The word strategy is derived from the Greek word “strategtia”. Strategy is perceived as the unified, comprehensive and integrated plan that relates the strategic advantage of the firm to the challenges of the environment. Strategy is primarily related to external environment. It is a long term overall framework for guiding enterprise thinking and action. This integrated approach is developed by top management. The components of corporate strategy are – i) Objectives, ii)Vector, iii) Competitive Advantage, and iv) Synergy.
Corporate strategy may exist at three levels in an organization. Corporate level strategies are futuristic, innovative and pervasive in nature. Strategic business unit managers are involved for business level strategies. These strategies are more specific and action oriented. Operating level strategies are formulated at the functional level. It relates mainly with routines.
There are four grand strategic alternatives. They are: stability, expansion, retrenchment and combination of these three. Expansion strategies operate through concentration, integration, diversification, corporation and internationalization. Retrenchment strategy is carried out through turnaround, divestment and liquidation.
We also see upon the compendium of various perspectives to strategy formation that have evolved over a period of time. The 10 schools of thought on strategy formation have been grouped into the prescriptive school, the descriptive school and the integrative school. Corporate strategy has an important role to play in coping with environment. It has great utility in planning, coordination, control and direction. We should also not forget that corporate strategy formulation process is not only a different exercise but also it is a costly proposition and has only long term utility.