Corporate strategy: definition

The Ministry of Education and Science of the Russian Federation

Plekhanov Russian University of Economics

Chair of Foreign Languages №1

PROJECT

“Understanding a corporate strategy: Coca-Cola’s global strategy”

Performed by:

Alyushin Valentin

Faculty of Distance Learning

group MM201

Supervised by:
Sizova Yulia Sergeevna

Project defended on:

__________________2016

Evaluation:

______________________

Tutor’s signature:

______________________

Moscow 2016

Introduction

The US nonalcoholic beverage market comprises categories like carbonated soft drinks, ready-to-drink tea and coffee, bottled water, sports drinks, and energy drinks. Soft drinks volume growth was mainly driven by noncarbonated or still beverages. Soda drinks—also called carbonated soft drinks or CSDs—remain the largest segment of the US liquid refreshment or nonalcoholic beverage market. But this segment has had persistently weak volumes over the past few years.

The relevance of the chosen research topic is evident due to the increasing importance of such market segments as bottled water, energy and sports drinks, for a portfolio of global corporations-manufacturers of soft drinks. A necessary condition for the successful functioning of such organizations in modern conditions is the presence of a well thought-out strategic management system. Due to the scale of existing activities, this system sets the long-term prospects for development and achievement of strategic goals and ensures the effectiveness of the company in the market and enhancement of the business value in general.

The purpose of the term paper is to study the concept of corporate strategy, which features creation and implementation of this type of strategy.

To achieve this goal it is necessary to solve the following tasks:

1) to disclose the concept of "corporate strategy";

2) to identify the main trends in the soft drinks industry;

3) to analyze the strategic management system of «The Coca-Cola Company».

The subject of the study is corporate strategy.

The object of study is «The Coca-Cola Company».

This term paper consists of two parts, introduction, conclusion, list of references, 1 figure, 1 table and 5 applications.

Corporate strategy: definition

Strategy is a term that comes from the Greek «strategia», meaning "generalship." In the military, strategy often refers to maneuvering troops into position before the enemy is actually engaged. In this sense, strategy refers to the deployment of troops. In the business, strategy is a plan of how to get the company from where it is now to where it wants to be; it is a means of achieving the desired results.

A typical business firm should consider four types of strategies, which form a hierarchy offered by Thompson and Strickland:

1) Corporate-level strategyfundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses. Corporations are responsible for creating value through their businesses. They do so by managing their portfolio of businesses, ensuring that the businesses are successful over the long-term, developing business units, and sometimes ensuring that each business is compatible with others in the portfolio

2) Business strategy defines how each individual business will attempt to achieve its mission within its chosen field of endeavour. This strategy referred to each separate business unit (SBU) or strategic planning unit (SPU). At this level strategy two critical issues are specified: (1) the scope or boundaries of each business and the operational links with corporate strategy, and (2) the basis on which the business unit will achieve and maintain a competitive advantage within its industry

3) Functional strategy focuses on supporting the corporate and business strategies. This strategy is the strategy for each specific functional unit within a business. Functional strategies primarily are concerned with the activities of the functional areas of a business (i.e., operations, finance, marketing, personnel, etc.) will seaport the desired competitive business level strategy and complement each other.

4) Operating strategy refers to the even narrower and more detailed approaches and moves devised by departmental-subunit managers and geographic-unit managers to achieve the strategy-supporting performance objectives established in their areas of responsibility.

Corporate-level strategy includes four kinds of initiatives:

· Making the necessary moves to establish positions in different businesses and achieve an appropriate amount and kind of diversification. A key part of corporate strategy is making decisions on how many, what types, and which specific lines of business the company should be in;

· Initiating actions to boost the combined performance of the businesses the company has already been involved into;

· Capturing economies of scope or synergies between business units;

· Establishing investment priorities and moving more corporate resources into the most attractive lines of business.

1.2. Typology of corporate strategies
The traditional classification of corporate strategies implies that synergy and the degree of diversification reflect the overall corporate strategy. In these schemes of classifications, the greatest opportunities for synergies lay in the hands of those companies where the business units perform similar operations - in other words, where the level of diversification is low. In corporations with a high level of diversification and, thus, an extensive list of orientation, the potential for synergies is low. With regard to coordination costs, they are significantly lower in organizations with significant diversification.

Table 1. Schemes of classifying corporate strategy[1]

Study by	Archetypes	Features
Porter	Portfolio management	Acquires undervalued companies. Highly autonomous business units. Corporation supplies capital and sophisticated management techniques.
	Restructuring	Acquires undeveloped companies. Corporation transforms companies by changing management, strategy, etc. Transformed companies are sold to finance acquisitions.
	Transferring skills	Acquires companies with the potential to transfer skills or expertise.Corporation creates necessary and appropriate organizational mechanisms to facilitate cross-unit interchange
	Sharing activities	Acquires companies with the potential to share activities between value chains. Corporation creates a context in which collaboration is encouraged and reinforced.
Goold et.al.	Financial control	A corporate strategy based on stand-alone influence, et al. control i.e. low synergy potential. Value is created by developing the operations of individual business units.
	Strategic planning	A corporate strategy based on linkage influence, i.e. planning high synergy potential. Emphasis is placed on exploiting synergies through various forms of operational integration among business units.
	Strategic control	A corporate strategy that combines linkage influence and stand-alone influence. The company will have clusters of units with high synergy potential and clusters with low synergy potential.
Prahalad and Hamel	Portfolio of businesses	Management focuses on organizational units, which means that capital is allocated business by business. The product-market is important in defining the organizational boundaries of business units.
	Portfolio of competencies	Management focuses on competencies: this focus is also the basis for the allocation of capital and talent. Competencies and core products are important in defining organizational units.

[1] Фредрик Нильссон, Биргер Рэпп. Понимание конкурентного преимущества: важность стратегической конгруэнции и интегрированного контроля. – Springer-Verlag Berlin Heidelberg, 2005. – 53 с.