Durman Esquivel's elaboration and execution of a strategy to stay afloat in the market
Summary
Michael Porter identified 5 forces that determine how attractive a market is in the long term in terms of profitability. These are: rivalry of industry competitors, threat of new competitors, power of customers, threat of substitute products and bargaining power of suppliers.
The SWOT analysis is very relevant for the Durman company, because it gives a quick diagnosis of how the business is developing, in addition to providing guidance at the time of setting objectives and action plans, so that these are as close to the reality of the company.
Durman uses Porter's five forces as well as implements SWOT analysis in his business, because it is so important to the company's success. For the implementation of the strategy, the company implements an in-depth analysis of the current situation of the company and the market, as well as a definition of the concrete goals and the action and monitoring plan, which makes the success of the company, both nationally and internationally, it is imminent.
Introduction
This research article will explore the subject of the methods or strategies used by the Durman Esquivel company during the economic crisis that it experienced in the eighties, and how these helped it stay afloat. In addition to this, how these methods managed to provide a new opportunity for the company and due to this, it achieves that the company makes an insertion in the international market, and now it has 10 factories abroad, as well as a distribution network throughout Latin America.
For authors like Thompson and Strikland (2004), competent execution of a well-conceived strategy is not only the most reliable recipe for organizational success, but it is also the best proof of administrative excellence. Likewise, it is observed that in companies there may be a lack of resources, as a consequence of poor strategic financial management, which directly impacts the financial evaluation variables that are liquidity, profitability and financial structure.
Strategic management is an extremely important topic in this article, because the company used this method to be able to cope with the economic crisis of the eighties. Strategic management is a challenge for the company because it goes far beyond giving orders to members of the organization, it depends on a number of considerations. Among them are the analysis of two environments, the internal and external of the organization, the establishment of organizational guidelines, the formulation of the strategy, the implementation of the strategy and strategic control.
When we talk about strategic management, we refer to aspects related to business, company or organization planning, leaving aside that leading is more than planning, as well as factors that are decisive for success: the perception that our clients have the motivation and satisfaction of belonging to our team or, of course, our own ability to transmit and share that illusion.
Durman Esquivel
Every company must give importance to the process of defining where it wants to go over time. The strategies come to represent the actions that will be carried out to achieve the long-term objectives, as well as the analysis and the selection of the strategy involve above all, making subjective decisions based on objective information. Strategy alternatives represent steps that advance the company to its desired position in the future.
Francis Durman Esquivel speaks in the newspaper El Financiero to what he experienced at the beginning of the eighties, when he was studying whether the company was going to continue with its work, due to an economic crisis that shook the company. In 2010 the company manages to make investments that help the company stay afloat.
Mr. Francis Durman Esquivel comments in the article in the newspaper El Financiero how this crisis taught him that in crises there is always an opportunity to take advantage of. In the words of Mr. Durman: “That marked me so much in my way of being. You cannot think all day that if the crisis comes or goes, you have to see what it is that you have and that you have to work with it ”.
Using instruments such as: investment certificates, standardized debt bonds, preferred shares, common shares, the Durman company has managed to raise the funds of the company.
In 1959 the company was opened in Costa Rica and from there little by little the company has been expanding the business over the years. In 1975 the factory was opened in Panama, 1987 in El Salvador, 1988 in Guatemala, 1898 in Nicaragua, 1996 in Honduras, 1997 in Mexico, 2001 in Peru and in the Dominican Republic, 2003 in Colombia and 2005 in Puerto Rico. As we can see in Annex 2 of this work, the Durman company has an efficient production and distribution network in Latin America. Attached is an image provided by Durman of the countries where they are currently located.
Porter's 5 Forces
Among the development strategies that Durman implements in his company is a diversification of markets, in which a dilution of economic risk is implemented, a strategy that they call “Four-legged table”. Every company, to be healthy and fulfill the purpose for which it was created, needs four fundamental pillars and an appropriate balance between them in order to adequately support business operations. Otherwise, there is a risk that it could disappear.
The four pillars a are:
Capital: the amount depends on the line of business, size and scope of the business, and covers concepts such as investment in equipment or machinery, expenses in promotion and advertising, or working capital, among others.
Technical knowledge: you must know the area in which you work, you cannot start a business in an area without knowledge of the subject. The subject should be investigated and studied.
