Many markets stagnate, and former seller’s markets that allowed companies to start up and expand easily, have now become buyer’s markets with quality-, price- and environmentally aware customers who compare every purchase in detail and weigh up the advantages and disadvantages. The requirements on corporate management are constantly growing and business performance is less and less a product of chance. Former “industry colleagues” have become bitter rivals who fight against one another. The market is thus becoming a “theatre of war”.
But young companies that want to survive in this environment should not focus just on short-term success and engage in individual “power struggles”. Success over the coming years can only be assured if they take the longer view and clearly define their corporate strategy.
A Sound Structure Can Only Be Built On Firm Foundations
The corporate strategy is a medium- to long-term blueprint (three- to five-year view) and ensures that, over the coming years, a company concentrates on the central objectives, activities and milestones. It forms the overarching framework for subordinate concepts, plans and budgets (e.g. marketing). In contrast to the mission statement, the corporate strategy is an “internal” document containing a much higher level of detail. The corporate strategy does the following:
- expands on the business idea on the basis of the analyses, vision, strategic success factors and mission statement
- ensures that there is a document describing the strategic focus of all business activities as succinctly and precisely as possible
- clearly and consistently defines the most important market partners, sub-markets (product groups), strategic business areas, objectives, fundamental decisions relating to marketing, infrastructure and finances, and central steps in implementation (milestones)
- defines the priorities and focal points of business activities so as to ensure that efforts are concentrated, or prevent efforts from becoming fragmented
The Benefits Of A Well And Succinctly Articulated Corporate Strategy
The strategic plan forces a company to “live by” the strategic principles of success during the detailed planning and implementation phases. It demonstrates to the partners involved (primarily owners, partners, employees, investors) that an entrepreneur has clear ideas about the company’s future. This can increase the extent to which partners identify with the company and prevent friction in business operations when strategic measures are implemented.
A precisely worded corporate strategy forces you as an entrepreneur to check the linkage between your decisions. Bad investments in the wrong or less important areas are avoided. The defined milestones enable the company to measure whether it is on track in its medium-term planning.
The Blueprint For Your Corporate Strategy
A well-articulated corporate strategy contains fundamental decisions on the following points, set out succinctly, precisely and in concrete terms over a few pages:
- Corporate vision
- Priorities as regards geographical markets, sub-markets (product groups, services) and market partners
- Formation and prioritization of strategic business areas (combination of sub-markets and market partners) including any phased plan for working on them
- Revenue targets and any contribution margin targets for the next five years in relation to product groups and market partners
- Fundamental decisions on and phased steps for corporate processes (marketing, organization/collaborations, management, development/innovation, production, procurement, returns/financing, control, quality assurance)
- Milestones for the next five years or the most important specifications regarding the timeline for strategy implementation
The most important thing when devising a corporate strategy is not to keep the statements vague and general as in a vision or a mission statement. In addition, it must be ensured that there are no inconsistencies with previous decisions or within the corporate strategy.
