1. Introduction
For many companies there is the challenge of knowing how they are going to face the competition derived from the globalization of the economy? A fundamental technique to be able to successfully answer that question is strategic planning.
The modern administrator must basically manage the conjunctural opportunities so that the variations in the market, the lack of knowledge and the technological advances do not become threats to his organization and therefore can disappear. The survival of an organization will depend on the ability it has to turn its resources and processes into strengths and not into weaknesses and vulnerabilities. Don't be afraid of the competition, fear your incompetence! »(Sallenave, 1994).
The development of this essay is not limited exclusively to the document provided by the teacher, but rather aims to compile some concepts and develop some of its own about strategic planning and its implementation process in the company.
To facilitate the development of this academic exercise, the document has been divided into six parts: 1) Introduction, 2) Background, 3) Some concepts, 4) Strategic planning process, 5) Practice of strategic processes and 6) bibliography.
2. Background
Sun Tzu, the oldest of the modern strategists (4th century BC) and who for 25 centuries has influenced the military thought of the world, did not know the term strategic planning, he spoke of offensive strategy. In Chapter VIII (The Nine Variables), verse 9, of his book The Art of War, he says: “The general (strategos) must be sure that he can exploit the situation to his advantage, as circumstances demand. It is not linked to specific procedures. "
Baidaba, in his Arabic-Hindu text Calila y Dimna (Antonio Chalita Sfair version, 1995) wrote about the three things on which the ruler's attention should focus:
- "… carefully analyze the past events and the reasons for its failure, take stock of the benefits and harms that have brought it…"; "Another lies in the careful study of the situation in its present hour and its good and bad, exploit good opportunities as much as possible, and avoid everything that may cause losses and failures "and".. the third of these things lies in the study of the future and the successes or failures that in your opinion you reserve, prepare good to take advantage of good opportunities and be attentive against all that you fear.
Later, Nicholas Machiavelli in his book The Prince also explains the need for planning for the realization of good government. Although there are several examples throughout history, the precedents are a representative sample of how strategic thinking developed.
In modern times, at the end of the Second World War, companies began to realize some aspects that were not controllable: uncertainty, risk, instability and a changing environment. So the need arose to have relative control over rapid changes. In response to such circumstances, managers begin to use strategic planning (planning).
3. Some concepts
Strategic planning can be defined as an objective and systematic approach to decision making in an organization (David, 1990).
Strategic planning is a tool that allows organizations to prepare to face the situations that arise in the future, thereby helping to guide their efforts towards realistic performance goals, for which it is necessary to know and apply the elements that intervene in the process planning.
Strategic planning is the managerial process of developing and maintaining a strategic direction that can align the goals and resources of the organization with its changing marketing opportunities (Kotler, 1990).
Strategic planning is deceptively simple: it analyzes the current situation and what is expected for the future, determines the direction of the company and develops means to achieve the mission. In reality, this is a very complex process that requires a systematic approach to identify and analyze factors external to the organization and confront them with the capabilities of the company (Koontz and Weihrich, 1994).
Strategic planning has the function: to guide the company towards attractive economic opportunities for it (and for society), that is, adapted to its resources and its know-how, and that offer an attractive potential for growth and profitability… (for which shall) specify the mission of the company, define its objectives, elaborate its development strategies and ensure that it maintains a rational structure in its portfolio of products / markets.
The portfolio of products / markets of an organization are the what and for whom it offers, that is, all the products and services that it sells to its clients or specific segments of these in the market.
4. Strategic planning process
The strategic planning process has basically four components: the mission, the objectives, the strategies and the portfolio plan. The development of the process results in a strategic plan.
to. Define the mission of the organization
Every organization has a mission that defines it, in essence it must answer the question: What business are we in? Having a very clear mission makes the product space (manufacturing, service or idea) very clear. The vision that answers the question must also be established: what should the business be? projecting the survival of the organization in the face of the expected changes in the long-term environment.
Due to economic openness, most Colombian companies are facing stages of instability, crisis or restructuring within their life cycle. This concept states that, like living beings, organizations go through different stages in their development, from gestation, constitution or birth, growth / development, maturity, crisis and eventually their disappearance. Therefore, the process of shaping the mission must result from a critical rethinking of its operation and purposes, in each of the stages and especially in crises.
In formulating the mission, it is pertinent to consider:
- Customers. Who are the company's customers? Products or services. What are the most important products or services of the company? Markets. In which markets does it compete? Technology. What is the basic technology of the company? Concern for survival, growth and profitability. What is the attitude of the company in relation to economic goals? Philosophy. What are the firm's core values, beliefs, and aspirations and its philosophical priorities? Self-concept. What are the strengths and key competitive advantages of the company? Concern for public image. What is the image that the firm aspires to? Inspirational quality. Does the reading of the mission motivate and stimulate action?
b. Establish the objectives of the organization
Objectives are the foundation of any planning program. The mission clarifies the purpose of the organization to management. The objectives translate the mission into concrete terms for each level of the organization.