Administrative knowledge: if you do not have knowledge in the administrative area in the blink of an eye we can lose control of what is happening on a daily basis; if the business grows we would not know how to organize ourselves properly. Without proper administration, there can be no order and growth.
Marketing system: no matter how much capital is owned, how expert or how many postgraduate and master's degrees in senior management our staff has, if customers do not find our products or services, failure is almost certain. In general terms, this aspect not only covers sales, but also promotion and delivery; Letting our clients know what we do, and complying efficiently with these offers in a timely manner is vitally important.
In addition to this, it is very important for the company to generate competitive advantages in the long term. The competitive strategy implemented by the company takes offensive or defensive actions to create a defensible position in the industry, in order to successfully face the competitive forces and generate a return on investment.
Having said all this, the fact that the company implements a diversification of the product, in which the company plans to exploit the competitive advantages accumulated by the company in its long history, through its business divisions, cannot be ignored, and specialize each factory in one area.
The growth of products such as PVC fittings, hoses, canoes, irrigation systems, water treatment plants in developing markets help diversification in the market. Furthermore, product diversification represents a real possibility of increasing turnover, as well as presenting a greater margin than the pipeline for the company. According to the following image we can see how the diversification of products that Durman implements, opens the doors to new markets, and therefore there is an increase in the sales of the company.
Porter's 5 Forces
There is an increase in operating expenses to meet growth, and is shown in the following graph, which was provided by the company.
Porter's 5 Forces
In addition, the company provided a graph about its indebtedness, which has remained constant throughout the years. As can be seen in the graph in 2006, it can be seen that the company has relied a little more on commercial financing than on financial financing.
Porter's 5 Forces
To make this article, two key questions were asked to Mr. Luis Martínez, country manager of the Durman company.
Among Mr. Martínez's studies are:
Mechanical and Industrial Engineer, MBA, Postgraduate in Senior Management IPADE and Member of the ADEN Directors Circle.
1. What was the process to be followed by the company in the crisis of the eighties to propose the business strategy to follow?
Analyze:
- Current situation of the company. b. Current situation of the market Position and participation of the company in it Define the Objective and concrete goals of the strategy Analyze resources (Human, Financial, Technological, etc.) that are required and which are available Define the Personnel Structure Clearly communicate the Objectives and Goals. Provide the organization with adequate and necessary resources. Make sure that the personnel in charge have adequate knowledge, and if they need to provide in-depth training. Define precise actions to follow, with dates. and managers, all 100% measurable to follow up and ensure the success of the strategy.
2. What methods do you currently use to measure whether the results of the strategy are bearing successful results in the company?
Follow-up of results, against 100% Measurable Objectives and Goals, in an established plan with dates and managers. A system like Balance Score Card can also be used.
Conclusions
The diversification strategy implemented by Durman achieved satisfactory results in the sales of projects and related items, in addition to an increase in administrative expenses due to the consolidation of a corporate team to be able to manage the growing organization, which as we saw in this work, the company is growing worldwide.
The strategic administration implemented by the company is carried out in a timely manner, since it responds to the needs of the company's business strategy, and allows the company to act in the periods in which a financial deficiency was shown (such as We can see in the article in the newspaper El Financiero about Mr. Francis Durman) and managing to strengthen the liquidity of the company throughout the period analyzed.
It is clear that the evaluation of the strategic administration is useful and pertinent for the design, implementation, execution, and evaluation of a market strategy that contributes to the achievement of the objectives that are set forth in the Durman company, as well as those of other companies. that are in the same market.
References
- Rodríguez L. (1980). Small business planning, organization and management. USA: South-Western Publishing. Thomson Artur, Strickland AJ (2005), Strategic Administration, 13th ed., Mexico, Mc. Graw Hill.Hill Charles, Jones Gareth (2001), Strategic Management, 3rd ed. Colombia Mc. Graw Hill. The five stages of the strategic management process. Recovered from http://pyme.lavoztx.com/las-cinco-etapas-del-proceso-estratgico-de-administracin-5576.htmlDavid, F. (2008). Strategic Management Concepts. Eleventh Edition. Editorial Pearson Educación, México.M. Sergio. (2010). Francis Durman: Having the ability to invest cautiously. El Financiero newspaper. Recovered from http://wvw.elfinancierocr.com/ef_archivo/2010/diciembre/19/enportada2608337.htmlHistoria Durman Esquivel. Recovered from:
