Transformation From Competitive to a Corporate Strategy, Case Study Example

The corporate strategy is a plan set out by a specific company and is not short-term. It usually has a design that aims to gain the best advantage among all the participants in a similar market. It must ensure that the plan does not change the organizational aim of providing the client’s needs and the stakeholders’ promises. The essay will focus on a summary of an article regarding this change as described below.

Diversification has been happening in companies since the 1960s. There are two main levels of strategies that a company has after being diversified. They are the competitive strategy and the corporate strategy. Over 36 years, the well-known, established companies in the U.S had divested in acquiring more than initially when they were being started. There is a need to focus on the corporate area because this strategy has been abandoned by the companies that we know today. The abandoning has led to almost the fall of the strategy in the Runnings of all the organizations. All companies must understand what good corporate means to achieve successful results.

There are three main premises of corporate strategy

• Firstly, there is the fact that good competition usually occurs at the level of the business unit. Diversification limits a company from competing. Competition only occurs from their business units. The corporate strategy requires that immediate attention achieve the best corporate in its running.
• Secondly, diversification requires the addition of costs and constraints to the units in business. A company must ensure that it gives out explanations to the top management and that complying with the corporate systems and the planning is well catered for. All these costs can be minimized, but it is impossible to do away with them.
• Finally, there is the fact that the shareholders can diversify themselves. The stocks’ portfolios must be selected to match the relevant profiles of risks and the various preferences.

Three main tests guide on how to do corporate strategies formulation

1. The test of attraction is the initial test. The specific organization chosen to undergo diversification must have the capability of becoming attractive.
2. Secondly, there must be a test related to the entry cost. The profits to be realized shortly must be well taken care of.
3. Finally, there must be the better-off test. The upcoming unit must have the best advantage from the links with the relevant corporation.

 Generally, there are four main concepts of corporate strategies as described below

• The first strategy is the management of the portfolio. The corporation or the organization must ensure that it has the best sound, attractive branches with the best managers who compete healthily. The managers must ensure that they have limited the range of the existing units. It helps in limiting the expertise required by the senior management.
• The second concept is the concept of restructuring. The new businesses do not have a relationship with the already existing business units. They are separate and different things. There is potential that is hidden and is also not realizable. Thirdly, the transfer of skills is another aspect of corporate strategies. The skills in the primary strategies are transferred to the secondary strategies.
• Thirdly, the concept of skills transfer is an important part of corporate strategy. Every unit in the business gains a competitive advantage after adding gain in the value of the original department. To achieve the best addition of the value of each unit in any business, there is the need to ensure that all the activities are shared.
• Finally, the concept of activities sharing. The responsibilities are shared among different units in a certain specific department. The aspect of sharing helps in the lowering of the total costs in the case that it has been able to achieve economies of scale, help in the boosting of the utilization efficiency, and helps the company is moving more rapidly.

Reference

Porter, M. E. (1989). From competitive advantage to corporate strategy. In Readings in strategic management (pp. 234-255). Palgrave, London..