GLOBAL CORPORATE STRATEGY

Global Corporate Strategy

Global Corporate Strategy

Q.1

Ans.

Strategy

The original meaning of the word strategy is derived from the Greek word strategos, which referred to a role, namely, that of a general in command of an army. It later came to mean the “art of the general,” comprising the skills necessary to undertake that role. Although the origins of strategy can be traced back through history, the application of the concept of strategy in a business context is arguably a comparatively recent phenomenon. Cynthia A. Montgomery and Michael E. Porter (1991), for example, regarded the pioneering work in this field as occurring in the 1960s. In their opinion, management thinking was, at that time, oriented toward discrete business functions such as marketing, finance, and production, and there was a pressing need for the development of a more holistic view. The development of a “strategic perspective” was seen as the tool to accomplish this goal.

There are, in fact, almost as many different definitions of strategy as there are writers on the subject. In 1983, Donald C. Hambrick suggested two main reasons for this lack of consensus: first, strategy is a multi-dimensional concept; and second, strategy is situational and will consequently tend to vary by industry.

Corporate Planning

From a business point of view, corporate planning involves formulating long term business goals so that the strategic planning of an enterprise may be developed and acted upon. The corporate planning term that was popular in the 1960s has since been referred to as strategic management. (Boulton, Lindsay, Franklin & Rue 1982, 500-509)

While there has been speculation concerning the 'corporate planning', there is evidence that the practice of formal corporate planning is becoming more prevalent. Houlden has found, between 1985 and 1992, a doubling of the number of organizations employing corporate planning units. Planning processes are potentially affected by a range of contextual factors. (Houlden 1995, 99-108) The reconfiguration of planning systems to reflect contextual change is an important assumption with implications for both the effectiveness of the planning process and its role. However, appropriate reconfiguration may not take place. Chakravarthy's survey of senior executives in a wide range of industries found planning systems to be, for the most part (Chakravarthy 1987, 517-534), lacking in both external and internal fit (in matching the characteristics of proposed ideal systems). Failure to reflect the planning system's particular context can be expected to result in a system that is ineffective, with the planning process assuming the role of an organizational ritual.

Organisational Structure

As a privatized company PowerGen has moved abruptly from the context of a nationalized industry to a more complex and changing environment, characterized by increasing competition and changing regulatory and government policy. These factors affect both the profitability of the core market and, at times, the strategic initiatives that the company is able to undertake (for example, through governmental restrictions on merger and capacity development). Within this context PowerGen has achieved a diversification of the company into other energy-related industries and has established overseas undertakings in Australia, Germany, Portugal, Indonesia ...