1. Preliminary tips and advice.
2. Strategic management process.
SUGGESTIONS AND PRELIMINARY ADVICE.
Preliminary suggestions for the strategic consultant.
• Choose a quiet and comfortable place to hold business meetings; where possible it is convenient to be neutral.
• Make a first impression on the employer.
• Observe the facilities, the distribution of the equipment, the activity carried out and become familiar with the work routines.
• Visualize the organization and its surroundings.
• Determine approximately the degree of rivalry of the company.
• Make it clear what are their tasks as a strategic consultant (auxiliary); and which ones correspond to the employer (carry out the process).
• Provide support, provide theoretical knowledge to the employer when necessary.
• Develop a relationship of trust with the employer.
Preliminary suggestions for the entrepreneur.
• Gather information from different publications on the subject (books, newspapers, specialized magazines).
• Recognize the importance of the quality of information (since this is the basis on which strategic decisions are made).
• Seek support within the employees of the organization to commit to the project.
• Establish contacts with people who have extensive knowledge on the specific subject that interests you even if they do not belong to the company.
• Attend and focus exclusively on the issues that can determine the success of the business.
• Understand the benefits and limitations of the strategic management process.
• Move from a managerial style of the operational reactive type to a strategic proactive style.
STRATEGIC ADMINISTRATION PROCESS.
Step One: Define goals for the next five years.
• Determine both personal and professional goals for the next five years.
Personal:
- Income Security Free time Opportunities Family relationships Other wishes
Professionals:
- Desired stability Degree of growth New products or diversification of them Other aspirations
-Make a list of what you want personally and for the organization, taking into account the above aspects.
-Review the list adding or removing items at your discretion.
-Repeat the review process several times.
-Elaborate assumptions and facts of the present situation for each of the goals that you establish.
-Establish specific, measurable and challenging but feasible objectives.
-Permanently reassess the goals by making adjustments.
-Determine the feasibility of the objectives in relation to external conditions.
-Establish possible relationships between personal and professional goals.
Second Step: Evaluation of internal resources.
- § Know and evaluate the resources available to achieve the goals § Evaluate each resource using defined criteria such as comparison with its competitors, or self-critical assessment of operations within the industry § Distinguish resources into advantages and disadvantages according to their characteristics.§ Make a list based on the previous distinction.§ Determine where the internal strengths and weaknesses of the company are.
Third Step: Evaluation of external factors.
- Assess external factors. Evaluate each of the aspects (Economic, Social, Political, Technological, Legal, Demographic, etc.) in relation to the current situation of the company. Determine which factors constitute a threat and which an opportunity. Make a list based on the previous distinction. Using other people or professionals to carry out this step can be very beneficial. Evaluate which opportunities can be taken advantage of by the organization and how it can defend it from threats.
Step Four: Analysis of the competitive environment.
- Know the general competitive situation of the company. Determine the rivalry between the competitors and what are the exit obstacles; answering the following questions.
Are the competitors numerous or do they strike a balance between size and capacity?
Is the industry growing slowly, thus causing development struggles between competitors? '
Do the competitors offer practically the same product or service?
Are the fixed costs (or the perishable product) high, so that you are tempted to remember the prices?
Did the industry experience occasional overcapacity?
Do competitors consider the leftovers of business success to be especially risks, due to factors such as prestige or the need for a complete product line?
Is it burdensome for a company to leave the industry, forcing companies to stay out of the competition that they would otherwise leave?
Does the industry require specialized equipment that cannot be easily used in another industry?
Is production capacity strongly linked to other manufacturing units, so that it is difficult to abandon a specific business without disrupting the production system?
Would the company incur high fixed costs should it decide to abandon a particular industry?
Is management particularly loyal to a certain line of business?
§ Evaluate the power of the industry suppliers; answering the following questions:
Is the group of suppliers more concentrated than the industry you serve?
Does each supplier have a unique product, or can the products they offer be easily substituted?
