CORPORATE STRATEGY ASSIGNMENT Direction: Write about what you learn today (in the second class) Answer: Corporate strategy is a choice of direction an organization/firm adopts in order to achieve the company objectives. According to the first material in the first class, developing corporate strategy is necessary to create the blueprint of the entire company in middle and long-term. The company or holding company can determine the overall direction in terms of 4 levels of strategy as follows: Table 1. The Direction of Overall Direction in 4 Levels of Strategy No Level 1 2 Corporate level Business level 3 Functional level 4 Operational level Description The strategy for entire company including several business unit The strategy for each unit business of a holding company The specific strategy inside the unit business such as manufacturing, finance, marketing, research and development, and human resources The strategy in the specific division. Example: strategy in manufacturing division, how to make it efficient, effective, and reach the target production. By defining the 4 levels of strategy, the owner can know to what extent the company will grow, how fast the growth, and when the right timing to execute the strategy. The blueprint can be used as a basic direction for the company growth as a whole. Then, the corporate strategy which include vision, mission, and value can provide the direction for the CEO in each business unit to keep focused on where the organization is going and what it is trying to achieve. It called Corporate Strategic Thinking (CST). CST makes the CEO can define the core value of the organization and guide them to make decision. There are different key points when we want to set up the corporate strategy and compare to business strategy. The corporate strategy is more focused on how does the parent company add value to the subsidiaries and how does being in one business can help the holding company compete in the other businesses. It means the corporate strategy is a wide strategy to create the benefit for each business unit. The decision made by looking which advantage that business unit can receive. On the other hand, business strategy is more focused on creating business competitive advantage. The strategy attempt to answer the question about how should the company compete in the competitive market?. It means the business strategy is need specific strategy that relevant enough to win the customers heart. Identifying the business strategy can be arranged by implementing Porter’s Five Forces Analysis as follows: 1. Cost Leadership, means the company compete as a cheaper price than the competitors. 2. Differentiation, means the company create the different value, feature, component for their product than the competitors. It can be said that the company providing the premium price for the premium specification 3. Focused Cost Leadership, means that the company wants to win the specific target customer (niche market) and become the cheaper. 4. Focused Differentiation, means that the company wants to win the specific target customer (niche market) and become different. 5. Integrated Cost Leadership/Differentiation, means that the company provide best price and differentiation to compete in the market. These strategy is refer to the resources in the organization, which strategy that appropriate to the company is based on their resources allocation. After determining the corporate strategy, the holding company can decide which level of activity that they want to conduct in the business. There are 4 levels of activities as follows: Table 2. The 4 Corporate Levels of Activities Example Level Activities Description There is no change in the firms current activities The Stability Strategy Example: Toyota brand as a market leader in automotive business in Asia just wait and see about the timing to respond the market changes. The company is expand the business activities The Expansion Strategy Example: Singer brand receive less demand on sewing machine, then they expand the business by creating other kitchen appliances The company wants to reduce the firm’s level of activities. It means the company must choose turnaround, divestment, or liquidation. The Retrenchment Strategy Combination Strategy Example: Nokia brand lost dominant global market leadership in mobile phone by fail to respond to smartphone technology changes. So they have to turnaround. The company used the combination of strategies above. Description in Table. 2. above shows that there are the level activities that can be used for the company when the must respond to the market changes. The leader or CEO must be aware of it due to the market are now very fast moving. The rapid growth of technology also drives the company increase the awareness of the changes. Thus, it is necessary for the CEO to understand the corporate level of activities in order to make the right decision to overcome the uncertainty in the market.