Unit 4: Corporate Strategy
Corporate strategy is perhaps the most important strategy, because it sets the metric by which all other strategies are formed within the company. For example, BMW has a focus 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 very difficult and could tarnish BMW's brand image, although that is not to say that it is impossible.
The subject of corporate strategy is vast; however, corporate strategies are usually based around one central goal: growth. 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 has produced 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 do BMW vehicles. Companies may create subsidiaries, different branches of a major company, in order to cater to these different markets. For example, in educational textbook publishing, a company like Pearson Education also has subsidiaries (although this company has since moved to combine these subsidiaries into the whole of Pearson Education, Inc.). The subsidiaries Prentice Hall and Addison-Wesley focus on specific fields, such as mathematics and economics, in which 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 various methods a firm can use to pursue growth. Growing is not just about buying the competition, because that is not always possible or expeditious. This unit will explore why that is and how to determine the best strategy for growth.
Completing this unit should take you approximately 8 hours.