Exotech | The use of strategy in various aspects is very important to determine, for example corporate strategy. In a corporation or company, the use of a strategy that functions well and appropriately can save the entire company. Therefore, in determining which strategy to use, careful thought and planning is needed from every decision maker in the company.
To explain briefly, strategy is a direction and scope that will change at any time depending on the resources and capabilities possessed by an organization or company to meet stakeholder expectations. With this definition, we know that the basis for determining strategy at the corporate level is the fulfillment of stakeholder expectations.
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The intended expectations are goals or objectives that have been set before the business runs. These expectations are usually stated in the vision and mission which are the foundation and determine where the company is going. Before determining strategies in other aspects such as marketing, sales, production and so on, corporate strategy is the first strategy to be determined.
Therefore determining it well is a crucial first step. Now at least you know about strategy, especially strategy at the corporate or company level. Then let's just look at what strategies exist at the corporate level.
Examples of Corporate Strategies that you Can Implement
There are three main strategies in corporate or company level strategy. These strategies are Growth Strategy, Stability Strategy, and Retrenchment Strategy. From each existing main strategy, we will also look at other strategies that are related to or included in each main strategy.
1. Growth Strategy
Growth Strategy or growth strategy focuses on the growth of the company in achieving predetermined goals. This growth can be seen from the improvements achieved by each existing department. For example, in one year, company A has a goal that there will be an increase in revenue of 70% from the previous year. So at the end of the year, the company will see company growth from the income they get.
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Has it increased to 70%, stagnated or experienced a setback? This strategy is suitable for corporations that are expanding their wings to other regions or even abroad. In carrying out this strategy, there are two other strategies that form the basis of the growth strategy, namely Concentration Strategy and Diversification Strategy.
- Concentration Strategy
This strategy focuses on the company's production every year or even every month. Although growth does not always talk about production, let's assume it is production to explain this. The concentration strategy is to choose one of the many roles to carry out.
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For example, like before, where a company focuses on producing goods whose final goal is to enter the value chain. This company usually chooses products that are essential or that are really needed by the public. This strategy is divided into two more, namely Vertical Growth Strategy and Horizontal Growth Strategy.
- Vertical Growth Strategy
A vertical growth strategy looks like what has just been described, where a company tries to focus on the production that the company can do. This is done so that the company can enter the value chain. The company is trying to strengthen its production so that they can gain the role as a supplier needed by many parties.
- Horizontal Growth Strategy
Different of course from the vertical growth strategy, the horizontal strategy focuses on expanding production to other locations or regions. The horizontal growth strategy focuses on ensuring that the company's goal of expanding geographically into several regions is met and executed well.
- Diversification Strategy
A diversification strategy is used when a company has experienced growth to the goals or objectives that were determined at the beginning, so that there is no opportunity for further growth in the business they are running. Diversified means the company decides to do business in different products, whether products in the same or different industries. This strategy is divided into two, namely Concentric and Conglomerate.
- Concentric Diversification
This strategy is carried out by the company by producing new goods, but still in the same industry. So any knowledge from previous production or original production can still be used to build new products. Companies that do this don't need to do everything from scratch, because they already have the knowledge needed in the industry.
- Conglomerate Diversification
Different from the previous strategy, the conglomerate strategy means the company chooses to open production of products that are different from the previous industry. This indicates that all preparations for building new product production will take longer because you have to learn from scratch about the new industry.
2. Stability Strategy
As the name suggests, this strategy is used by companies that successfully operate in a stable or predictable environment. This company tries to maintain the strategy that has been implemented previously, so that it makes little or no changes at all. This strategy is divided into three basic strategies.
- No Change Strategy
This strategy indicates that the company that uses it is "comfortable" and feels that the strategy that has been carried out previously is a good strategy and benefits the company. Although this also indicates that the company is no longer seeing growth in its business, but feels that it has had enough.
- Profit Strategy
This strategy is carried out in various ways that can be taken by the company with the aim of maintaining the profits obtained. Either by cutting existing costs or aggressively increasing product prices. This strategy is very useful when companies are going through difficult times, such as the 1998 economic crisis.
- Pause or Proceed with Caution Strategy
This strategy is also called a trial period. A company will carry out this strategy when they are in a transition period to change strategy. This strategy is only used temporarily, until the company sees that everything has returned to normal.
3. Retrenchment Strategy
Retrenchment Strategy or savings strategy is carried out by companies when they experience setbacks as a result of their weak position in a competitive business. This strategy is expected to return the company to a strong position and become competitive again in the market.
- Turnaround Strategy
This strategy is the first strategy taken when a company experiences a decline. This strategy seeks to reduce operational efficiency.
- Divestment Strategy
This strategy is a strategy carried out by selling assets for various purposes. This can also be done by cutting departments that experience losses.
- Liquidation strategy
This strategy is the last strategy that can be carried out by a company when every effort they take does not produce any results to restore the company's position. This strategy is carried out by selling all assets and stopping production activities completely. In other words, the company was closed to avoid greater losses.
Each example of corporate strategy described above is used according to the circumstances of each company. The strategies taken certainly have their own advantages and risks when implemented. If you are interested in learning strategies in making company decisions, you can learn through paid online platforms.