What is Corporate Level Strategy?

Business owners need targeted corporate-level

strategies to position themselves for success.
Corporate-level strategies define a plan to hit a
specific target needed to achieve business goals.

Strategies tend to be long-term in nature but you

should have a medium for adjustments, based on
uncertainty and changing market conditions.
A corporate-level strategy is an action taken
to gain a competitive advantage through the
selection and management of a mix of
businesses competing in several industries or
product markets.
Let me explain.
 Decision making in organizations come under 3 strata
of management; the top, middle, and low-level
management.
 Strategies or what you can call business decisions are
made by each of these levels. These strategies are
made in 3 different ways by these management levels.

 That is to say, strategies can be formulated at three

levels, namely, the corporate level, the business level,
and the functional level.
Business-level strategy
 The Business-level strategy is what most people are familiar with
and is about the question “How do we compete?”, “How do we
gain (a sustainable) competitive advantage over rivals?”. In order
to answer these questions it is important to first have a good
understanding of a business and its external environment. At this
level, we can use internal analysis frameworks like the 
Value Chain Analysis and the VRIO Model and external analysis
frameworks like Porter’s Five Forces and PESTEL Analysis. When
good strategic analysis has been done, top management can
move on to strategy formulation by using frameworks as the 
Value Disciplines, Blue Ocean Strategy and Porter’s Generic
Strategies. In the end, the business-level strategy is aimed at
gaining a competitive advantage by offering true value for
customers while being a unique and hard-to-imitate player within
Functional-level strategy
 Functional-level strategy is concerned with the question “How do
we support the business-level strategy within functional
departments, such as Marketing, HR, Production and R&D?”. These
strategies are often aimed at improving the effectiveness of a
company’s operations within departments. Within these
department, workers often refer to their ‘Marketing Strategy’,
‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to align
these strategies as much as possible with the greater business
strategy. If the business strategy is for example aimed at offering
products to students and young adults, the marketing department
should target these people as accurately as possible through their
marketing campaigns by choosing the right (social) media
channels. Technically, these decisions are very operational in
nature and are therefore NOT part of strategy. As a consequence,
it is better to call them tactics instead of strategies.
Corporate-level strategy
 At the corporate level strategy however, management must not
only consider how to gain a competitive advantage in each of the
line of businesses the firm is operating in, but also which
businesses they should be in in the first place. It is about
selecting an optimal set of businesses and determining how they
should be integrated into a corporate whole: a portfolio.
Typically, major investment and divestment decisions are made
at this level by top management. Mergers and Acquisitions (M&A)
is also an important part of corporate strategy. This level of
strategy is only necessary when the company operates in two or
more business areas through different business units with
different business-level strategies that need to be aligned to form
an internally consistent corporate-level strategy. That is why
corporate strategy is often not seen in small-medium enterprises
(SME’s), but in multinational enterprises (MNE’s) or
• At the corporate level, the strategy is
formulated for the organization as a
whole. In essence, a corporate
strategy deals with decisions related
to various business areas in which the
firm operates and competes. It is
when a business makes a decision
that affects the whole company.
The decision affects the company’s finances,
management, human resources, where the
products are sold, just about everything in the
company. The purpose of a corporate-level
decision is to maximize profitability and maintain
financial success in the future.

In addition, this decision is utilized to help

increase competitive advantage over competitors
and to continue to offer a unique product or
service to consumers.
What are the Types of
Corporate Level Strategy?

Expansion/Growth  Strategy
Stability Strategy
Retrenchment Strategy
Combination Strategy
 Expansion/Growth  Strategy

 Every business wishes to grow and occupy a substantial market

share if it wants to continue in that niche.
 Growth strategies look at methods to get more revenues from
the sales of products or goods.
 There is a vertical and horizontal strategy when referring to
growth strategies. A vertical strategy seeks growth by taking
over various components of the operation it usually
outsources.
 For example, a juice company farming for the fruits it uses. By
taking over part of the supply chain, they are able to better
control quality and supply needs.
 A horizontal growth strategy refers to a business extending its
reach of existing products or services to new geographic areas
or new target markets.  
 I hope you know that this horizontal growth strategy can come
in the form of niche marketing? That is expansion into other
niches or market segments you never were involved in.

 Mediums through which a company can expand are;

Concentration, Integration, Diversification, Cooperation, and
Internationalization. Concentration is done by Market
penetration, Market Development, and Product development.
 During the growth stage, you can promote it using Advertising.
 Stability Strategy

 It is possible for a company to reach its optimal market share

goals.
 At this point, management might choose a stability strategy to
maintain market shares. Methods used to achieve this include
making processes more cost-efficient through automation,
cutting costs where possible, and negotiating better costs on
raw materials.
 So, when a company is convinced that it should continue in the
existing business and is doing reasonably well in that business
but no scope for significant growth, the stability is the strategy
to be adopted.
 This strategy also requires management to focus on customer
retention. This is a popular strategy used during adverse
 Retrenchment Strategy

 Retrenchment strategy may require a firm to redefine its

business, abandon some markets or reduce its functions. It may
make a firm layoff, reduce R&D or marketing or other outlays, 
and increase the collection of receivables.
 Redefining the business and reducing the pace of activities can
improve the performance of a firm. Expansion in combination
with Retrenchment is a very common strategy. Retrenchment
alone is probably the least frequently used strategy.
 Retrenchment strategy involves a partial or total withdrawal
either from products, markets or functions in one or more of a
firm’s businesses.
 This strategy is used during periods of decline and crisis when a
business is not thought to bring profitability back to the firm.
Reasons for following retrenchment strategy:

 1. The firm is doing poorly, but if it is worth saving,

you adopt a turnaround strategy.
 2. If there is pressure from various groups of
stakeholders to improve performance. You cut the
loss-making portion of the business in a
divestment strategy.
 3. If better opportunities for doing business are
available elsewhere a firm can better utilize its
strengths. The company can liquidate.
Combination Strategy
 Combination strategies are a mix of expansion, stability, or
retrenchment strategies applied either at the same time in
different businesses or at different times in the same business.
 Actually, no organization has grown and survived by following a
single strategy. Normally, businesses require owners to adopt
different strategies just to suit different situations.
 For instance, as companies divest, they also need to formulate
expansion plans that will strengthen the remaining businesses,
start new ones or make acquisitions.
 An organization following a stability strategy for quite some
time has to consider expansion. And one that has been on
expansion for long has to pause to sustain his businesses.
Multi-business firms have to adopt multiple strategies either
simultaneously or sequentially.