5 key components of a strong corporate plan

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A corporate plan is very similar to an overall strategic plan but is more inwardly
focused on operations.

The two share many common traits, however. Both are long-range plans and both
start from a very high, big-picture level and increasingly focus on details.

Functions like a road map

Look at a corporate plan as a "business improvement plan" that examines internal
capabilities to take advantage of external opportunities.

This plan also contains actions that are needed to accomplish objectivessupplying
a map to benchmark progress at regular periods.

Essentially, a business improvement plan, or corporate plan, is a road map that will
allow leaders to guide the business to another level.

Useful for big and small companies

Corporate plans are usually confined to very large organizations with disparate
systems that must be examined and catalogued so that the organization can march
toward the future with a single mind.

That does not mean, of course, that smaller organizations should forgo the exercise.
Indeed, some would say that a written corporate plan is just as important for an
entrepreneur because he or she is often so busy dealing with day-to-day problems
that it becomes difficult to act on some half-thought-out strategy that exists only as
an idea.

What elements should I include?

A corporate plan, like any strategic plan, usually contains these elements:

A vision statement

This is where you define the objectives that will guide your internal decision making.
A strong vision statement can help you maintain your business focus and give a
sense of purpose to your business.

A mission statement

While a vision is often aspirational, a mission statement should outline how you will
achieve your business plan. It should be shortone or two sentencesand clearly
state what market(s) you intend to serve, the products or services you want to
provide and what makes you unique.

Your company's resources and scope

Take an inventory of all your activities, programs, divisions, employees, tangible and
intangible assets, finances and anything else that is relevant to your vision and
mission. This should give you a clear picture of where you are and where you want
to go.

A listing of corporate objectives

State your corporate objectives along with how these objectives will be measured.
In this way, your corporate plan will let employees and other stakeholders know
where your company is heading and what needs to be done.

A listing of strategies to reach those objectives

List your strategiessuch as developing new products or entering new marketsas

well as the tactics you will use to get there.
A well-written corporate plan will clearly communicate you vision and strategy to
your employees, investors and bankers. From there, stakeholders will be able to see
if they are aligned with the plan or working at cross-purposes.

The corporate plan can also help you connect with clients. By clarifying who you
are, what you offer and what differentiates your company, you will be able to better
communicate your value to clients.

Clients will also benefit from a tighter focus on your core competencies, or an
expansion of your services and products to meets their needs.

Essential Elements of Corporate Strategy

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Introduction
Corporate Self-Analysis

Formulating Strategy

Different Strategic Directions

Evaluating Strategies

Implementing Strategy

Conclusions

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INTRODUCTION

The major focus of corporate strategy is to present a method by which any business
can adapt to a changing environment. The focus of corporate strategy is to enable a
business to improve it's competitive advantage.

Corporate strategy theory presents us with the following questions:

WHERE ARE WE NOW?

WHERE DO WE WANT TO BE?

HOW DO WE GET THERE?

Let us now expand our corporate thinking.

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CORPORATE SELF ANALYSIS

Corporate self analysis is about answering the first question, where are we now?.

The logic is to examine the current status of the business. Areas to look at within
corporate self analysis include:

Is the business aware of who it's stakeholders are?

Does your business have a mission statement?

What are the long term objectives of your business?

What are your current business strategies? - Are they simple to understand and
communicate to the workforce?, or Are they difficult to understand and
communicate?

What is the state of the marketplace? - Is it in growth/decline?, Who are your

biggest competitors? Apply the PEST/SWOT models described in the marketing
section of this web-site.

Review your business internally, look at your business - Does it support growth and
adaptability to change?, How effective are your production processes?, How well do
Sales/Personnel/Marketing/Finance perform?

How well does the business control its internal resources?

Use the corporate self-analysis model we provide to develop your thinking.

From the corporate self analysis we can then look at where the business would like
to see itself positioned and develop a strategy to help it reach that position.
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FORMULATING STRATEGY

When devising any business strategy, you need to consider:

The reasoning behind the strategy, what are your objectives? - Achieve x amount of
growth/cost reduction?

What are all your options? -Does it have to be done in a certain manner?

Examine all options, what strategy is going to the most feasible in terms of
acceptance?

The best model of corporate analysis in relation to strategy formulation has been
developed by Johnson and Scholes during the 1980's. The logic of the model is
shown below:

The basic premise of this model is that strategic analysis/choice/implementation all

effect each other. These three main elements need their internal facets to be
observed in any business strategy.

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DIFFERENT STRATEGIC DIRECTIONS

When evaluating the different strategic directions a business can take there are
several routes a business can explore:

DO NOTHING - In this scenario, the business does little in terms of reacting to

changes in the marketplace.
DEVELOPMENT - Spend vast amounts of money on research, developing new
product ranges.

INTEGRATION - Integrate in a backward manner by going back and buying up your

business suppliers to achieve growth by getting lower priced raw materials.
Integrate in a forward manner by buying your product distributors, sell your
products direct to the consumers, thereby generating increased profits. Integrate in
a horizontal manner, by buying your competitors to gain increased market shares.

STRATEGIC ALLIANCES- Join forces with one of your competitors to develop a

stronger position in your marketplace.

NEW MARKETS - The business decides to embark on positioning itself into new
markets.

The overriding logic of formulating strategy is that any strategy must be in line with
the business objectives, ensuring stakeholder needs are maintained and that needs
of the surrounding environment are adhered to.

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EVALUATING STRATEGIES

After developing several potential strategies, the next step in the process is to look
at the different strategies to see which one will be the most suitable:

What is the cost of each potential strategy likely to be?

Does the business have the correct current machining capabilities (if applicable) to
achieve the strategy?

Does the business need any additional manpower for the strategy?
How will the business fund the strategy?

How is the business marketing plan affected by the strategy? (if applicable - new
product?)

In terms of evaluating any potential strategy, two key elements need to be

observed, the first is the financial viability of the strategy, how soon will the costs
be recouped?, and will the benefits to the business be long-term?. The second
element must be the effect of a strategy on the current facilities and resources,
does the business require additional employees to both implement the strategy and
maintain it?

IMPLEMENTING STRATEGY
There is no clear cut advice that can be given on how to implement a strategy. The
only advice we can give is to keep it simple, clear, precise. But above all make sure
everyone understands what is expected of them.

Studies of how to implement a strategy by Nutt showed that the success rate for
strategies was greater when the strategic managers spent more time looking at
how implementation issues, as opposed to merely forcing a strategy, questions
raised by Nutt on implementing a strategy include:

Does implementation exceed the managers authority to act?

Does a technically sound plan exist?

Can the manager shape the plan so it falls under his/her control?

Does the plan deal with a recurring problem?

Can plan acceptance be negotiated with the affected parties?

Should consultants be used?

Do time constraints exist?

When looking at the implementing strategy it is advisable that you keep the aim
and text of the strategy as simple as possible.
From the outline of the strategy, the next step is to define the processes and tasks
which are needed to implement the strategy. From identifying the tasks for
implementation the next phase will be identify who will be responsible to carry out
the implementation stages, and finally to ensure the review of the strategy:
Break the aim of the strategy into clear implementation tasks
Decide who will be responsible for implementing the strategy.
Ensure regular reviews and adjustments to the targets set within the strategy as
and when necessary.

CONCLUSIONS
If a business is to remain competitive in an ever changing environment, then
strategic reviews need to take place from the management of the business to
assess the business in relation to it's environment, accordingly adjusting the
strategic focus of the business.
When developing a strategy for your business, never overlook what the core
competencies of your business are, as it is these fundamental areas which have
made your business successful and it is these areas which need to harnessed in
future strategy