Creating Business and Corporate Strategy

An Integrated Strategic System

Adyl Aliekperov

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000415063
• Edition: 1
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Businesses need strategies that determine the direction of functioning and further development. If a company deals with several multifaceted businesses, each of them subsequently requires their own strategy. The issue of strategy creation and realization is a key factor that must receive the closest possible attention.

In order to assure victory and be thoroughly prepared for various directions and situations that may arise, companies create their own unique strategies. This book is primarily aimed at suggesting the necessary repertoire of knowledge and skills for strategy creating with the help of the TASGRAM integrated system – Thinking, Analyzing, Strategy, Goals, Risks, Actions, and Monitoring. The main outcome of TASGRAM is a combined strategic table: business strategy, corporate strategy, goals, risks, actions, and monitoring. Each element in TASGRAM has a concrete goal and it helps users become more focused. Creating Business and Corporate Strategy: An Integrated Strategic System offers a new tool for company strategy creation, showcasing various cases and examples based on theory and practice.

Unlike the existing tools, the suggested system of strategy creation is simpler and definite. Its main purpose is to help create and further develop the created strategy, making this book especially valuable to researchers, academics, practitioners, and students in the fields of strategy, leadership, and management.

1Introduction

“Amat victoria curam” is one of the best known ancient Roman phrases that is translated as “victory loves concern” (Enenkel et al., 2017:442). This phrase can be applied to companies and businesses that strive to take leading market positions. To assure their victory and to get thoroughly prepared for it, the companies create their unique strategies.

For instance, the strategy of General Electric (2019) is to provide constant and stable development, to improve their financial positions, and to strengthen their business. In order to accomplish this the company promotes its brand, improves its customer connections and attaches close attention to financial management. Besides, General Electric advances its “lean management tools with a relentless focus on customer value” (General Electric, 2019:2).

In Whirpool, the attention is focused on the idea that their “long-term value creation strategy” must improve their financial results (Whirpool, 2019:24). With this aim the company continuously develops its technologies and robotics, as well as offer its clients “products that provide exceptional performance and desirable features” (Whirpool, 2019:4).

The key strategy of Apple, Inc. (2019) are the future growth and the strengthening of marketing competitive position by investing in research and development, as well as in the development of new products and services and the renovation of the existing ones.

The example of these three leading companies showed that strategy determines the ways of its further development, prepares its coming victory, which is expressed in continuous growth and the creation of economic value.

This approach is also shared in academic literature. According to McKeown (2012:21), “Strategy is about shaping the future”. Grant and Jordan (2016) operate the notion of “successful strategy”, which includes the shaping of long-term goals, understanding the competitive environment, and the objective assessment of current resources.

Therefore, a single conclusion can be made that business needs a strategy that determines the direction of its functioning and further development. Moreover, Porter (2015) emphasizes that if a company deals with several multifaceted businesses, each of them needs its own strategy. Consequently, the issue of strategy creation and realization is a key factor that must be cared with the closest possible attention.

However, the following questions arise: what is strategy? how should it be created? and how should its realization be provided? It is the answers to these questions that this work is devoted to.

2What Is Strategy?

This chapter, using the examples of companies such as Apple, Inc. and Amazon.com, and also the relevant theoretical postulates, suggests the answer to the questions “what is strategy?” and what is the difference between “business strategy” and “corporate strategy”. Besides, the emphasis will be made on the advantages of customer requirements’ orientation while creating the company strategy.

In 1996, Michael Porter asked the famous question “What is strategy?” (Porter, 1996). In 2000, professor of Strategy and Entrepreneurship Costas Markides remarked that “we simply do not know what strategy is or how to develop a good one” (Todorovich and Bakir, 2016). In 2015, Porter notes again that “Strategy is relatively misunderstood in lot of organizations” (Porter, 2015). In 2017, the opinion was voiced that many organizations do not completely understand what strategy is, mixing it up with planning (Latham, 2017). Hence, the question “what is strategy?” still remains topical.

Alongside this, Porter emphasizes that “the essence of strategy is choosing to perform activity differently than rivals do” and this idea must find its reflection in its unique market positioning (Porter, 2015).

Besides, according to Porter, a company must define the way it forms value proposition for its customers by means of its products or services (Porter, 2015). Weinstein and Ellison (2012) underline that value is not simply provision of services, quality image, and attractive price on a product or service, but also extraordinary efforts aimed at meeting or outrating a customer’s expectations.

