Chapter 1
Corporate Strategy — Decides Where to Go
Corporate strategy is about setting the overall direction of the company — which business or
market to enter, what the long-term goal is, and how to grow.
Example:
Imagine a company called “Fresh Bite Foods” that makes snacks.
The management decides: “We will expand into the healthy food market and start selling
organic snacks.”
This is corporate strategy because it decides where the company wants to go — toward the
health food market.
Business Strategy — Decides How to Get There
Business strategy is about how to compete successfully in that chosen market.
It focuses on whether the company will win by being cheaper (cost leadership) or by being
different/better (differentiation).
Example (continuing Fresh Bite):
To succeed in the healthy snacks market, Fresh Bite decides: “We will compete by offering
affordable healthy snacks made from local ingredients.”
This is business strategy — it explains how they will succeed in that market (by using a cost
advantage).
Functional Strategy — Decides What to Do Each Day
Functional strategy turns the business strategy into day-to-day actions within each department
— marketing, production, finance, etc.
Example (continuing Fresh Bite):
Marketing Department: Create social media ads showing that “healthy food can be
affordable.”
Production Department: Source ingredients from local farms to reduce costs.
HR Department: Train staff in food quality standards.
These are functional strategies — daily actions and operational plans to make the business
strategy successful.
1. Strategic Analysis
This stage finds out where the organization is now and where it wants to go.
It involves understanding the company’s mission (purpose and what it does), and vision (what
it wants to achieve).
Example: A company like Coca-Cola defines its mission as “refreshing the world”
and its vision as “to be the world’s leading beverage company.”
It then carries out:
Environmental Analysis (PESTEL, Porter’s Five Forces, Porter’s Diamond) to study
external factors like competition, technology, and regulation.
Position Analysis (Value Chain, Portfolio Analysis, Resource Analysis) to know its
strengths and weaknesses.
SWOT Analysis combines both internal and external analysis to identify opportunities
and threats.
This stage supports corporate strategy because it helps decide what kind of business the
company should be in and what direction to take.
2. Strategic Choice
In this stage, the company develops and selects possible strategies.
It looks at options such as market growth, cost leadership, or product differentiation.
Then it evaluates those options based on suitability, feasibility, and acceptability.
Example: After analyzing the market, Coca-Cola may choose to expand its bottled water brand
to compete with other health drinks.
This stage is linked with business strategy because it decides how to compete successfully in
each business area.
3. Strategic Implementation
This is about putting the chosen strategy into action.
It involves resource planning, operations planning, functional strategies, and changes in
structure or culture if required.
Example: Coca-Cola’s marketing department starts advertising the new bottled water,
production ensures sufficient supply, and HR recruits skilled staff to support the new product
line.
This stage links directly with the functional strategy, as it focuses on day-to-day actions within
departments like marketing, production, finance, and HR.
How Corporate, Business, and Functional Strategies are Linked
Corporate Strategy is formed in the Strategic Analysis stage when the company decides
its overall direction (e.g., enter a new market).
Business Strategy is formed in the Strategic Choice stage when each division decides
how to compete (e.g., cost leadership or differentiation).
Functional Strategy is part of Strategic Implementation, where departments plan daily
activities to support the chosen strategy (e.g., marketing campaign, production
schedule).
Example Summary:
Coca-Cola (corporate level) decides to enter the bottled water market → Dasani brand
(business level) chooses to compete through differentiation → Marketing and production teams
(functional level) promote and produce it daily.
This shows how all three strategies are connected and move through the steps of analysis,
choice, and implementation.
Mendelow’s Power/Interest Matrix – Overview
The Mendelow Matrix helps an organisation decide how to manage and communicate with
different stakeholder groups depending on:
Power → their ability to influence decisions
Interest → their level of concern or involvement in organisational activities
Group A – Minimal Effort (Low Power, Low Interest)
Strategy: Monitor with minimal effort
Meaning: These stakeholders are not very powerful and not very interested in the
organisation’s decisions. They pose little threat or influence.
Objective: Avoid wasting resources on unnecessary communication, but still maintain
basic awareness.
Actions:
o Send annual reports or newsletters.
o Publish updates on the website.
o Keep them informed of major changes only.
o Monitor if their interest or power increases.
Example:
A small section of the general public with no direct connection to the company; minor
shareholders owning few shares.
Why it matters:
Their current influence is low, but ignoring them completely may be risky if their interest
increases later (e.g., through media attention).
Group B – Keep Informed (Low Power, High Interest)
Strategy: Keep them informed and involved
Meaning: These stakeholders are very interested in what happens but lack the power to
directly influence decisions.
Objective: Ensure they understand the organisation’s activities to maintain their support
and prevent negative publicity.
Actions:
o Provide clear, regular communication (newsletters, community meetings).
o Involve them in consultation and feedback sessions.
o Show transparency in decisions affecting them.
Example:
Local community near a factory, lower-level employees, or customers of a niche product.
Why it matters:
If ignored, they can become hostile and create reputational issues through protests or social
media campaigns.
Group C – Keep Satisfied (High Power, Low Interest)
Strategy: Maintain satisfaction to prevent problems
Meaning: These stakeholders have significant power, but they are not currently
interested in the organisation’s operations.
Objective: Keep them satisfied so their interest doesn’t rise (which could turn them into
active opponents).
Actions:
o Provide high-level periodic updates or summary reports.
o Offer personal meetings or briefings occasionally.
o Ensure their basic expectations are met (dividends, compliance, financial
stability).
o Avoid decisions that might draw unwanted attention from them.
Example:
Institutional investors not directly involved in daily operations, government regulators when the
company is compliant, or a major supplier with stable contracts.
Why it matters:
If their satisfaction drops, they may become highly interested — shifting to Group D (Key
Players), which can be risky.
Group D – Key Players (High Power, High Interest)
Strategy: Manage closely and actively engage
Meaning: These are the most important stakeholders. They are both powerful and
highly interested in the organisation’s performance.
Objective: Build strong relationships, involve them in decision-making, and ensure their
continuous support.
Actions:
o Engage in regular two-way communication.
o Include them in strategic discussions and key decisions.
o Arrange regular board meetings, consultations, or updates.
o Address their concerns immediately and transparently.
o Build trust and long-term collaboration.
Example:
Major shareholders, board of directors, senior executives, key lenders, and government
regulators overseeing operations.
Why it matters:
Their support is crucial to the success of strategies and projects; losing their confidence can
cause serious damage to performance, funding, or reputation.
Chapter 2