• 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 hours.

    • Upon successful completion of this unit, you will be able to:

      • explain commonly used corporate strategies;
      • analyze which strategy alternatives will create the most value; and
      • relate strategy theory to specific applications.

    • 4.1: Growth Strategies

      • Sun Tzu's "The Art of War" Book

        Skim this book about ancient Chinese philosophy and strategy. Pay attention to passages about being victorious over rivals. Consider these general ideas in light of corporate actions like takeovers, price wars, and buyouts.

      • Growth Strategy Page

        As you navigate this section, you will explore the growth strategies organizations use to spur growth. You will discover ways that markets might emerge organically to promote a company's growth. The discussion also reflects on how companies integrate and diversify as a form of strategic management.

      • Growth Strategies for Start-Ups Book

        Read this chapter on the various growth strategies companies use. One particular area of interest for strategic managers is the best practices to build growth for new start-ups in the evolving marketplace. This video will teach how Hubspot CEO Brian Halligan addresses growth. He offers an analogy to showcase how much we as consumers invest in start-ups in our daily lives, such as using Spotify and Uber, which are all start-ups.

    • 4.2: Retrenchment

      • Corporate Strategies Page

        Review this article on corporate strategies. Not all firms can make a profit, and sometimes they must cut back. Consider the pros and cons of each retrenchment strategy: turnaround, divestment, bankruptcy, and liquidation.

        Then, watch the video from Henry Mintzberg, where he discusses how the strategy must come from the bottom and not from the leaders. Consider how your organization addresses strategy. Are decisions being made by leaders or from the bottom?

      • Strategies for Getting Smaller Page

        Read this section about the concept of a company strategizing to get smaller. It delves deeper into retrenchment and restructuring. Why might a company shrink or exit from its current business structure?

    • 4.3: Corporate Strategy Selection

      • The GE Approach Page

        Read this article on the GE/McKinsey matrix model. Strategic planning is a system that allows managers to make decisions regarding processes or choices they need to make on behalf of the organization. The planning process helps leaders organize their reasoning behind specific objectives by mapping out the process for implementation.

    • Study Sessions

      These study sessions are an excellent way to review what you've learned so far and are presented by the professor who created the course. Watch these as you work through the unit and prepare to take the final exam.

    • Unit 4 Assessment

      • Unit 4 Assessment Quiz
        Receive a grade

        Take this assessment to see how well you understood this unit.

        • This assessment does not count towards your grade. It is just for practice!
        • You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
        • You can take this assessment as many times as you want, whenever you want.
      • Unit 4 Writing Exercise Quiz
        Receive a grade

        Complete this writing exercise to check your understanding of the material presented in this unit.