Thus, strategy is formed in terms of two aspects:

• Determining the company’s market positioning aimed at its distinction in a competitive range.
• Determining the approach to customer value formation with the purpose of complete satisfaction or outrating the customers’ expectations.

Consequently, strategy creation is concentrated on two stakeholders, that is, the company’s customers and competitors. Concerning competitors, the company needs to specify its unique market positioning that makes it special in a competitive range. For its customers the company should shape a unique value proposition on the basis of marketing positioning.

What this looks like in practice can be illustrated with the examples of two companies – Apple, Inc. and Amazon.com. This gives an idea of the process of customer value creation on the basis of market positioning in the companies whose leadership and exclusive financial results are beyond doubt. These companies are included into “The Top 10” leadership list of companies, according to Fortune 500: Amazon.com takes the second place in this list and Apple, Inc. is given the fourth position (Fortune, 2020).

Apple, Inc.

On June 29, 2007 the smartphone iPhone was introduced to the world, which was a mobile telephone of an absolutely new format (Encyclopedia Britannica, 2019). The users obtained a unique possibility to thumb through the photos, made with the same smartphone, with a light finger touch to the screen, to exercise comfortable trips via the Internet, to perform other actions by means of a light contact with a touchscreen.

Besides, alongside with an innovative smartphone customers were offered the following innovative services (Fisk et al., 2014; Merchant, 2017; Straubhaar and La Rose, 2015):

• The website suggesting the information on the product, the ways of obtaining it and receiving support;
• Retail stores allowing potential customer to get to know more information about the iPhone and other company products;
• iTunes, a music shop where the iPhone owner could load music and listen to it;
• App Store, the Internet shop for applications to be installed into the iPhone;
• iCloud, the cloud storage, where reserve information copies placed on the iPhone and iPad can be stored. This service, in Apple’s opinion, was one of the most meaningful variants, suggested by the company. The customers got the opportunity of making a reserve copy of all their data and then to transfer them easily onto a new iPhone.

Not all services were suggested by the company simultaneously. Nevertheless, the customers could see that the company probably cares about their convenience, continuously suggesting new decisions that add value to its products and make them ever more attractive.

iPhone owners became attributed to a special group of people who possess this unique “made by Apple” gadget. It is noted that iPhone possession allowed people to demonstrate “the shiny new thing, the one that everyone’s talking about” (Matyszczyk, 2018). A strong emotional and psychological link appeared between the company’s brand and its customers (Lewis, 2014). It is worth saying that customers, who are emotionally linked with the brand, are ready to buy more products or services of this trademark, are more loyal towards price growth, often recommend this brand to other people, and communicate with the company willingly (Zorfas and Leemon, 2016). Besides, Apple, Inc. suggested the opportunity of creating one’s own image: people could choose the most suitable accessories to protect their smartphones, empathizing by this their distinctness.

Steve Jobs emphasized that “you’ve to start with the customer experience and work back to the technology” (Hansen, 2013). In all appearances, this approach was realized in the iPhone creation, when customers’ requirements were anticipated with the help of innovative technologies. The customers received a beautiful-looking, comfortable, and original innovative gadget that was a surprise for them. It was remarked that one of the secrets of the Apple smartphones’ success was that the company managed to unite a gorgeous design with innovative approach.

Thus, it is possible to derive from the example of iPhone, the company’s top-of-the-line product, that the company formed its customer value proposition by means of its product and the suggested services.

Weinstein and Alison (2012) note that the more attractive the value proposition is, which the company manages to form for its customers, the greater is the likelihood of achieving a high financial index. This statement was confirmed by Apple, Inc.

Owing to a well-made customer value proposition, the company really managed to take a leading market position, demonstrating its high financial results (Figure 2.1).

Figure 2.1Annual total net sales of Apple, Inc. in 2009 and 2019 (in mln. USD).

Source: Apple, Inc. (2009, 2019, b).

Such financial progress was managed by Apple, Inc. owing to the application of the differentiation strategy for the iPhone, singling it out in the competitive range by means of unique products and services. It is necessary to note that differentiation is possible with factors such as technological progress and exceptional image, or when the relevant product possesses priority for the customers, and as a result, the company gets a considerable benefit compared to competitors (Porter, 1998). It was that Apple, Inc. demonstrated by its products and ...

Table of contents

• Cover
• Half Title
• Series Information
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• To the Readers
• 1 Introduction
• 2 What Is Strategy?
• 3 TASGRAM – The Integrated System of Strategy Creation
• 4 Questions and Answers
• 5 Concluding Remarks
• References
• Index