CORPORATE STRATEGY DESIGN PROCESS

The task of developing a comprehensive strategy for a firm that integrates the finance, marketing, operations functions is complex. Robert Kaplan and David Norton in The Strategy Focused Organization have developed a generic strategic map template which can be customized for a particular firm. Companies have two basic strategies for driving financial performance; growth & productivity. Growth strategy consists of building the franchise and increasing customer value.

 Productivity strategy consists of improving cost structure and asset utilization. Kaplan & Norton stress on using a balanced approach so that reductions do not compromise growth of the company. The customer perspective defines how growth will be achieved as customers are the engine of growth. The value proposition defines the specific strategies to compete for new customers or an increased share of existing customer business.

 The value proposition is the device by which a company differentiates itself in the marketplace and can be done through product leadership , customer intimacy and operational excellence. The internal perspective defines the business processes and the specific activities the organization must master to support customer value proposition. The activities of an organization are embedded in the internal business processes that comprise the value chain.

 The template segments the value chain into four sets of business processes i.e. Product leadership, Customer intimacy, Operational excellence and Regulatory & environmental considerations. The learning and growth perspective defines the intangible assets needed to enable activities and customer relationships to be conducted at the highest levels of performance which are three principal categories, Strategic competencies, Strategic technologies and Climate for action.

 Kaplan and Norton developed The Balanced Scorecard. They said that an integrated set of measures be developed to track performance from different perspectoves. Linkages in strategy maps provide recipes for transformation and value creation over time.
Near term: Valu creation can focus on operational excellence Medium term: Increasing customer value is important Long term: Main focus is building business through loyalty and new customers

Collectively, these perspectives ensure short and long term firm performance.