Put simply, corporate strategies are essentially about what the business wants to achieve.Business strategy is about how those corporate objectives are to be achieved.
Business strategy is concerned with deciding which markets and activities the business should be involved in; where it wants to be; and how it is going to get there. Strategy is about making high-level decisions and forms the management game plan for…
Satisfying customers (meeting customer needs)
Running the business (organising resources in the most efficient and effective way)
Beating the competition (strategies and tactics to gain competitive advantage)
Achieving corporate objectives
Corporate (or business) objectives are set at the high level and are quite distinct from any more detailed functional objectives set for the functional areas of a business.
Examples of corporate objectives would include targets for:
Sales revenue (a traditional measure of the size and strength of a business – if revenue is growing then the business is growing)
Profit (both the absolute level of profit and the profit margin – i.e. return on sales)
Return on investment (e.g. ROCE, ROI: particularly important for capital-intensive businesses)
Growth (sales volume, revenue, profit, earnings per share)
Market share (the proportion of markets and industries owned by the business or its products)
Cash flow (this can be similar to a profit objective, but with the focus on maximising the net cash inflow of the business)
Shareholder value (particularly important for publicly-quoted businesses where senior management are tasked with growing the value of the business)
Corporate image & reputation (increasingly important – links closely with corporate social responsibility, product and customer service quality, and business ethics)
Many factors will influence the corporate objectives that are set. Precisely which factors depends on the nature of the business and its markets, and the business ownership. Some examples of those factors include:
Factors Influencing Corporate Objectives
Age of the business
Size and legal status
Ownership (e.g. privately owned; stock exchange quoted)
Views of owners and managers
Market conditions
Legislation
State of the economy
Competition
Risk and attitude to risk
Corporate culture
Political factors
Social attitudes
Corporate objectives can also be considered the main or primary objectives of a business. The set the agenda for the secondary objectives:
Primary Objectives
Secondary Objectives
The ultimate, long term goals of the business (3-10 years typically)
These are the key strategic objectives such as profit growth or shareholder returns
Make a direct contribution to meeting primary objectives
E.g. sales growth will help business achieve profit target
Also known as tactical objectives
Usually focused on the short or medium-term (1-3 years)
A similar distinction can also be made between strategic (corporate) and tactical (functional) objectives:
Strategic
Tactical
Focused on long-term
Focused on short-term
Set by the Board
Set by line management
Involve higher risk & uncertainty
Relatively low-risk
Likely to involve significant investment / business resources
