What is Corporate Strategic Planning?

This is something I pondered, based on research, on businesses’ success or failure. It presents nothing more than a piece to ponder – the broad-brush approach which, I think, is either not undertaken at all, or perhaps undertaken disjointedly, and which is then why some businesses fail.

A good example of this is, and isn’t, the current UK retail sector. Very much on its uppers with many 2018 and 2019 casualties, and almost certainly more to come in 2020. Some succeed – notably Next, a consistently good performer which the City monitors eagerly – debatably because they set and manage their strategy properly, but ensure they both stick to it, yet are also highly flexible.

Some stumble but continue, recover or die – M&S springs to mind, and LK Bennett, out of touch, and no more.

So, the next time you plan your business, big or small, or you’re offered a strategic consultancy position, perhaps consider……………….

Corporate Strategic Planning is a companywide approach at the business unit and corporate level for developing strategic plans to achieve a longer-term vision. The process includes defining the corporate strategic goals and intentions at the top and cascading them through each level of the organisation.

Sometimes this is confused with the annual budgeting process. Corporate strategic planning should come first, and annual budgeting should be driven by the strategy, not by prior year’s budget spend. If you don’t know what you want to do, how do you know how much it will cost?

A corporate strategy matters because it can – should – focus every employee in a company on the same objectives, and help them to use them all efficiently. It gives every employee a set of guidelines they can use in their everyday work to move toward certain targets, which promote the vision and mission of the company.

The corporate strategy gives leaders and employees ideas to use for the improvement of distinctive activities (processes and operations) that create a competitive advantage. The strategy can also help executives to protect the company from entering into costly or potentially adverse opportunities. Wesfarmers learnt this at a very high cost when they purchased Homebase.

What are the steps involved in strategic corporate planning?

1) Competitive Analysis

A competitive analysis needs to be conducted, to understand the trends that could impact the success of the strategy. Common factors that could be analysed include political, legal, social, environmental, technological. There may be other factors businesses may want to consider that are relevant to their business and industry.

2) Strategic Goals & Priorities

The corporate leadership team will set the overarching strategic goals and priorities for the organisation. These will then be fed to each business unit, to define its strategic goals and plans on how it can contribute to the overall direction of the enterprise. That includes not only what is to be accomplished, but how it will be accomplished including high level plans, budgets, human resources, etc.

3) Communication

Once business unit plans and directions have been set, the information needs to be communicated and shared with leadership inside the business unit so that priorities and plans can be aligned and integrated within a single budget.

At the corporate level, an enterprise develops a portfolio of businesses they choose to compete in. This is analysis of a business’s competitive and core capabilities, and how each business contributes to the corporate goals. These businesses are then set up, sponsored, and supported as business units at the operating level. For example, the John Lewis Partnership’s incoming 2020 Chair will oversee John Lewis Partnership and Waitrose, even though these are run, as operations, as 2 distinct businesses.

As an aside, said Chair, Sharon White, was, prior to joining Ofcom, Second Permanent Secretary at the Treasury, and held board level positions at the Ministry of Justice and the Department for International Development. In addition, she has also worked as an adviser at the Prime Minister’s Policy Unit and in Washington DC as a senior economist at the World Bank. There is therefore a divided commentator and City opinion – either giving her the role will be an inspired choice or a disaster, given her zero P&L / bottom line / customer experience.

Sir Charlie Mayfield, the outgoing Chair, said that Sharon White had “a stellar career in a number of senior strategic and executive roles” and stood out “during a thorough, wide-ranging and extremely competitive search.” He added. “I believe she has the vision, leadership, drive and flair to steer the Partnership through its next phase.”

My money? It’s only opinion. Her lack of experience should help her in the short term because she’ll be objective. Her lack of experience may creep up and bite her in the medium term, for the same reason.

Cue the above and below.

When looking at the types of corporate strategy, it is important to consider where the business competes (markets, geography, size, etc).

Strategy 1: Low Cost Strategy

This type of strategy is one where business uses its advantage by simply competing on being the low-cost provider. With this strategy an organisation must exploit all sources of cost advantage. This includes volume, economies of scale, cost of inputs, and operations excellence to help drive down costs. This type of strategy requires an organisation to compete more broadly (markets, geography, size).

Strategy 2: Differentiated Strategy

The focus here is on competing by being unique or distinctively different industry. A differentiated strategy provides a product or service in more of a niche market where customers see the importance of offerings and are willing to pay a premium price. While this strategy still has a broad focus on how and where it competes (markets, geography, size), it serves its customers in a differentiated way. Differentiation can include factors such as technical superiority, customisation, innovation, products or services that are difficult to copy, and customer service. ExecutiveCVServices.co.uk is a case in point.

Strategy 3: Segmented Strategy

A segmented strategy is one in which a business clearly differentiates itself from the competition. It would usually be a small – in terms of type of service – and distinct group of customers with specialised needs. In this, there are few product or service substitutes that can be offered and whilst a business may not have the volume of customers of others, profit margins tend to be higher because of the lack of substitutes. Think my sister’s children’s’ dancewear shop – a niche market, and she is the only provider for a 50-mile radius.

So, getting your strategy right is no guarantee of success. But, if you don’t plan at all, will you crash and burn? You decide.

Written by

Nigel Benson is a professional career sector specialist with over 12 years' experience writing executive level CVs and expertise in recruitment, job interviews and training.

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