations and activities. 

This type is often used when:

• The industry a company is in begins to slow down
• A company isn’t interested in taking any major risks
• A business is waiting for growth opportunities to present themselves
• A company is testing the waters before officially deciding on a specific strategy to implement

Essentially, this type of strategy maintains the current market share and position by continuing to serve in the same industry with the same product line and services. It’s put in plan when a business performs reasonably well in its industry and chooses to remain stable.

2Retrenchment strategy

A retrenchment strategy can help a business maintain its cash flow and stay afloat—especially during times of crisis. This type of strategy helps reduce any loss made by restructuring other strategies and cutting off loss-making divisions.

It’s put in place when a company needs to revamp its business model or sell certain assets to generate needed cash flow.

3Reinvention strategy

There’s also the reinvention strategy, which is when a business wants to remake or completely redo its current plan or roadmap. This often includes taking the existing business plan, which may not have changed or updated in years, and completely reinventing it. Usually, new technology is involved in this strategy.

4Growth strategy 

The fourth type of strategy is the growth strategy, which is ideal for a company planning to reach new customers, expand its workforce, and introduce new products or services into the market. This strategy aims to expand market share, obtain increased profit, and achieve faster growth.

5 ways to build an effective corporate strategy

Looking to build an effective corporate strategy? Here are five ways to do it right.

• Set clear objectives
• Have an understanding of the market
• Create an approach to risk management
• Measure your results
• Develop a mission statement

1Set clear objectives

First, you need to make sure your strategy has clear objectives. What’s the point of putting in the work on your company roadmap if it’s not straightforward and helpful?

Thankfully, you can take building an effective strategy one step further by using Fellow to track and set objectives and key results (OKRs). In the Objectives tool, stay on top of your team’s goals by clearly recording, defining, and tracking the progress of your OKRs. This also makes it easy to quickly review those objectives during your team meetings so all departments can see how they’re progressing towards each milestone within the roadmap.

Plus, with your objectives organized in one place, resolving problems and getting questions solved quickly is easier than ever.

2Have an understanding of the market

It’s also a must to thoroughly understand the market your business is in. Having this understanding also provides a clear picture of the competitive landscape.

Finding the right market is easier said than done. During our interview with Dave McJannet, CEO of HashiCorp, on episode 130 of our Supermanagers podcast, he shared, you have to be “really clear on what market [you’re] going to pursue. And like, ask yourself what’s our thesis with respect to how this market is going to evolve?

And that is about picking the market? I think there’s this fallacy that we build products and then we take them to market. And I think my biggest learning is you pick a market that you think is interesting, do you think it’s going to evolve, there’s going to be opportunity, and then you wrap a company behind that, and you’re putting up a rapid product value proposition behind that.

It all starts with that deep introspective exercise on what market we want to be in. Because if you get that right, you have the opportunity to build a business. If you get that wrong, no amount of execution is going to help you.”

Listen to the entire episode below!

3Create an approach to risk management

Next, create an approach to risk management. This is usually done during a risk review meeting, sometimes called a risk assessment meeting. This type of meeting will address the strategy behind risk management so everyone taking part in the strategy or project can come together to handle associated risks before the plan begins.

To do this, take your corporate strategy and:

• Identify all risks that could be involved
• Categorize the risks by the likelihood of their occurrence
• Prioritize the risks by least to most detrimental 
• Mitigate the risks if they were to occur
• Avoid risks at all costs

By the end of this meeting, you should have a solid long-term plan for risk management to include in your corporate strategy.

4Measure your results

Don’t set goals and then cross your fingers, hoping it all works out. Instead, actively monitor progress and check your corporate strategy monthly to ensure things are operating smoothly and running as they should. 

Teams should have metrics to evaluate whether they’re meeting key performance indicators (KPIs). If a team isn’t meeting KPIs, come up with a solution to get things back on track.

5Develop a mission statement

Last but not least, develop a mission statement for your corporate strategy. A mission statement will focus on the values at the heart of your organization and the reason or purpose behind it. This statement doesn’t need to be very long—it can be just a few sentences that explain what you’re looking to accomplish with the strategy in place.

Planning is everything!

No matter what your business is looking to achieve, it likely all starts with building a corporate strategy from the ground up. Without this roadmap fully set up and put in place, your business may struggle to achieve even the simplest of short-term goals. Making an effort to instill a corporate strategy can make all the difference.