Corporate Strategy
The essence if strategy is choosing what not to do.
Michael Porter
Any approach to strategy quickly encounters a conflict between corporate objectives and corporate capabilities.
Bruce Henderson
Business opportunities are like buses,
there's always another one coming.
Richard Branson
Business strategy (aka competitive strategy) aims at generating over-performance compared to other players in the same industry (or competitive arena). Fundamentally competitive strategy addresses three major questions:
Why will the firm win customers ? e.g. how to lower prices and/or pro- vide unique value that customers couldn’t get elsewhere ?
How will the firm architecture deliver its value ? What are the resources & capabilities needed ? How can the firm obtain them ?
How much value can the firm claim ? Will profit be sufficient to stay in business?
Corporate Strategy refers to the strategy that multi-business corporations use to compete as a collection of multiple businesses. It is qualitatively different from strategy for a single-business or business strategy. ( [Puranam16] )
Corporate strategy, by contrast deals with how to create value in a multi-business configuration. When several businesses are owned by the same company, are they worth more together than they would be worth separately?
Corporate Strategy revolves around three questions:
Corporate Composition: What businesses should the corporation be active in ?
Growth option: What growth path should be selected to enter in the new businesses?
Portfolio Selection: How to select the best options for growth?
Corporate management (What is the optimal corporate structure and how should the various businesses be managed?) is a fourth important subject that will not be covered here.