Formulating a corporate strategy considers what business or portfolio of businesses should be entered into and how the relationships of the businesses can be managed to create and maintain synergy (Dess, Eisner, & Lumpkin, 2008).
To determine its corporate strategy a company should first consider the factors from the strategy analysis, as it is one of the first steps in strategic management. Specifically, a company should consider the results that demonstrate the company’s strengths and weaknesses relative to competitive advantage; the company’s external environment, including opportunities and threats and the macro-environment (political, economic, societal, and technological changes); and the identification of the organization’s mission, goals, and objectives.
Once the organization has a clearly understanding of those factors and scope and direction of the organization, they should consider how those factors relate to its line(s) of business and the relationship among the company's businesses and the nature of its subsidiaries and acquisitions; and consider what changes need to be made and the strategy for achieving it such as those activities that can be shared, competencies that can be leveraged, and resources that can be allocated and the related costs (Dess, et. al, 2008).
Watson and Wooldridge (2005) also believe an organization should consider upward influence. “Upward influence is the foundation of a stream of literature demonstrating the importance in strategy formulation of bottom-up processes as well as top-down processes”. According to Watson’s and Wooldridge (2005) study, business unit managers are important agents in strategy, since they are the agents mainly responsible for the strategy and performance of the business units that comprise large corporations and analysis of performance data places the business unit, and hence its managers, at the center of the stage”. The capabilities and abilities to coordinate with other organizations...