From the book “ Strategic Administration. An integrated approach ”by the authors Charles WL Hill and Gareth R. Jones have been extracted, which apparently are the main concepts on business strategy, respecting the authors' thinking and meaning that this work is considered a must-see in the most Strategic Management courses.
- STRATEGIC MANAGEMENT. Its central objective is to investigate why some organizations succeed while others fail. Its process can be divided into five components: (1) the selection of the mission and the main corporate goals; (2) analysis of the organization's external competitive environment to identify opportunities and threats; (3) analysis of the organization's internal operating environment to identify its strengths and weaknesses; (4) the selection of strategies based on the strengths of the organization and that correct its weaknesses in order to take advantage of external opportunities and counter external threats; and (5) the implementation of the strategy. STRATEGIC ALLIANCES.They constitute cooperation agreements between actual or potential competitors in order to achieve various strategic objectives. The benefits that a company obtains from a strategic alliance seem to depend on three factors: selection of the partner, structure of the alliance and the way it is managed. POTENTIAL COMPETITORS. They are companies that at the moment do not participate in an industry but have the ability to do so if they decide. EXPERIENCE CURVE. Refers to the systematic reductions in unit costs observed in the life of a product. According to the concept of the experience curve,The unit manufacturing costs of a product generally decrease by a certain characteristic amount each time the accumulated production of the product is doubled (the accumulated production is the total production of a good since its introduction).DIFFERENTIATION OF THE PRODUCT. It is the process of creating a competitive advantage by designing products -goods and services- to satisfy customer needs. All companies must differentiate their products to some degree in order to attract customers and meet a minimum level of customer needs. ECONOMIES OF SCALE. They are the cost advantages associated with large companies. Sources of economies of scale include cost reductions obtained through mass production of standardized products,discounts for purchases of raw materials and parts in large volumes, the distribution of fixed costs over a large volume and economies of scale in advertising. LOCATION ECONOMIES. They are those that arise from the development of a value creation activity in the optimal place for this activity, in any part of the world that can be carried out (transport costs and commercial barriers allowed). LEARNING EFFECTS. These are cost savings that come from learning by doing. For example, labor activities are learned through improved repetition of a task. In other words, labor productivity increases over time, and unit costs decrease as individuals learn the most efficient way to perform a particular task. STRATEGY.Traditional definitions of strategy emphasize that an organization's strategy is the product of a rational planning process. Henry Mintzberg's review of the concept suggests that strategy may emerge from within an organization in the absence of any prior intention. The basic objective of the strategy is to achieve a competitive advantage. GROWTH STRATEGY. At this stage, the task facing a company is to consolidate its position and provide the necessary foundation to survive the next recession. LEADERSHIP STRATEGY. A leadership strategy involves growing in a declining industry by taking the participation of companies that abandon that medium.This strategy makes the most sense when the company has distinctive strengths that allow it to capture market share in a declining industry, and when the rate of decline and intensity of competition in this industry are moderate. MATURITY STRATEGY. At the maturity stage, a strategic group structure emerges in the industry, and companies learn to observe how rivals react to their competitive moves. At this point, companies seek to reap the rewards of their previous investments by developing a generic strategy. RECESSION STRATEGY. In the recession stage, demand increases slowly and competition for prices or product characteristics intensifies. In this way,Companies in a strong competitive position need resources to invest in a strategy of increasing participation in order to attract clients from weak companies that leave the market. EMBRYON STRATEGY. In the embryonic stage, all companies, weak and strong, emphasize developing a distinctive skill and product / market policy. During this stage, the investment needs are greater because a company must establish a competitive advantage. GENERIC STRATEGY. Companies follow a business-level strategy to achieve a competitive advantage that enables them to outperform rivals and obtain above-average returns. They can choose between three generic competitive approaches: cost leadership, differentiation and concentration.These strategies are called generic because all businesses or industries can follow them regardless of whether they are manufacturing, service or non-profit companies. GLOBAL STRATEGY. Companies that follow a global strategy focus on increasing profitability by obtaining the cost reductions that come from the effects of the experience curve and localization economies. In other words, they use a low-cost strategy. Global companies do not tend to adjust their product offering and marketing strategy to local conditions. COMPETITIVE STRUCTURE. This factor refers to the distribution in quantity and magnitude of companies in a particular industry. Different competitive structures have different implications for rivalry. The most common competitive structure in the USA.The US is the consolidated one, called by the oligopoly economists. FUNCTIONAL MANAGER. Take responsibility for a specific role in the business such as personal, purchasing, production, sales, customer service, and accounts. Although they are not in a position to look at the big picture, they take on several important strategic responsibilities. It is that individual who assumes responsibility for the overall performance of the organization or one of its main autonomous divisions. His predominant strategic interest is focused on the health of the entire organization under his direction.GLOBALIZATION OF PRODUCTION.Individual companies incrementally disperse parts of their production processes to various locations around the world to take advantage of national differences in the cost and quality of factors of production (labor, energy, land, and capital). MARKETS. National markets are merging into one huge global market. According to this perspective, the tastes and preferences of consumers in different nations begin to converge on a global norm. For example, the worldwide acceptance of Coca-Cola STRATEGIC GROUPS. Most industries are made up of strategic groups. These are groups of companies that use the same or a similar strategy. Organizations located in different strategic groups use different strategies.DISTINCTIVE ABILITY. It refers to the only strength that allows a company to achieve superior status in efficiency, quality, innovation or capacity for customer satisfaction. A firm with distinctive ability can price its products higher or achieve substantially lower costs relative to its rivals. INDUSTRY. An industry is defined as a group of companies offering products or services that are close substitutes to each other. EMBRYON INDUSTRY. It is the one that is just beginning to develop (for example, personal computers in 1980). Growth at this stage is slow due to factors such as buyers' unfamiliarity with the product of this medium,High prices due to the inability of companies to take advantage of significant economies of scale and poorly developed distribution channels. DECADENT INDUSTRY. Eventually, a good number of industries enter a stage of decline. At this stage, growth becomes negative for several reasons, including technological substitution (traveling by train instead of airplane), social changes (increased health care awareness hitting tobacco sales), demographic (declining birth rate hurts the market for baby and child products) and international competitiveness (low-cost foreign competition leads to the decline of the North American steel industry). Within a declining environment, the degree of rivalry between established companies generally increases.INNOVATION. It can be defined as something new or novel with respect to the way a company operates or the products it generates. VERTICAL INTEGRATION. It means that a company produces its own inputs (backward or upward integration) or has its own production (forward or downward integration). A steel company that meets its iron ore needs through its own iron ore company is the example of backward (upward) integration. LOYALTY TO BRAND. This source consists of the preference that buyers have for the products of established companies.MACROAMBIENTE. Industries have been treated as autonomous entities, although in practice they are in a broader macroenvironment. That is, an economic, technological, demographic environment,wider social and political. Changes in the macroenvironment can have a direct impact on any of the five forces outlined in Porter's model, consequently altering the relative robustness of these forces and thereby the attractiveness of an industry. GOALS. The main goals specify what the organization expects to achieve in the medium to long term. Secondary goals are objectives that the company deems necessary if it intends to maximize shareholder profit. MISSION. Explains the why of the organization's existence and what it should do. For example, the mission of a national airline could be defined as meeting the needs of individuals and business travelers in terms of rapid transportation, at a reasonable price and to the main population centers of the country. FIVE-FORCE MODEL.Theoretical framework by Michael E. Porter that helps managers analyze the competitive forces of an industrial environment in order to identify the opportunities and threats that an organization faces: (1) the risk of the new entry of potential competitors, (2) the degree of rivalry between established companies within an industry, (3) the bargaining power of the buyers, (4) the bargaining power of the suppliers, and (5) the proximity of substitutes for the products of an industry. OF THE INDUSTRIAL LIFE CYCLE. It is a useful tool to analyze the effects of industrial evolution on competitive forces. It is similar to the product life cycle analyzed in the marketing literature. This model identifies five industrial environments: (1) environment of an embryonic industry,(2) environment of industrial growth, (3) environment of industrial recession, (4) environment of mature industry, and (5) environment of a declining industry. CORPORATE LEVEL. The corporate level of the organization is made up of the CEO, other senior executives, the board of directors and corporate staff. These individuals are at the top of decision making within the organization. The CEO is the main general manager at this level. CORPORATE SOCIAL RESPONSIBILITY. It is the judgment of obligation on the part of companies to form certain social criteria within their strategic decision making. The concept implies that when companies evaluate decisions from an ethical perspective, there must be a presumption that favors the adoption of courses of action that increase the well-being of society in general.MARKET SEGMENTATION. The way a company decides to group customers, based on significant differences in their needs or preferences, in order to achieve a competitive advantage. NEARBY SUBSTITUTES. They are products or services that satisfy the same basic consumer needs. For example, plastic and metal boards used in automobile manufacturing are close substitutes for each other. ADDED VALUE. In a typical raw material-consumer production chain, at each stage of the chain, value is added to the product. This means that a company located in one stage takes the product generated in the previous stage, somehow transforms it and sells the production at a higher price to a company that is in the next stage of the chain.The difference between the price paid for inputs and the price at which the product is sold is a measure of value added at that stage. COMPETITIVE ADVANTAGE. An ability of the organization to outperform its rivals. A company is said to have a competitive advantage when its profit ratio is higher than its industry average. It is the product of at least one of the following characteristics: superior efficiency, superior quality, superior innovation, and superior ability to satisfy the customer.A company is said to have a competitive advantage when its profit ratio is higher than its industry average. It is the product of at least one of the following characteristics: superior efficiency, superior quality, superior innovation, and superior ability to satisfy the customer.A company is said to have a competitive advantage when its profit ratio is higher than its industry average. It is the product of at least one of the following characteristics: superior efficiency, superior quality, superior innovation, and superior ability to satisfy the customer.
Natural parks
