What is a corporate strategy

What is a corporate strategy, it’s an integral part of your board member training that matters from the start of your governance career.

Corporate strategy is the overarching plan that defines a company’s long-term vision and direction. It encompasses the decisions and actions senior management takes to achieve corporate objectives and secure a competitive position in the industry.

The board has a huge role in strategy. Primarily, it needs to ensure the strategy is planned with shareholders in mind. This breaks down into multiple other tasks, which you can find below.

Corporate strategy is the framework within which a company determines its course over the long term. Experts commonly describe it as a game plan or roadmap for the company’s future. 

Strategies are official documents that allocate resources, processes, and goals to navigate the business landscape effectively. They also integrate all aspects of operations, focusing on how to win in the market against competitors while ensuring sustainable growth.

Corporate strategy is crucial because it provides a roadmap for the company’s future, guiding decision-making processes and resource allocation. It helps identify growth opportunities and areas where the company can gain a competitive edge, ultimately influencing the long-term success and sustainability of the business.

Most experts will tell you that there are four core elements—or “pillars”—of a corporate strategy. Others may add to the list depending on the company or industry, but the four main pillars are vision/ mission, objectives, resource allocation, and prioritisation/strategic tradeoffs. 

• Vision and mission. These define the company’s purpose and primary objectives. They rarely stay the same over a company’s life cycle. Good visions are dynamic, reflecting the company’s size and changing market. Things within the vision that do stay the same include organisational values and lifetime goals. 
• Objectives. These allow the goals above to be broken down into more detailed, quantifiable, and actionable plan points. They are often described as “stepping stones” to the vision and mission. 
• Resource allocation. This sets out how your company will use its people, capital and anything else it has at its disposal. Allocating resources is crucial because you need to ensure they achieve their maximum potential in the drive to achieve your vision. Sustainability is everything here.
• Prioritisation/strategic tradeoffs. This is the process of selecting the best methods of success after careful consideration. It’s a difficult task because there could be multiple ways to achieve business goals, and you need to filter them down into the most promising. Sometimes, rejecting an opportunity is tough due to the fear that it might be the right one after all.

Make no mistake: the board’s role is critical. Here’s how it usually plays out:

• The board must approve and endorse all elements of corporate strategy. Often, senior management drafts a strategy, but the board needs to scrutinise it and decide whether to pursue it.  
• The board must monitor strategy implementation, ensuring it’s effective in day-to-day operations and from one year to the next. If there are problems, the board must adjust the strategy as necessary. 
• The board must oversee risk, identify where it occurs, and control it.
• The board must secure the necessary resources for strategic goals to be realised. 

You can read more about it here.

Understanding corporate strategy is fundamental for anyone involved in the management and governance of a company. By defining clear strategic objectives and the means to achieve them, companies can navigate competitive markets effectively and secure their long-term success.