The M&A market brings its participants not only great benefits but also threatens to lose business. Therefore, the development of a competent and effective corporate strategy will allow companies to reap the maximum benefit. Here is more about the role of the corporate strategy department.
The concept of the corporate strategy department
The key to the successful and efficient operation of the organization is a well-thought-out, detailed corporate strategy. In business, it is quite difficult to do without a carefully thought-out strategy and an effective mechanism for its implementation. The importance of managing competitive strategies is constantly growing, as they allow companies to participate in a competition for a long time, survive in a competitive environment and realize their development prospects. Management of corporate strategies is especially relevant in today’s conditions of ever-increasing competition, an unstable economic environment, which requires the organization to develop the right direction to achieve its goals through effective interaction with the external environment, the development of potential opportunities in the long term.
For every manager or employee, an M&A deal is not just part of corporate strategy. Such events do not pass painlessly and unsettle. What executives and consultants are cautiously calling “post-merger integration” is turning into tension, uncertainty, and even chaos. The workload grows and with it the stress. You have to quickly adapt to unfamiliar orders, methods of work, internal politics. Your colleagues may be carriers of a different culture; and the new leader, most likely, will not know about your merits or career aspirations. And there is no guarantee that you will find a place in the new company, not to mention the prospects. On average, after the merger, about 30% of employees are left behind.
The corporate strategy department in M&A provides management that relies on human potential as the basis of the organization, orients production activities to consumer needs, responds flexibly, and makes timely changes in the organization that meet the challenge from the environment and allow achieving competitive advantages, which together makes it possible for the organization to survive in the long term while achieving their goals. Its task is to create a balance between different departments to achieve common results. In medium-sized companies, it can be assumed that a centralized management style tends to prevail.
The development function of the M&A corporate strategy department
Successful companies establish a new corporate unit during M&A transactions- the department of corporate strategy. This department is completely different from the strategic planning department and plays a special role in implementing the strategy.
The organization of strategy development at the enterprise involves the selection of developers, organization of their work and control, change the organizational structure of management following the needs of strategic management, development of strategic skills and information, and analytical support of the strategy development process.
The main development functions of the stratagem department include:
- to develop a new vector for the development of staff skills, to form new skills, systems, and structures. Strategic planning is only one of the components of this vector, and its effectiveness will depend on the integrated development of all components;
- create an appropriate business culture that stimulates change, innovation, and risk, without which a well-established competitive culture will slow down change, including strategic planning;
- to take care of the harmonious, complementary coexistence of competitive and entrepreneurial abilities and cultures.
The strategic management department can normally cooperate with other divisions of the company. First, it provides support to structures in terms of the tools needed to implement corporate strategy. Second, it provides strategy information to key functional units, such as human resources and finance.