Introduction

To be able to provide a critical analysis of the approaches to corporate strategy,it is important to

understand what strategy means particularly corporate stategy, and the context of strategy. We would
then examine the various approaches to corporate strategy. It is the opinion of this writer that
approaches to corporate strategy very much depend on the environment within which an enterprise
operates.


Arguably, strategy can be perceived to be vague and elusive concept, not least because it appears to
have a variety of meanings. Pinning down an acceptable definition can seem like attempting to target a
morning object in a fog.Many writers as well as business managers in books and articles have given
different definitions and meanings of strategy. Hence it could be described as elastic.
For the purposes of this analysis, the following definition of strategy will be used. strategy is knowing
the business you propsed to carryout. (Cummings 1993)
This definition stresses that strategy requires knowledge of the business, and intention for the future,
and an orientation towards action. This definition is consistent with managers of view of strategy.
Having given a definition of strategy, it is important to list the various levels of strategy and briefly
described the corporate level strategy. There are four broad levels of strategy namely: corporate level
strategy, business unit strategy, functional level strategy, and operating level strategy.
Corporate level strategy is the overall managerial game plan for a diversified company. It extends
company-wide; an umbrella overall businesses that the company is in. it consists of the moves made to
establish business positions in different industries and the approaches used to manage the companys
group of businesses.
Furthermore, corporate strategy is the setting of a companys long-term goals, the manor policies and
plans, and adoption of courses of action for achieving those goals. Hence the strategic questions at this
level are:
1. The firms overall orientation towards growth, stability or retrenchment (directional strategy).
2. The industries or markets in which the firm competes through it produsct and business units
(Portfolio strategy).
3. The manner in which management coordinates activities and transfers resources and cultivates
units (Parentin strategy).
However, the choice of these strategies cannot be done without understanding the context of the
business or corporation. This will therefore be discussed in the preceeding paragraph.

Context
Every context involves some hard facts as your customers and product, and your known competitors.
However, context is influenced by how you interpret the facts. Hence Theodore Levitt (1960) averred in
his famous article Marketing Myopia, that how you see your context influences the strategies which
you will pursue at least as much as the facts.
Context simply is the business environment within which a company or an organization operates. This
business environment involves both the external environment in which the company operates and the
internal characteristics of the company itself. Understanding context is the starting point for strategy
formulation at the corporate level. In general, this will mean identifying the dimensions and scope of the
context and focusing on the most important issues which the context poses.
Approaches to corporate strategy
There are no universal approaches to corporate strategy. Various strategic management experts
propound different approaches.
Brain Leavy in his article: assessing your strategic alteranatives from both a market position and core
competence perspective discussed market position and core competence as approaches to corporate
strategy. Ansoff also proposed four generic approaches to corporate strategy namely market
penetration, market development, product development and diversification. The writer will however,
base the analysis on Ansoff Groupings.
Market Penetration
Market penetration may be defined as a strategy to increase the market shares of the company by
offering more of its existing product in the existing market. This type of approach exposes the company
to a low risk because of the company knows the product works, and the market holds few suprises.
However, there are challenges such as retaliation and legal constraints.
Corporation may have retaliation challenge because the industry players may resort to price cutting in
order to capture the market and this may lead to excess power in the market. However, governments
try to stop this by always introducing completion law to protect the smaller companies in the industry.
To achieve the consolidation of the market shares companies fiercely defend their existing product in
their existing market by engaging in:
1. Advertisement to encourage more customers within their existing market to choose their
product, or to use more of it.
2. Introduction of a loyalty scheme.
3. Launching price or other special offer promotions.
4. Increasing sales force activities.
5. Buying a competitor company particularly in mature markets.
Grey argued that although market penetrations strategy is by no means static one, its limitations often
propel managers to consider alternative strategic directions.
Market development
Market development may be defined as a strategic approach where corporations turn to offer existing
products to new markets. Here the focus is targeting a new market, or new areas of the market.
In targeting the new market or new areas of the market, companies might:
1. Target different geographical markets at home or abroad.
2. Use different sales channels, such as online or direct sales if they are currently selling through
the trade.
3. Target different groups of people, perhaps with different age groups, genders or demographic
profiles from your normal customers.
From these three forms of market development, it can be submitted that there will be coordination
problem or challenge. There is also the problem of strategic capabilities such as marketing skill, brand,
technology etc. as the company is venturing into a new market.
Grey (2008) however, submitted that for market development to work or succeed, the product the firm
is offering to the market must meet the critical success factors of the new market.
Product development strategy
Product development involves a corporation developing entirely new product or modifying and existing
product for an existing market. This process or product development involves greater degree of
innovation. In product development, the following activities may be carried out:
1. Extend your product by producing different variants, or packaging existing products in new
ways.
2. Develop related products or services.
3. In a service industry, shorten your time to market or improved customer service or quality.
Involvement in these activities does not leave the corporation without limitations.
4. The limitations likely to be faced by corporation in adopting the product development strategy
are; process is expensive, and it involves high risk of commercial failure. This is because the
process involves deployment of new capabilities such as new technology. Further the product
development is a project, that is, it is unique, consume resources, time bound, have activities
that are interrelated and must meet stakeholder expectation. This however poses the
corporation to project management risk such as cost overrun, delay in delivering the product to
the market, and more importantly, not even meeting consumer expectation.
Diversification
This involves corporations moving away completely from its existing product and existing market. This
however is not practical. In practical terms it has to do with relationship management in the existing
market. Hence diversification may be seen to involve moving into other product lines in order industries.
Diversification has been broadly classified into concentric (related) diversification and conglomerate
(unrelated) diversification.
It is that diversification provides the following in international markets:
1. High growth potential
2. Efficiency gains through use of existing resources with new market.
3. Increase market power through cross subsidy to other business.
Despite the above perception of benefits or reasons of diversification, it is risky. This is because there is
little scope for using existing expertise or for achieving economies of scale or scope, because you are
trying to sell completely different products or services to different customers.
Quite a good number of empirical research on diversification performance relationship have been
conducted but are agued by others that they are inconsistent and inconclusive in their findings.
Generally, research has shown that the relationship between relatedness and performance is
curvilinear. If a new business is very similar to that of the acquiring firm, it adds little new to the
corporation and only marginally improves performance. Also the new business is completely different
from the acquiring businesses; there may be very little potential for any synergy. If, however, the new
business provides new resources and capabilities are different, but similar business, the likelihood of a
significant performance improvement is high.