Purpose of Corporate Strategies
Imagine you're the CEO of a company. You have an innovative product idea, a team of skilled professionals, and a vision to grow your business. But how do you decide which path to take? Should you be the first to market, or should you wait and refine an existing idea? What about the ethical implications of your decisions? These are the questions corporate strategies aim to answer.
Corporate strategies serve as the backbone of a company's success. By providing a roadmap for achieving objectives, they guide organizations in evaluating and selecting the most appropriate products, services, and systems. Without a clear strategy, even the most innovative companies risk losing direction, wasting resources, or failing to meet market demands.
Defining Corporate Strategies
Corporate strategies are long-term plans that help businesses meet their goals, which may include increasing market share, improving profitability, or expanding into new markets. These strategies are not one-size-fits-all, they must be tailored to the company's unique strengths, weaknesses, opportunities, and threats (commonly analyzed using a SWOT framework).
At their core, corporate strategies involve making informed decisions about:
- What to offer: Which products, services, or systems should the company focus on?
- Where to compete: Which markets or customer segments should the company target?
- How to operate: What resources, technologies, and processes will be used to deliver value?
Corporate strategies are dynamic and must adapt to changes in market conditions, competition, and consumer preferences.
Types of Corporate Strategies
Different companies adopt different strategies based on their objectives, resources, and market conditions. Let’s explore some common types of corporate strategies:
Pioneering Strategy
A pioneering strategy focuses on being the first to market with a new product or service. This approach often involves significant research and development (R&D) costs but can lead to a competitive advantage if successful. For example, Motorola's introduction of the first commercially available cell phone in 1984 revolutionized mobile communications.
However, being a pioneer comes with risks. Many market innovators fail to capitalize on their early entry. For instance, Xerox developed a groundbreaking personal computer operating system but was unable to dominate the market.
ExampleThink of the MP3 player market in the late 1990s. While the South Korean MpMan was one of the first mass-produced digital audio players, it was Apple’s iPod, with its innovative features and marketing, that captured the mass market and dominated for over a decade.
Imitative Strategy
In contrast to pioneers, imitators wait for a market to mature before entering. They capitalize on the groundwork laid by pioneers, avoiding the high costs and risks associated with early innovation. By refining existing products or services, imitators can offer improved versions that better meet customer needs.
For example, JVC's VHS format outperformed Sony's Betamax, not because it was first to market but because it better aligned with consumer preferences and industry partnerships.
Common MistakeMany students assume that being first to market guarantees success. In reality, imitators often achieve greater long-term profitability by learning from the mistakes of pioneers.
Hybrid Strategies
Some companies adopt a hybrid approach, combining elements of pioneering and imitative strategies. Apple’s iPod is an excellent example. While it wasn’t the first MP3 player, Apple pioneered new features and a seamless ecosystem (iTunes) that set it apart from competitors.
