12 May HAS THE COMPANY’S CORPORATE STRATEGY CHANGED OVER TIME?
Analyse the company’s history, development, and growth. A convenient way to investigate how a company’s past strategy and structure affect it in the present is to chart the critical incidents in its history; that is, the events that were the most unusual or the most essential for its development into the company it is today. Has the company’s corporate strategy changed over time? What factors influenced these changes? Its entry into new businesses and shifts in its main lines of business can provide insights here and should be considered. Some events have to do with its founding, its initial products and how it makes new-product market decisions.
Analyse the external environment. The next step is to identify opportunities and threats by examining the (C)ontext, (C)ompetitive environment and (C)ustomers. Context refers to the macroenvironment or PESTLE and a thorough investigation of each factor is of utmost importance. This part of the case analysis process is time consuming both in terms of researching and writing up. The competitive environment also refers to the characteristics of the industry and the firm’s direct and indirect competitors. Of particular importance here are Porter’s five forces model and life cycle model. The final C refers to customers in the broadest and specific sense. What is the size if the market? How is the market segmented? How profitable are each of the segments? Why do customers buy and what factors influence their decision? After obtaining and analysing this information make a list of Opportunities and Threats
Identify the company’s internal strengths and weaknesses. Once the historical profile is completed you can begin the situation analysis (5 C’s). Use all the incidents you have charted to develop an account of the (C)ompany’s strengths and weaknesses as they have emerged historically. Examine each of the value creation functions (Porters Value Chain) of the company, and identify the functions in which the company is currently strong and currently weak. Some companies might be weak in marketing or finance; some might be strong in research and development. Who do they (C)ollaborate or partner with? Consider also the culture of the firm; strong cultures are difficult to initiate and can lead to a competitive advantage. Make lists of these Strengths and Weaknesses.
Evaluate the SWOT analysis. Having identified the company’s external opportunities and threats as well as its internal strengths and weaknesses, you need to consider what your findings mean. That is, you need to consider the strengths and weaknesses against opportunities and threats. This is largely a brainstorming exercise as specific decisions will be made later on but start by addressing these questions: Is the company in an overall strong competitive position? Can it continue to pursue its current business or corporate-level strategy profitably? What can the company do to turn weaknesses into strengths and threats into opportunities? Never merely generate the SWOT analysis and then put it aside because it provides a succinct summary of the company’s condition. A good SWOT and TOWS analysis is the key to all the analyses that follow.
Analyze corporate-level strategy. To analyse a company’s corporate-level strategy, you first need to define the company’s mission and goals. Sometimes the mission and goals are stated explicitly in the case; at other times you will have to find them from available information. Insights into a company’s corporate strategy can be gained by examining its line(s) of business and the nature of its subsidiaries and acquisitions. It is important to analyse the relationship among the company’s businesses. Do they trade or exchange resources? Are there gains to be achieved from synergy? Alternatively, is the company just running a portfolio of investments? This analysis should enable you to define the corporate strategy that the company is pursuing (for example, related or unrelated diversification, or a combination of both) and to conclude whether the company operates in just one core business. Then, using your SWOT analysis, debate the merits of this strategy. Is it appropriate, given the environment the company is in? Could a change in corporate strategy provide the company with new opportunities to transform a weakness into a strength? And so on.
Analyse business-level strategy. Once you know the company’s corporate-level strategy the next step is to identify the company’s business-level strategy. If the company is a single-business company, its business-level strategy is identical to its corporate-level strategy. If the company is in many businesses, each business will have its own business-level strategy. You will need to identify the company’s generic competitive strategy – differentiation, low cost, or focus – and its investment strategy, given the company’s relative competitive position and the stage of the life cycle. The company may also market different products using different business-level strategies. For example, it may offer a low-cost product range and a line of differentiated products. Be sure to give a full account of a company’s business-level strategy to show how it competes. Porters generic strategies and the Miles & Snow typology (better still the combined model are crucial at this stage).
Identifying the functional strategies that a company pursues to build competitive advantage to achieve its business-level strategy is very important. These may include superior efficiency, quality, innovation or customer responsiveness and the SWOT analysis will have provided you with this information. You should further investigate the firm’s production, marketing, or research and development strategy to gain a picture of where the company is going. For example, pursuing a low-cost or a differentiation strategy successfully requires a very different set of competencies. Has the company developed the right ones? If it has, how can it exploit them further? Can it pursue both a low-cost and a differentiation strategy simultaneously? If the SWOT analysis revealed threats to the company from the environment, can the company deal with these threats? How should it change its business-level strategy to counter them? What functional level strategies need adjusting?
Make recommendations. The last part of the case analysis process involves making recommendations based on your analysis. Recommendations should justify whatever corporate and business level strategic positions you have chosen, clearly demonstrating how it will improve future profitability and sustainability. Your recommendations should be in line with your analysis; that is, they should follow logically from the previous analysis. For example, your recommendations will generally centre on the specific ways of changing corporate, business and functional strategy to improve business performance. As this course zones in on marketing, functional strategies should include consideration of the 4 or 7 p’s. Be careful here; a recommendation at the corporate level can have implications all the way down to distribution strategies for example. Finally, you should develop a plan for effective implementation of your solution. Even the best ideas poorly executed can have disastrous consequences. Remember an idea without financial supporting documentation is an hallucination
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