Roman philosopher Seneca is quoted as saying: "If a man does not know what port he is steering for, no wind is favorable." The same applies to organizations and corporations. The best product, services, goals and management teams are of little use without a corporate strategy. Without a corporate strategy it is impossible for a corporation to have long term plan or method to achieve objectives or goals, which are key to any type of strategic planning.
The terms strategy and tactics are often misunderstood and even used as synonyms. Although strategy and tactics both help you achieve your goals, they are very different, and understanding those differences is at the heart of a successful corporate strategy. Strategies are ideas you create to achieve objectives. If you own a chocolate brand, your goal may be to make your company the largest and most profitable chocolate company in the world. Your strategy may be to convince your target audience that your chocolate is the best premium quality chocolate by getting high-end establishments and people to endorse it. Your tactics could include offering free samples in high-end stores, placing them under the pillows of beds of luxury hotels or hiring a celebrity to endorse it.
A formal corporate strategy is a crucial strategic tool because it allows a corporation to focus multiple resources on a single objective. Without a clear corporate strategy, companies lose sight of their main objectives and lack the drive and focus of a well-designed corporate strategy provides.
A corporate strategy provides management with a benchmark to measure a company's success or failure. As Peter Drucker, the famous management guru, is quoted as saying: "What gets measured improves." However, it's difficult to measure the success of your corporation if you aren't clear on what your strategy is.
A well-thought-out corporate strategy allows a corporation to create plans and methods that will allow it to continue growing despite the ups and downs of the economy or changes in the market. Take for instance the baking soda brand Arm and Hammer. In the 70s, executives noticed their sales were dropping because their target audience was baking less. To achieve its goal of turning around the tide and increase sales, the company devised the strategy of devising new reasons for people to buy their baking soda. First it sold its packs of baking soda to get rid of bad smells in fridges, then as part of environmentally friendly cleaning products, and now it is found in cat litter and toothpaste.