OBJECTIVES:
- Understand Strategic Planning as a fundamental means to show an attitude of change in the face of what may happen in the environment, allowing continuous control over the direction of the Organization Discern through strategic management between each of the factors that influence the Company, thus allowing elements for strategic decision making that facilitate a positive reaction to these factors Highlight the role that strategies play in the globalization environment in which we find ourselves, since they enhance the competitiveness of the Organization
BASIC CONCEPTS:
Strategic Vision: A point of view of the future direction of the Organization and the structure of the business, a concept that serves as a guide for what it is trying to do and what the Organization wants to become.
Organization Mission: The Organization's response, tailored to the situation, to the question "What is our business and what are we trying to achieve on behalf of our clients?" It explicitly states the purpose of the Organization and the reason for being. It is the definition of the business in all its dimensions
Financial Objectives: The objectives established by Management for the financial performance of the Organization.
Long-term objectives: The results that must be achieved either within three to five years, or on a consistent basis, year after year.
Short-term objectives : The Organization's short-term performance objectives; the number of short-term improvements indicates how quickly management is trying to achieve long-term goals.
Strategic Diagnosis: Analysis of internal strengths and weaknesses of the Organization, as well as threats and opportunities facing the Company
Strengths: Activities and internal attributes of an Organization that contribute and support the achievement of the Company's objectives
Weaknesses: Activities or internal attributes of an Organization that inhibit or hinder the success of the Company
Opportunities: Events, events or trends in the environment of an Organization that could facilitate or benefit its development, if they are used in a timely and adequate manner.
Threats: Events, events or trends in the environment of an Organization that inhibit, limit or hinder its operational development
Organizational Principles: They are the set of principles, beliefs and values that guide and inspire the life of an Organization or area. They are the support of the organizational culture. They are the definition of the business philosophy
Strategy: The pattern of actions and business approaches that managers employ to please customers, create an attractive market position, and achieve organizational goals.
Strategic Plan: A statement that outlines an organization's mission and future direction, short- and long-term performance objectives, and strategy.
Action plan: These are the tasks that each unit or area must carry out to specify the strategies
Strategy formulation: The role of all management, determining direction, conceptualizing the mission of the organization, setting performance objectives and creating a strategy. The final product is a strategic plan.
Strategy implementation: The full range of administrative activities associated with establishing the chosen strategy, monitoring its pursuit, and achieving the objectives.
DEFINITION
Process by which those who make decisions in an organization, obtain, analyze and process pertinent information, internal and external, in order to evaluate the present situation of the company, as well as its level of competitiveness, in order to anticipate and decide on the address to give to the Organization.
More specifically, it is a process through which the Organization defines its long-term Vision and the strategies to achieve it, based on the SWOT analysis. It involves the active participation of organizational actors, the permanent obtaining of information, on its critical factors of success, its review, monitoring and periodic adjustments, so that it becomes a management style, which makes the Organization a proactive and anticipatory entity.
Process
- Defining the time horizon
- The stability or profitability of the environment in which the Organization operates The intensity of competition The threat or not of substitute products The speed with which the Organization or the Company's sector absorbs or incorporates changes
My time horizon is …… years
- Establishment of corporate principles
The corporate principles are the set of values, beliefs, norms that regulate the life of the Organization. They define aspects that are important to the Company and that must be shared by all. Therefore, they constitute the corporate life norm and the support of the organizational culture.
The principles and values are not part of the Vision or the Mission, these are its frame of reference. These define the culture of the Organization, understood this culture as the set of values that inspire the life of the Organization.
Formulate the principles and values of the Organization, is to give it the ethical navigation chart by which the execution of its activities will be governed
ORGANIZATION CULTURE
From a strategic point of view, the culture of an Organization is a Key Success Factor.
What is corporate culture?
Each Organization has its own culture, different from the others, which gives it its own identity. This includes the values, beliefs and behaviors that are consolidated and shared during business life. The leadership style at the senior management level, the norms, procedures and general characteristics of the Company's members complete the combination of elements that make up the Company's culture.
It is the way Organizations do things, how they establish priorities and give importance to the different business tasks, in addition to including what is important for the Company. Likewise, culture influences the way managers solve the strategies proposed. Therefore, this is one of the greatest strengths of an Organization if it coincides with its strategies.
Strategic Direction
(Where we want to be)
3.1 Definition of the strategic vision
“Where do we go from here, what customer needs and buyer segments do we need to focus on, and what should the Company's business configuration be in the coming ……. years?"
A Strategic Vision indicates management's aspirations for the Organization, providing a panoramic view of "what business we want to be in, where we are going, and the kind of company we are trying to create." Explain an address in detail and describe the destination point.