Does the supplier have the potential to enter the industry and then become
in direct competitor of the one that now supplies?
- Determine the power of buyers of industrial products; answering these questions:
Are buyers more concentrated than the companies supplying the product?
Do buyers purchase the products in substantial volumes?
Can the purchased products be easily replaced by those offered by other manufacturers?
Do buyers make low profits?
Does the buyer not care much about the products purchased?
Is it possible for the buyer to become a competitor by integrating backwards?
- Determine the availability of substitute products, through the following questions:
Are very similar substitute products available?
Are other suitable substitute products available?
- Evaluate the likelihood of new competitors joining the industry; by means of these questions:
Are the capital requirements high in the industry?
Are there significant economies of scale?
Are the products offered irreplaceable, which makes it difficult for potential new competitors to attract a good customer base?
Are there government policies that restrict entry into the industry?
Will new competitors find it difficult to establish adequate channels for the distribution of their products?
- Identify the distinctive competence of the organization:
What is the unique combination of internal advantages that allows each of the rivals to compete effectively?
Fifth Step: Develop possible future scenarios.
- Prepare a possible short-term future scenario (one year). Prepare a possible long-term future scenario (five years). Exchanging ideas with people who know your situation but who are not close enough to directly intervene in your own strategic evaluation is a good method to avoid misinterpretation.
Step Six: Formulation of the strategy.
- Formulate a strategy that prepares a relationship for the future, based on the current situation of the company, on future scenarios and aimed at achieving goals. Develop several strategic alternatives that are useful to achieve the goals, at least four. Become aware of some strategies that can be used to realize how they are formed and to take them as references when developing strategic alternatives.
Generic Strategies:
- Growth Reduction Offensive Defensive Analytic Reactive Cost leadership Differentiation Concentration (niche)
Try to determine what generic strategy your competitors are using.
Step Seven: Evaluation of the strategic alternatives.
- Objectively evaluate and compare the strategic alternatives developed taking into account legal aspects and observing if it coincides with the distinctive competition. Review goals carefully. Analyze evidence to assess the effectiveness of the strategy by assigning it ratings:
- Test of consistency with goals Benchmark test Competency test Feasibility test
- Choose the strategy that gets the highest rating. Go back to strategic formulation if you find it difficult to choose one capable of achieving both personal and business goals.
Eighth Step: Implementation of the strategy.
- Develop instrumentation and substrategic plans that make it possible to reduce disadvantages and increase the advantages of the strategy that allows achieving the expected results. Modify employee behavior to support implementation. Develop specific programs for the implementation of the objectives. Determine specific, measurable and time-limited objectives for the instrumentation program. Establish specific review points to determine if the program is proceeding according to the set dates. Carry out business development and transformation (structure, human resources, employee development and leadership style). Coupling the structure of the company to the new strategy. Have the necessary human team for the performance of all the functions involved.Identify and develop the skills of the employees that are necessary for the fulfillment of the strategic plan, stimulating this development. Develop a leadership style appropriate to the situation. Take into account that it is necessary for employees to know what the boss's leadership style is, if the style is changed it will end up confusing them and damaging morale in general. Determine if the operational strategies walk in line with the general strategy, and if they serve to support it. Train and train staff to be able to carry out the strategy. Know in detail the distinctive competence, to know which areas represent an advantage and which are the weak areas that need corrective actions. View each operational strategy as part of a comprehensive set.Organize the projects to form a general plan with them. Create a Gannt diagram, establishing priorities, to organize activities chronologically according to needs and urgencies. Run the instrumentation.
Step Nine: Strategic Control.
- Monitor both the process and the product. Establish a control calendar in which the dates are clearly indicated, in which the degree of progress in meeting the objective will be evaluated. Continuously review all the aspects included in the strategic plan, considering the opportunity of new strategies that were not originally thought of. Systematically and formally review each of the issues involved in the strategic product periodically; APO can also be used as a way of monitoring. Correct any deviations that occur. Consult strategic specialists when difficulties arise that require it.
