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fully chosen, implemented and carried out can lead
to a synergistic effect. These strategies can guide a
firm's allocation of resources among several business
units and/or other ventures it may choose,
thus leading to the creation of wealth for all its
stakeholders.
Throughout the organisation, there are various
levels of strategies: corporate strategies, business
strategies and functional. Like business-level or
functional strategies, corporate strategies have four
aspects that need to be addressed: focus, specificity,
responsibility and time frame. The focus of
corporate strategies targets in on what type of
business should a firm be in. This also entails such
elements as whether or not the firm should be
diversified or undiversified, and the type of
products and/or services that the firm should offer.
The answers to these fundamental questions derive
from what the firm's SWOT analysis is comprised
of. The specificity of corporate strategies tends to
be very broad compared to that of a functional
strategy. This level of strategy provides the blue
print of the business plan in which a functional
strategy can be implemented.
The responsibility of the creation of corporate
strategies is that of the chief executive officer and
its top management team. It is also their responsibility
to ensure that these strategies are carried
throughout the various levels of the organisation. It
is through their strong commitment to resources, as
well as fostering an organisational culture �see
culture, corporate) and a reward system that
leads to successful strategy implementation. This
indeed creates a profitable future for the company.
As in any level, corporate strategies have time
frames. Since corporate strategies map out longterm
future plans for the firm, the time frame for
achieving these objectives and goals are approximately
five to ten years.
Since the 1980s, the hospitality industry has
been operating in a very volatile environment.
Intense competition in the domestic market has
made many US firms expand their operations
internationally. Many compete at a global level in
hopes to gain a greater market share and increased
profits. There are several generic corporate growth
strategies that tourism firms embark upon in order
to gain both a competitive and sustainable
advantage over its fierce competitors. The generic
corporate strategy 113
corporate growth strategies can be classified into
three categories: concentration, vertical integration
and diversification.
A concentration growth strategy is followed by
firms whose focus is on either a single or limited
number of product�s) and/or service�s). A company
uses this type of strategy to grow through its
current product. Three basic ways a firm can
undertake a concentration strategy are through
market development, product development and
horizontal integration. Market development is
the expansion into new geographic areas or new
market segments in order to gain a larger market
share. Some companies may add new products
and/or services or may alter or add to their current
products and/or services for their target markets.
This strategy is product development �see also
product planning). Horizontal integration is a
strategic move for organisations which already
have great knowledge of their existing operations
and which actually invest in businesses similar to
theirs. Firms which embark upon this strategy
eliminate competitors and create a synergistic
effect at the same time. McDonald's is a prime
example of a company incorporating a concentration
strategy.
As to the second growth strategy, some companies
choose to become suppliers to their own
current products and/or services in order to gain
control of the distribution channel. Firms which
choose this type of move are practising vertical
integration. Under this category, firms which
choose to serve as a supplier are involved in
backward integration. Other firms may become an
outlet for its own product. This type of move is
forward integration. Examples of hospitality firms
that follow a vertical integration strategy are Bob
Evans and Papa John's International.
A third generic growth strategy is diversification
which provides firms the opportunity to capitalise
and manage a portfolio of strategic business
units in different industries. There are two types of
diversification strategies: concentric diversification
and conglomerate diversification. The concentric
diversification strategy is used by companies which
acquire businesses that are different, but at the
same time complementary to its current business to
create a synergistic effect. Carlson Company is an
example of a firm focusing on a concentric