Free Paper Sample on Corporate-Level Strategy

Introduction

Focusing on just one or a single industry is critical for a new organization or, in other cases, for an organization that is seeking to improve on its overall company performance. Therefore, there are several avenues that an organization can pursue to grow its business, and one of them is developing a corporate level strategy (Tilles, 2014). A corporate-level strategy is defined as a plan developed by an organization to determine how the firm interacts with other companies over a specified period. It can also be described as the instance when a firm makes a decision that affects the organization as a whole; it affects the company's human resource, finances, management as well as where the company products are sold. Therefore, the purpose of this paper is to highlight the importance of a corporate level strategy as well as discuss the reasons as to why and organization might diversify its operations.

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A corporate-level strategy is essential in helping an organization specifies actions that help in attaining a competitive edge by choosing and controlling a set of diverse businesses contending in various markets. It is additionally helpful in selecting new strategic positions for the companies, and through these positions, the organization can increase its market value. An organization also employs the corporate level strategy and a means to maximize its revenue as well as intents to grow its firm (Seker, 2020). The corporate-level strategy is also involved in deciding as to which product markets and businesses should the company compete and in what ways should the company management govern these businesses.

Three Reasons Firms Choose to Diversify Their Operations

An organization may decide to move from a dominant or, in other cases, from a single business position to a significantly diversified position for three significant reasons (Hitt et al., 2001). And these include valuer creation. The organizations diversify their operations to increase on their value and gain a competitive advantage through the increased economies of scale. This, however, can be done through the transfer of the company's core capabilities as well as the allocation of activities (Guo, 2019). Gaining market supremacy by blocking the business rivals through multipoint competition and the financial economies, for instance, capital allocation as well as the restructuring of the company.

Secondly, an organization diversifies due to neutral value (Hitt et al., 2001). That means a firm may decide to diversify its operations as a response to inventive, for instance, as a response to tax law benefits or balance out inconsistent cash flows and, in other cases, to overcome a low-performance thread.

Last, a company many diversify as a result of value reduction (Hitt et al., 2001). For instance, the unrelated acquisition may be carried out for various management reasons, and this may be to diversify the risk associated with executive recruitment or, in other cases, to improve the compensation for the managers. However, it is essential to note that diversification is not necessarily made to improve company competitiveness. It might have a neutral or, in other cases, a negative impact on the organization.

Conclusion

In conclusion, it is essential to note that corporate-level strategy is essential in an organization as it helps in maximizing the company revenues, help an organization gain a competitive edge, and in the decision-making process. Additionally, diversification is essential; it might not always be for the growth of the organization; it can have neutral as well as negative effects on a firm.

References

Guo, R. (2019, June 18). What drives firms to be more diversified. Aabri. https://www.aabri.com/manuscripts/10740.pdf

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2001). Strategic management: Competitiveness and globalization. Ohio: South-Western - Thomson Learning.

Seker, B. (2020, March 09). Corporate-Level Strategy. Medium.
https://medium.com/@baturseker/corporate-level-strategy-753028fed2ff

Tilles, S. (2014, August 01). How to Evaluate Corporate Strategy. Hbr.
https://hbr.org/1963/07/how-to-evaluate-corporate-strategy.