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Corporate-Level Strategy Management

Introduction

The major corporate level strategy formulation responsibilities include the following.

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Direction setting

Direction setting involves various activities which the management needs to do in order to define and put clarification on the objectives of the organization and they will include identifying and acting upon the major goals of the organization and the overall procedure for businesses integration & management.

Direction setting may also include identifying the corporation’s vision, objectives, and aims. It also takes into account the type of business organization will involve itself in and the way in which businesses will be integrated and managed.

Development of corporate level strategy

A good corporation should be able to maximize on its resources to beat up competition on the market, come up with better goods or services than their competitors, therefore corporate strategy very situation, the management will only choose the best to use depending on the nature of its clients, the strength of the competitor and the government policies in that area (Henry & Quinn, pg 32). There are various methods that the management can implement depending on the environment of the business and these includes,

Concentration

Concentration marketing strategy involves targeting of a small group of populated consumers of a product or users of a service. The marketing messages are intended to this segment of consumers or customers but the fact that a company only concentrates on a small targeted customers can be very costly because it ignores the other area of the market and it may be difficult for the company to expand its products (Henry & Quinn, 46).

Vertical integration and diversification

Vertical integration involves expansion of a corporation on different areas but with the same product line in an industry for instance an oil company, which has a single unit firm usually has oil drilled wells, refines its oil, and then sells petroleum at the roadside filling stations. While diversification involves a firm spreading its interests to different industries as long it has got the resources of maintaining itself, diversification can occur at either at business level or at corporate level (Hitt, A & Erickson, pg 28).

Another corporate level strategy responsibility is the selection of competent business and portfolio management, these are good men and women who have what it takes to take the corporation above its objectives, they understand the market and they know their competitors (Priscilla, pg 6). In addition to this there is another responsibility of corporate strategy and this is the act of management resources, there is no firm that has got all the resources it wants. Therefore this calls for proper channel and use of resources to the benefit of the organization, resource management is very important since they are the major in any organization.

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How corporate level strategy formulation responsibilities is different from business level strategy formulation responsibilities. Business level strategy is mainly concerned with satisfying the customer’s needs or their preferences in the market in order to achieve their corporate strategies which include the mission and objectives. The major difference comes in because business level strategy responsibilities call for the management to know who their customers are, what the goods that those customers want are and how the corporation can avail those goods or services to their customers, At the unit level of business, issues of strategic management are minimal in the supervision and coordination of operational units and maximum in competitive advantage sustainability (Priscilla, pg 26).

The strategy initiation phase deals detail actions which are aimed at gaining a competitive advantage, another function is to give a precise decision on how the firm or organization should go about in managing its group of operations.

In addition to this corporate level strategy involves Developing and implementing multi-business strategies may be necessary for effective use of excess resources, capabilities and core competencies that have value across several businesses in order to enhance strategic competitiveness, & earn above average returns.

Why Organizations Diversify

To Increase Economies of Scale

When two companies merge, and these companies produce the same product to their customers, this will enable these two companies to pool their resources together and in the long run they will end reducing their operation costs. The company may benefit from a reduced overhead cost or they can benefit from allocating a larger amount of operation using a limited fixed cost.

Enhancing Market Power by Vertical Integration or Multi-Point Competition: Most companies who have got mergers or acquisitions are able to increase larger market share for both companies especially when they are trading in the same product, and this will be able to fight away competitors who are sharing the same customer base (Priscilla, pg 34).

For Profit Stability: The Acquisition or formation of a merger with new companies can reduce fluctuation in business income by increasing the company’s lines of business operations. This typically occurs when the main business depends on sales that are always seasonal.

For Growth: The main reason why most companies diversify is the desire to grow; therefore growth is the main reason for diversification. Normal growth of a company takes time and a lot of resources to achieve but diversification for growth is a quick thing since the staff, technology and in fracture is readily available (Hitt, A & Erickson, 14).

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How Marketing Strategies are affected by Firm’s Business Level Strategy: Growth strategies, which are a business strategy, the firm will only concentrate on increasing its market share while it is ignoring how the firm should create product awareness through advertisement and promotional channels.

In addition to this there is retrenchment strategy where the firms mainly concentrate only on those segments that are profitable while ignoring the efforts of advertisement to promote the products in other segments of the population.

Characteristics Of A Well Developed Functional Strategy: The decisions made on each functional area are consistent with one another. The decisions made in one functional area should be also consistent with those made in other functions. The decisions within functions are and should be consistent with the business strategies.

The Matrix Structure

It is structure which is hybrid in nature which involves the combination of some elements of both functional and production market forms. It is involves the bringing together of professionals having different experience to work together in the organization’s projects.

Use of Matrix Structure

It is a type of organizational structure which has two distinct organizational forms and therefore offering the utility benefits of both structures. Many of the well established organizations in the world today have integrated matrix structure where they blend product divisions with geographical divisions. In this particular way they are able to get maximum benefit from both the divisions. Geographical structure is able to enable the organization to increase its product(s) while product based structures is able to make the organization to practice economies of scale. An example of a company which has used matrix structure is Unilever international. An organization which produces many different products and has branches in different geographical regions is advised to use the matrix structure.

Work Cited

Hitt, A & Erickson, M. Performance and experience outcomes of diversification, Journal of Management, 12: 48, 1998.

Henry, M. & Quinn, B. The strategy practice. Harlow: Prentice-Hall, 1988.

Priscilla, K. The Competence of an organization. USA: McGraw Hill, 1990.

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StudyCorgi. (2021, November 13). Corporate-Level Strategy Management. Retrieved from https://studycorgi.com/corporate-level-strategy-management/

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StudyCorgi. (2021, November 13). Corporate-Level Strategy Management. https://studycorgi.com/corporate-level-strategy-management/

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