Grand Strategy

What is Grand Strategy ?

The grand strategy of the company is also known as the corporate strategy or the master strategy. It provides the general plan by which the company intends to achieve its long-term goals. It basically falls into four types expansion, stability. retrenchment and combination. Companies which can have many product lines in various stages of development can adopt any number of these grand strategies. At the same time any one of these four grand strategies can be instrumental in the company's achievement of its long-term goal.

The grand strategy is concerned with the company's scope and the direction in which it is headed. It is concerned with topics like what should be the growth objective of the company and what strategy should it adopt to achieve those objectives, what are various lines of business of the company and how these businesses work in co-ordination with each other.

Objectives of Grand Strategy

The grand strategy concerns itself with four objectives:

  1. Making the decisions regarding the number of business lines to pursue and the positions needed to be reached in each of these businesses. This may also lead to a decision regarding addition or deletion of a specific line to increase or decrease the breadth of diversification of the company.
  2. The strategies may be a mix of various sub strategies for each of the business lines. Those business lines which are showing a healthy trend can have a high growth strategy, those that are steady can be kept healthy, those businesses that are not performing to expectations but can deliver, need to go for tum around strategies and finally those businesses which have no potential or do not fit with the company's strategic road map should be dropped. To do this the businesses will also have to be provided with financial, managerial or other resources.
  3. The grand strategy explores ways to get strategic fit between the various business lines and hence turn these into sources of competitive advantage for the company through the use and transfer of technology, advantage in procurement, operations, distributions and customers. 
  4. To priorities investment into the most lucrative lines of business.

Importance of Grand Strategy

A corporate strategy is must if the company wants to achieve its long-term goals and objectives. Only then it can deliver the best products and services, goals and achieve the maximum from its team of managers. Corporate strategies are important because of the following factors :

1) Focus : 
A well designed corporate strategy gives the company the capability to direct its multiple resources to a single objective. In the absence of a formal corporate strategy, the company could fritter away its resources. The corporate strategy thus brings the focus in the company.

2) Measurable Progress : 
The strategy also provides the company a yardstick or benchmark against which it can measure its progress or failure. Peter Drucker, the famous management guru has said "What gets measured improves". The strategy provides clarity to the company on what needs to be measured.

3) Long-Term Success : 
The corporate strategy allows the company to manage through periods of ups and downs. This makes it immune in periods of economic downturn or market slowdowns. For example, during the financial crisis of 2008 the global demand for petrochemicals plummeted. This impacted the short-term performance of Reliance Industries as the demand from its customers went down. However because of the corporate strategy prevalent the company could overcome weaknesses in its external environment. With the the world economy recovering now, the demand for petrochemicals has come up again and this has improved the bottom-line of Reliance Industries.

4) Other Benefits :
  • Corporate strategy channelizes the distribution of scarce resources. 
  • It shares the corporate vision with the employees and motivates them to work hard. 
  • The strategy empowers the management to tackle unseen market contingencies.
  • The effectiveness of the implementation of the management can be seen through the success of the corporate strategy. 
  • Corporate strategy helps the management to plan about the uncertain future.
  • It prepares the company to handle unforeseen external emergencies. 
  • It allows the management to choose the best course of action.
  • It provides a yardstick for measuring the performance of the company.

Limitations of Grand Strategy

The shortcomings of corporate strategy are as follows: 

1) Complex Process : 
Framing a corporate strategy is a very complicated and time consuming process.

2) Requires Huge Expenditure : 
The making of a corporate strategy requires a lot of time, effort and money. It requires the company to hire of expensive consultants. This is often beyond the financial capacity of small companies.

3) Uncertain Estimates : 
Estimates of the future are always unclear and inaccurate. Corporate strategy is based on inaccurate assessments of the future. This is a very big drawback.

4) Difficulty in Achieving Desired Results : 
The success of corporate strategy lies in its execution. The execution is a function of organisational, behavioral and motivational factors. There is thus often a gap between the conceptualization of the strategy and its implementation.

5) Useful only for Long-Range Problems : 
Grand strategy always has a futuristic perspective. They are of not much use when the problems being faced by the company are of short-term in nature.

Types of Grand Strategy

There are four types of grand strategies, these are as follows :