What is corporate strategy and how it works

1. Corporate strategy is a unique plan or
framework that is long-term in
nature, designed with an objective to
gain a competitive advantage over
other market participants while
delivering both on customer/client
and stakeholder promises (i.e.
shareholder value).

2. • A corporate strategy is a long-term plan that outlines clear
goals for a company. While the objective of each goal may
differ, the ultimate purpose of a corporate strategy is to improve
the company.
• A company's corporate strategy may be to focus on sales,
growth or leadership. For example, a business might implement
a corporate strategy to expand its sales to different markets or
consumers. It may also use corporate strategy to prioritize
resources.

3. Types of corporate strategies
• Growth
• A growth strategy is a plan or goal for the company to create
considerable growth in different areas. It could refer to overall
growth, but it could also encompass only specific areas, such as sales,
revenue, following or company size. Companies can accomplish
growth strategies through concentration or diversification.
Concentration refers to a company developing the core of its
business, such as a bookstore investing in selling more books.
Diversification is when a company enters new markets to expand its
business.

4. • Retrenchment
• The retrenchment strategy encourages the company to change paths
to improve the business. This might mean switching business models
or changing markets. The goal of this is to reduce or manage parts of
the business that don’t work for the company. A company might
achieve this by either switching the business’s pathway or by
removing parts of the business. For example, if a product line is
decreasing company sales, the product management team might
remove the line to save profit.

5. • Reinvention
• Reinvention strategies are when a company reinvents, or redesigns,
an aspect of the business that may be old or irrelevant. The company
might update it with new designs, technologies or products. To
accomplish this strategy, a project manager could reinvent a function
by significantly changing a good or service. An example of this could
be converting a physical store into an online store.

6. • Coca-Cola Company case study
• The first Coca-Cola was sold in 1886 at a pharmacy in Atlanta, but
now globalisation and diversification of the product range have
changed its original brand image significantly.
• Coca-Cola is one of the biggest global soft drink companies. It has a
wide portfolio with brands in multiple soft drink categories including
carbonated drinks, energy drinks, juices, and coffee. Its overall
portfolio is diversified and more importantly, there are some products
that are sold as region-specific, making up part of their strategy.

7. • Functional strategy of the Coca-Cola Company
• Functional strategies are specific goals set out for different
divisions of an organisation to reach its functional objectives.
• The divisions usually include Marketing, Finance, Operations,
and Human Resources. However, for multinational conglomerates
like Coca-Cola, there could be more specific teams under each
division. For instance, the operations division may include the IT
department, Logistics, and Customer Service.
• In terms of operational strategy, bottling partnerships have helped
Coca-Cola seize growth opportunities via vertical acquisitions.
Global partnerships help Coca-Cola with cost control by reducing
transportation costs and reaching economies of scale. This is an
example of a functional objective for the operations division.

8. • Coca-Cola marketing strategy
• Effective and active marketing activities around the world are strong
contributors to Coca-Cola’s revenue and market shares. Market and human
insights are used heavily as indicators in Coca-Cola’s marketing activities.
This means that Coca-Cola can target specific consumer segments well by
understanding their profiles, including age, gender, and lifestyles.
• Sprite is a brand under The Coca-Cola Company marketed as a
brand for younger generations, specifically Gen Z, as their focus is
on promoting the ideas of current affairs, pop culture, and some
popular consumer lifestyles such as the wider use of all things
digital.

9. • Coca-Cola expansion strategy
• Although Coca-Cola is operating in most parts of the world, it has different market shares and
products depending on the market. Coca-Cola has a high dependency on its bottling partners
around the world. Hence, first of all, to expand, it has to improve its logistics and bottling systems.
•
• Secondly, it is planning to reach a balanced combination of global, regional and local brands so its
consumer base can grow gradually and sustainably. Also, it has a rather diversified portfolio and is
planning to make use of the wide range of products to acquire customers with different interests.
This means that Coca-Cola will not only continue its focus on soft carbonated drinks but will also
put more effort into products such as nutritional drinks and coffee.
•
• Thirdly, by joining social networks and participating in popular culture-related activities such as
using TikTok and making YouTube videos for its promotion, it connects effectively with consumers,
shortens the distance between the brand and consumers and benefits from the knowledge of the
latest consumer trends.

10. Three Levels of Strategy: Corporate Strategy, Business
Strategy and Functional Strategy
• These three levels are: Corporate-level strategy, Business-level strategy and
Functional-level strategy. Together, these three levels of strategy can be
illustrated in a so called ‘Strategy Pyramid

13. • Corporate level strategies
• occupy the highest level of strategic decision making and cover actions dealing with the objective of the firm, acquisition and
allocation of resources and coordination of strategies of various SBUs for optimal performance.
• The corporate strategies a firm can adopt may be classified into four broad
•
• categories:
•
• 1. Stability strategy
•
• 2. Expansion strategy
•
• 3. Retrenchment strategy
•
• 4. Combinations strategy

17. Mergers and Acquisition
• Merger and acquisition in simple words are defined as a process of combining
two or more organizations together. There is a thin line of difference between the
two terms but the impact of combination is completely different in both the
cases. Some organizations prefer to grow through mergers. Merger is considered
to be a process when two or more companies come together to expand their
business operations. In such a case the deal gets finalized on friendly terms and
both the organizations share profits in the newly created entity.In a merger two
organizations combine to increase their strength and financial gains along with
breaking the trade barriers.
• When one organization takes over the other organization and controls all its
business operations, it is known as acquisitions. In this process of acquisition, one
financially strong organization overpowers the weaker one. Acquisitions often
happen during recession in economy or during declining profit margins. In this
process, one that is financially stronger and bigger establishes it power