Key Components of a Corporate Strategy10/13/2018
Organisations with concrete corporate strategies will remain competitive in their respective industries. An effective corporate strategy guides an organisation’s activities with a strong mission statement, vision statement, organisational goals and values.
Mission
An organisation’s mission statement should be formatted according to the following template:
We solve [ specific problem ] by offering [ product/solution ] to [ target customer ]. 1. Specific Problem An organisation identify an inherent problem and/or deficiency in their marketplace. They should use their defined problem to create a product/solution that consumers are willing to pay for. 2. Product/Solution An organisation should devise a product, software and/or solution that may address the specific problem that they have highlighted in their mission statement. This product/solution may achieve either of these objectives:
3. Target Customer Organisations must determine the audience who would benefit the most from their product and/or solution. An organisation may define its target audience according to their demographics, interests, purchasing history, etc. Vision
Corporate strategies must clarify an organisation’s vision, which are the long-term changes that the organisation hopes to achieve within a specific period of time.
1. Components of a Vision Statement An organisation’s vision statement may include the following components:
2. Example Vision Statements Regional healthcare specialist The primary trusted renal healthcare provider in Southeast Asia within the next 5 years. Vision Statement Breakdown:
Local Patisserie The maker of the finest chocolate cakes in Singapore within the next 7 years. Vision Statement Breakdown:
Business Consultant The management consultant of choice for SMEs within the next 9 years. Vision Statement Breakdown:
3. Example of how an Organisation’s Vision Drives Corporate Strategy A hypothetical company, whose objective is market leadership, may strive to persuade its targeted customers to select its services instead of its competitors’. The company should determine what differentiates its service from close substitutes in its industry, and must make itself distinctive by acquiring unique capabilities, products or services that are not commonly available within its industry. For instance, a business consultant may possess the following capabilities, products and services:
Organisational Goals
An organisation should devise goals, which are specific objectives that would allow it to achieve its mission and vision.
1. Short-term Goals Organisations should establish short-term goals to improve its current financial, legal and operational activities. Organisations should identify deficiencies in its current processes, and should examine how their existing resources and capabilities may be used to improve their operations. Organisations may achieve this by:
Dangers of Price Competition as a Short-term Goal Although companies may choose to compete in the short-run by offering low prices to its clientele, price competition may not be a sustainable strategy in the long-run. In price inelastic industries, such as the Food and Beverage or publishing industry, decreasing the price of a product or service may not necessarily lead to an increase in the quantity demanded of a product or service. In addition, This strategy may not necessarily increase potential revenues. Moreover, competing firms may revise their fees to match the company’s rates, and may ultimately nullify the company’s strategy. 2. Long-term Goals (Stretch Goals) An organisation may choose to establish long-term goals to expand its operations into additional territories, or to increase its influence in its current marketplace. An organisation’s stretch goal, which seems difficult for a company to achieve with its current resources, would challenge organisations to improve their performance. In order to devise appropriate stretch goals, leaders may regard the financial market’s expectations of their organisation’s growth as potential milestones. For instance, organisations whose stock values are predicted to increase in the future may choose to use their predicted growth as benchmarks for their stretch goals. Value Statements
In order to remain credible, organisations should ensure that their operations are ethically conducted.
An organisation should also establish core principles to its employees’ attitudes and behaviours, and should highlight these principles in a value statement. 1. Ethical Values Employees should practice these values whilst conducting primary activities, such as communicating with customers. For instance, an organisation may choose to emphasize integrity, which considers honest and responsible communication with stakeholders, customers and employees. 2. Penalties for Deviation In order to discourage employee deviation, organisations should also highlight penalties for forbidden conduct. For instance, organisations should highlight the consequences of bribery, conflicting interests and theft of intellectual property.
References
[1] Kaplan, Robert S., and Norton, David P. (2008). Mastering the Management System. Special Issue on HBS Centennial. Harvard Business Review, 86, no. 1. pp.62–77.
[2] Ferrell O.C. Hirt G.A. Ferrell L. (2014). Business, A Changing World. 9th Edition. NY, U.S.A. Published by McGraw-Hill/Irwin. pp.180. [3] Lipsey R. Chrystal A. (2011). Economics. 12th Edition. NY, USA. Published by Oxford University Press. pp.76.
2 Comments
8/3/2019 07:04:22 am
The mission and vision statement of an organization is very important. It is always crucial to cement a mission and a vision for your entire organization. To tell you the truth, there are organization who do not really care about theirs, but those are the weak ones. If you have a solid mission and vision statement, then you will be able to accomplish something great in the future. Always look into making and building something that can help everyone in the future.
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Indeed that’s true:
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