Strategy: From Corporate Planning to Shareholder Value

Abstract

Strategy provides unity, consistency and guidance in an organization’s decisions and activities and is fundamental to an organization’s success. It is essentially about applying principles to various strategic situations. The development of business strategy over the last 50 years was initially driven more by business practicalities than theory. The business environment in the 1950s and 60s was a period of relative stability, and organizations focused on growth through diversification, vertical integration, mass marketing, efficiencies through scale and long-term investments. Corporate planning grew in popularity as a result of the increasing size and complexity of these organizations and the problems associated with management and control. Although financial budgeting offered some means for addressing these issues, the main strategic objective was the long-term planning of investments, which required a longer time horizon than that provided by annual budgets.