No. M&A is not a corporate strategy in and of itself, although such transactions can play a pivotal role in implementing—or sabotaging—a strategic plan. As Porter notes, “[A] merger can instantaneously propel a weak competitor into prominence or strengthen an already formidable one.”

Before deciding to enter a new area of business, strategic thinkers will make industry forecasts and study the fit of the proposed acquisition with their present operations. Furthermore, because strategic planning requires choices, any opportunity, no matter how hot, should always be forced to stand trial against other potential entries. This means taking a formal inventory of opportunities and then methodically comparing them.

The plan resulting from strategic thinking, once installed, acts as a disciplining force on everyone at the decision-making level. Any proposed transaction can simply be matched against pre-agreed-upon criteria that describe the company’s strategy. If the proposed transaction doesn’t meet most of these strategic criteria, the opportunity is rejected, saving executive time and resources.

Strategic planning can also help in the divestiture process. In any multi-unit company, strategic planning that does not automatically produce candidates for possible sell-off is probably not truly strategic. It is necessary in any strategy to weigh what a business is doing against what the business could be doing with its resources. If the potential is greater in new areas of opportunity, the old lines of business should be converted to cash by selling them off, possibly at a premium to a firm where they fit, and the cash should be redeployed to new lines through internal or external development. Controlling this continuous redeployment process is an important aspect of strategic planning.