1. Corporate Activity and Strategic Management
In this section, we are going to learn about Corporate Activity and Strategic Management. As you can imagine, both of these concepts are equally important to understand the basics of how companies design their strategies. In fact, Corporate Activity will describe general business model and Strategic Management is the concept of strategy design.
What is Corporate Activity?
Corporate activity is for the corporate to procure necessary managerial resources to execute business, add values to the resources and deliver to the market. Managerial resources are categorised into Four resources. Funding from the financial market, procurement of material goods, hiring human resource from the labor market and information. Information is also an important resource as information flows across value chains internally and externally from organisations. In general, every company has the different business environment and business operations. However, generalised corporate activities are the same for every company.
External and Internal Activity
You can see that activities that are towards the four markets are external activities. First of all, companies will procure materials from suppliers. In addtion, funding from banks or investors may be required to secure cash to run a business. Companies will hire employees from the labor market to procure workforce. Ultimately delivers final goods or service to the product and service market. On the other hand, business companies will proceed production, distribution, sales activities. The business companies perform key activities to add value to the product or service are internal activities. For the enterprise to carry out an internal activity, it is important to manage the activity and people who execute the value chain of the corporate activity.
What is Strategic Management?
Every business companies will perform corporate activities, and the external business environment will influence them. Strategic Management is basically to plan, design the way business companies will approach the external business environment. One of the key management issues that business companies face is to decide how to adapt to the external business environment. Every business is to provide value to the market. They are unable to continue business if the value does not exist because the market will not utilise products or service that does not have value. Strategic Management provides the vision and direction of the company. At the same time, it is also the basic guideline on how to approach the external business environment and make management decisions.
Corporate Strategy, Business Strategy, and Functional Strategy
There are three layers in Strategic Management. The three layers are corporate level, business level and functional level. Each level of strategies needs to be aligned with the corporate vision as well as with each layer of the strategy.
Corporate strategy is to design the entire strategy for the organisation to decide which market to compete and allocate managerial resources to each business domain. For example, Corporate Strategy is to define, Business domain to deliver value, source of competitive advantage, and resource allocation at a corporate level
2. Business Strategy
Business Strategy is to design the strategies for each business domain. Each company will complete against competitors, and there are characteristics in each of the market. In other words, Business Strategy allows each business to consider these market characteristics. At the same time, Business Strategy will also consider the core competence and the competitive advantage your business has in order to build financial stability to the business you execute in the market.
3. Functional Strategy
Functional Strategy is to design the strategies for each business functions. For example, sales strategies will focus on how to efficiently find potential customers and the approach to selling the product. Also, Financial strategies will be to design funding partners, prediction of cash flow and necessary investment strategies for companies to secure cash.
Summary of This Topic
Corporate Activity is the ultimate model of how every business executes in each market. Make sure to understand the four markets that corporate interact. On the other hand, Strategic Management is the framework of how corporate designs the strategy. Moreover, this framework provides how the executives, business managers and functional managers to design and execute strategies.