The Four Components of Corporate Strategy

Corporate Information Strategy and Management: Text and CasesThe major components of corporate strategy are purpose and objectives, vector, competitive advantage, synergy, personal values and aspirations and social obligations. Ansoff has used the term “common thread” for the purpose. According to him, the common thread is a statement of relationship between present and future product market postures. In this section, the different components of corporate strategy are discussed.

Objectives

Corporate objectives should be stated in such a way so that they may provide a clear idea about the scope of the enterprise’s business. Objectives give the direction for which action plan is formulated. Objectives are open-ended attributes denoting a future state. Objectives translate the purpose into goals. A few specific aspects about objectives are as follows: The objectives should

  •  have time frame
  • be attainable
  • be challenging
  • be understandable
  • be measurable and controllable

For having clarity in objectives, the business domain is defined specifically in terms of a product class, technology, customer group, market need or some other combination.

Vector  Corporate strategy has one more important component i.e. Vector. Vector gives the directions within an industry and across industry boundaries which the firm proposes to pursue. If an organization has the objective to maximize sales, the series of decisions will be to enhance salesman’s commission, release nationwide advertisement, introduce total quality management and introduce new product range. Vector signifies that a series of decisions are taken in the same direction to accomplish the objectives.

Competitive Advantage

Corporate strategy is relative by nature. In the formulation of corporate strategy, the management should isolate unique features of the organization. The steps to be taken must be competitively superior. While making plans, competitors may be ignored.

However, when we formulate corporate strategies, we cannot ignore competitors. If an organization does not look at competitive advantage, it cannot survive in a dynamic environment. This aspect builds internal strength of the organization and enhance the quality of corporate strategy.

Synergy  

Synergy means measurement of the firm’s capability to take advantage of a new product market move. If decisions are made in the same direction to accomplish the objectives there will be synergic impacts. The corporate strategy will give the synergy benefit.