Every company is dominated by four fundamental factors that are:
- The mission, the environment, the structure of resources (technological, economic-financial, and human, among others), and management. Between these four elements there must be a balance that allows the company to survive and compete with possibilities in the market, consistently achieving benefits.
These factors are interrelated and mutually affected, which is why we can speak of the existence of a system.
The mission represents the raison d'être of the organization, the business in which it is, but not only from the point of view of its activity, but also its extension in the market in terms of customers and areas (regions) to which you sign up.
The environment is shaped by factors outside the company but that determine and affect its possibilities and viability. In this environment we locate issues such as climate, natural factors, society, culture, economy, politics, legal security, the educational level of the population and their levels of health and nutrition, among many others.
The resource structure includes everything related to its physical, human and technological assets.
And finally, the management covers the aspects related to the management capacity of its managers.
So, if we have a company in a certain environment, having a structure of resources and its management, the latter must adapt the structure of the company to its mission, within the environment in which it is located, or it should correcting your mission to the authentic capacities that its structure and environment offer you.
If we compare from an analogy to the company with a car (structure) traveling a route (road and type of climate, which represents the environment), with a driver (manager), and an average minimum speed to be reached to have possibilities of accessing the triumph (mission), requiring the car a speed higher than it can achieve under the circumstances of the environment, and beyond the driver's conductive capacity, can lead to the breakage of some part of the car or even to an accident, with which which will not only be out of the race, but also endangers the life of the pilot (that is, the very existence of the company as such). Needless to say, if the pilot cannot make the most of the taxi under the conditions of the route.
You can have a very good car, the question is whether it is suitable for such an environment, and therefore if you can aspire to achieve the goal with it. It would be something like using a Formula One to do the Paris-Dakar Rally. The structure is not convenient (adequate) to achieve the goal.
Similarly, many companies have managers and structures that are not adequate to achieve the mission and goals set under a given environment.
A company that intends to work on a variety of high-tech alternatives, with reduced capital and without sufficient quantity and quality of labor, is not in a position to exist. The number of activities and the area in which you intend to market your products and services will have to be reduced to your structural and resource capacity. A matter of focus requires it.
In the same way, a non-profit organization, of a socio-cultural and sports nature, should limit the activities to be undertaken to its structural and leadership capacity within the environment in which it operates. He acts in numerous sports without major sporting pretensions but merely participatory, or he does it in certain sports in which he can count on greater possibilities of success. It is nothing other than the well-known production possibilities curve seen in the economy. Trying to achieve, within certain capacities and environment, more than something, implies having to give up other goals or objectives.
Many companies unaware of such limitations seek to sell a greater variety of brands or products, serve more areas by opening new branches, and all this with little financial and human capital, and with an insufficient administrative structure. How far will such an undertaking go? Undoubtedly not far away. Pretending to achieve objectives with a structure that does not allow it is like trying to reach a speed with a car prepared to reach a lower speed. Sooner or later the car will lose its balance and end up overturning, beyond the capabilities of its driver. You cannot extract water from the stones.
In the strategic analysis, the intimate relationship between the components of the Strategic Diagnosis Table © must be taken into account and analyzed with precision.
Questions: If it is intended to serve a certain size of the market, do you have the capacity to provide the appropriate level of service? Example: a school cannot enroll five hundred students if its physical structure only allows it to provide services to four hundred and if the number of educators it has is enough to teach only three hundred conveniently and effectively. It is clear from the example that it will be impossible to provide a good service, and that therefore it will generate high levels of disagreement between the students and their parents, on the one hand, and on the other, among the teachers, who will be over-demanded.
So we have a first question to ask: What business are we in?, And then go on to determine who we want to serve? Or what are our clients? And what resources and structure do we have?
We continue with the strategic analysis asking ourselves: which are the best or most profitable clients to link with? What resources should we have to serve our current clients? And what resources should we have to assist more profitable clients?
Is the environment suitable for this type of activity? Are our resources the most acceptable to face the circumstances of this environment? What would be the most suitable environment to carry out this type of business?
Do we have the necessary management capacity to command a company in this type of business, with the current resources and under the current and future circumstances of the environment?
Do we know what our critical success factor is? How good is our positioning in the market? What market share do we have? How strong are our competitors? How important is the growth force of the market? Do we have technology in accordance with current demands? Do we have sufficient financial capacity to operate within the limits of our mission and objectives?
Do we have strategic plans? Do we have contingency plans? Do we carry out budgetary and management controls? How accurate are our forecasts? How well are the budgeted objectives met?
How are our costs operating? How are the costs of our competitors evolving? How good are the levels of productivity and customer satisfaction that we have?
It is starting from the Strategic Diagnosis Chart (CDE) that we can strategically rethink and analyze the company. With this analysis we will be able to realize that it is not with the sum of expensive and sophisticated components and elements with which we will obtain the desired competitiveness, but with the sum of the elements most appropriate to the proper functioning of the company as a system.
Each element, each component, must keep relation and harmony with each other, making the system the most suitable for the objectives, which are also part of the system. The analysis must be continuous, modifying the interrelationships as changes in the environment occur or are anticipated, or when the management considers it useful to expand or restrict the objectives based on the organization's structural capabilities.
When diagnosing the state of a company or organization, we must always start by seeing how well balanced its strategic components are, giving an answer to each of the questions and others that may arise from the analysis.
