Unit 4: Corporate Strategy
Understanding an organization's corporate strategy is essential, as it helps managers and leaders set the metrics by which all other strategies are formed within the company. For example, BMW focuses on quality vehicles that they can sell for a premium. If a business unit of BMW decides to pursue a cost leadership strategy that will not work well with the overall firm strategy, it would be challenging and could tarnish BMW's brand image – although this does not mean it is impossible.
The subject of corporate strategy is vast; however, corporate strategies are usually based around one central goal: growth. Growing is not just about buying the competition, because that is not always possible or expeditious. It is up to the management to determine the best way to achieve growth. Some prefer to integrate into the value chain. For BMW, this would mean pursuing opportunities to produce parts for its cars instead of paying contractors. Other firms may want to grow by diversifying. While a firm like GE, which produces engines, financial products, and entertainment programming, can diversify across industries, most diversify with closely-related industries. BMW also makes motorcycles and owns the Mini and Rolls-Royce brands, which cater to different markets than BMW.
Companies may create subsidiaries, different branches of a major company, to cater to these other markets. For example, in educational textbook publishing, a company like Pearson Education once had the subsidiaries Prentice Hall and Addison-Wesley to focus on specific fields, such as mathematics and economics, to market textbooks. At one point, these subsidiaries competed against each other, while at the same time, both brought in market share for the Pearson Education company as a whole. Pearson Education has since merged these subsidiaries, although it has kept the names for branding and now focuses on selling its products without this internal competition. This unit focuses on the methods a firm can use to pursue growth.
Completing this unit should take you approximately 3.5 hours.
4.1: Growth Strategies
4.3: Corporate Strategy Selection
Unit 4 Assessments
- Receive a grade
- Receive a grade