Goals are the desired states or outcomes of behavior. A person or a company may want either to get something or to improve what they already have. The objectives represent the future conditions that individuals, groups or organizations strive to achieve and must be specified in written statements and if possible quantifying the expected results. Effective objectives have the following characteristics: Specificity, achievability, measurability, results-oriented and time-limited.
c. Formulate the organization's strategies
The purpose of the strategies is to determine and communicate, through a system of objectives and larger policies, a description of the type of company that is desired or required.
The strategies are not intended to accurately delineate how the company will achieve its objectives, since it is the function of a series of primary and secondary support programs; But, they do define the work structure that should serve as a guide to thoughts and activities. Its practical utility and its importance as a guide to addressing, justify in any case, the separation of the strategies as a type of plan for analysis purposes.
According to the circumstances, it is intended to choose one of four strategies. Strategies are the means by which an organization seeks to achieve its objectives. Since no company has unlimited resources, strategic decisions must be made to eliminate some courses of action and, among other things, to allocate resources.
To establish the strategies of the organization, it is necessary to reflect on the changes in the short or long term and the maximization of profits.
Basically, there are four types of strategic alternatives:
- market penetration strategies, market development strategies, product development strategies and diversification.
Market penetration strategies are aimed at ensuring that the products offered by organizations are better received by their current clients.
Market development strategies consist of finding new customers for the company's products.
The strategies for the development of products to offer them to your current customers.
Diversification consists of researching new products that are aimed at customers you do not have at the moment.
To select strategies, every organization must focus on achieving the basic goals set out in the corporate mission.
d. Organization portfolio plan
The phase of the portfolio plan or business portfolio plan allows us to know which businesses are essential for the fulfillment of the mission. At this level of analysis, it is decided which business areas are those that deserve the greatest attention from the organization.
A basic tool for defining the business portfolio plan is the business portfolio matrix.
The Boston advisory group introduced the idea that the organization's product groups or businesses could be represented in a two-by-two matrix, the abscissa showing the market share and the ordinate representing the expected growth of the markets.. This creates four business groups:
- Stars (High growth, high participation). This category generates a high amount of cash, and also has a large market expansion, as well as a dominant share. Question Marks - Dilemmas - (High growth, low participation). They have a small share of the market, even though they are profitable. Cows in Cash. (Low growth, high participation). Products in this category generate high amounts of cash, but future growth is limited Dogs. (Low growth, low participation). This category does not produce much cash and its participation is minority.
The strategy to follow with each group is that market share and profitability maintain a high correlation, hence managers must get the best production from the cows, without incurring any investment, only maintenance costs and use the quantity of cash it produces in promising investments.
A high investment of stars yields high dividends, while with the question marks some should be sold and others made stars, since they are risky and the management only wants to have some so as not to speculate. Dogs do not create strategic problems: they must be sold.
The growth share matrix offers a simple conceptual tool for defining products and balancing their mix. The market product portfolio can have an overwhelming number of "dilemmas" (products with high market attractiveness, but low competitive potential) and "poor dogs" (products with little or no commercial attractiveness and very weak competitive potential). Similarly, the lack of "cash generators" (products of competitive strength today, but with low commercial attractiveness for the future) and "stars" (products of great commercial attractiveness and competitive potential but which require heavy investments to keep growing).
The new BCG matrix starts from three assumptions:
- A company has to achieve a competitive advantage to be profitable; the number of ways in which advantages can be obtained and the potential size of the advantage varies between industries, and industries evolve, altering the magnitude and nature of the advantage. The fundamental characteristics of an industry can be determined by considering the number of ways an advantage can be obtained and the size of the advantage.
5. Practice of strategic processes
The practice of strategic planning is a useful tool for management, not to predict the future or abolish its risks, but so that a company can cope in better conditions than the competition to the changing conditions of its environment.
To get the best out of Strategic Planning technologies, it is necessary:
- Presence and commitment of the entire management team to the process Summon all staff to provide the information Obtain the participation and commitment of all people, providing sufficient information Use the necessary tools that make it possible to have as many alternatives as possible (courses of action) The members of the management team must have skills to cooperate in group work, if necessary, have an expert in the process to efficiently guide the work of those involved.
6. Bibliography
- BAIDABA. Calila and Dimna. Trad. Antonio Chalita Sefair. Ed. Panamericana. Santa Fe de Bogota. 1995.SUN TZU. The Art of War. Ed. Kier. Buenos Aires. 1990 DAVID, Fred. Strategic management. Ed Legis. Santa Fe de Bogota. 1990.SALLENAVE, Jean-Paul. Management and strategic planning, Bogotá: Grupo Editorial Norma, 1993. KOTLER, Philip and BLOOM, Paul. Marketing of professional services. Ed Legis. Santa Fe de Bogota. 1988. KOONTZ, Harold and WEIHRICH, Heinz. Administration: A Global Perspective. Mc Graw Hill. México DF 1994.On the Internet:
