Page 82 - GLOBAL STRATEGIC MARKETING

2.2 Defining corporate strategy

What exactly is corporate strategy? Andrews (1971) proposes a
comprehensive definition:

‘Corporate strategy is the pattern of major objectives, purposes or goals,

and essential, policies and plans for achieving those goals, stated in such
a way as to define what business the company is in or is to be in, and the

kind of company it is or is to be’ (Andrews, 1971 cited in Baker, 2000, p.
54)

This definition is based on the article by Theodore Levitt, ‘Marketing

Myopia’, published in the Harvard Business Review in 1960. Levitt (1960)
argued that the dominant business orientation of production and product-

led business philosophies failed to take into consideration customer and
market forces in strategic planning. As a result, he pointed out that
because these organisations were too inwardly focused, and not market-

oriented, their business activities were defined too narrowly, as long-term
corporate planning did not take into consideration customer needs and

competitor activity. For example, he highlights that railroads failed to
identify that they were in the ‘transportation business’ and allowed new
competitors and other forms of transport to take business away from them.

Therefore, it can be determined that corporate strategy and planning
should be concerned with the long-term direction of the organisation. It is
also concerned with the scope; what types of business the company as a

whole should be in (Andrews, 1971). This is what can be determined as
portfolio planning (Kotler et al, 2003). The portfolio can be made up of

divisions such as strategic business units (SBU’s); these can be separate
companies that have been acquired to extend the business portfolio. On
the other hand, the company can be structured into separate divisions or

business units to make the portfolio more manageable as the organisation
grows and becomes more complex. Regardless of the structure, corporate

level responsibilities include designing the corporate strategic plan to
guide the whole company as well as the allocation of resources and the
decision to invest or divest certain strategic business units/divisions/

products or services. The main theoretical model to determine a well-