- Remember that the Vision is the “MUST BE” of the Organization The Strategic Vision outlines the future of the Company The Vision projects the Mission over time The Vision is specific to the Company, not generic The Vision must be reflected in the Mission, in the objectives and in The Organization's strategies The Vision becomes tangible when it is materialized in specific projects and goals to be achieved, and the results can be measured through a well-defined system of management indicators.
Characteristics:
- It is formulated by the leaders of the Organization Wide and detailed Integrative Consistent and consistent Time dimension Positive and encouraging Clear and understandable by all It must be disseminated internally and externally It must be realistic - possible: "Dreams must be realistic"
"An action without Vision is a useless effort, A Vision without action is a utopia
A Vision made reality can transform the world "" John Baker "
The Vision of the Organization is: ………………
3.2 Definition of the business mission
The formulation of an enduring purpose is what distinguishes an Organization from others like it.
A Mission identifies the scope of operations or activities of an Organization in product and market aspects.
The Mission indicates the way an Organization intends to achieve and consolidate the reasons for its existence.
The Mission of the Company is the definition of the business; This definition must condition me to achieve the Vision.
Definition of the business mission
Ask yourself over and over "What is our business?" an adequate answer to this question is the strategic starting point of the Organization.
What describes the Mission of the Company?
- What business are we in The purpose The clients The products (services) The market Differential elements (technology, human resources, etc.)
The Organization's Mission can be divided into two main levels:
The primary: Indicates in very general terms the category of business to which the Company is dedicated.
The secondary: Supports the primary Mission in more concrete terms and situations, involving in some cases its most important actors and elements.
The Mission of the Organization is: …………………
3.3 Establishment of Objectives:
The Objectives are the link between the Mission and the Vision of the Organization. These are the ones that define the path to achieve the Vision.
The determination of Objectives turns the strategic Vision and the directional course into specific performance indicators.
The Goals represent an administrative commitment to achieve specific outcomes and results. These are a call to action and results.
Setting Goals
Objectives Characteristics:
For the Objectives to function as criteria for organizational performance and progress, they must be expressed in the following terms:
- Quantifiable or measurable Limit a time to its achievement Explain in detail how much of what kind of performance and by when
This avoids generalities such as: "Maximize Profits", "Reduce costs", "Become more efficient", "Increase sales"
“You cannot manage what you cannot measure ……. And what gets measured gets done ”. "Bill Hewlett"
Objectives classes to be determined
There are two types of key result areas to highlight:
- Areas related to Financial performance
Achieving acceptable performance targets is a must; otherwise, the Financial position of the Organization may alarm creditors and shareholders, impair its ability to fund necessary initiatives, and perhaps even put its very survival at risk.
- Areas related to Strategic performance
Achieving acceptable strategic performance is essential to maintain and improve the Company's market position and competitiveness in the long term.
Strategic Diagnosis
(where we are today)
Strategy creation is an analysis-driven exercise, not a task in which managers can be guided by opinion, good instincts, and creative thinking. The criteria about the strategy to be sought need to flow directly from a sensible analysis of the external environment and the internal situation of the Organization.
The two most important considerations are:
- Industry and competitive conditions (which are the essence of the external environment of a single business Company). External Analysis The competitive capabilities, internal strengths and weaknesses, and the market position of a Company. Internal analisis
How strategic thinking and analysis lead to positive strategic choices
4.1 External Analysis (Industry and competitive analysis)
How to think strategically about Industry and Competitive conditions.
- What are the dominant economic characteristics of the industry? What does the competition look like and how powerful are each of the five competitive forces? What are the drivers of change in the industry and what impact will they have? Are they in the strongest and weakest competitive positions? What strategic actions are rivals likely to take? What are the key factors that will determine competitive success in the industrial environment? Is the industry attractive and what are the prospects for superior returns average?
What are the key economic characteristics in the industry?
- Market volume Sphere of action of competitive rivalry (local, regional, national, global) Market growth index and position of the industry in the growth cycle Number of rivals and their relative volumes, that is, is the industry made up of many Small companies, or concentrated and dominated by a very few large companies? The number of buyers and their relative volumes The frequency of backward and forward integration The types of distribution channels used to access buyers The pace of technological change, both in innovation of the production process as well as in the introduction of new products If the Companies can achieve economies of scale in purchasing, manufacturing, • transportation, marketing or advertising
What are the drivers of change in the industry and what impact will they have?
- Changes in the long-term growth rate of the industry Changes in who buy the product and how they use it Product innovation Technological change Marketing innovation Income to exit of major companies Diffusion of know-how Increase in industry globalization Changes in cost and efficiency Emerging buyer preferences for differentiated products instead of a generic product (or a standardized product instead of highly differentiated products) Regulatory influences and changes in government policy Changing concerns, attitudes and lifestyles of society Reductions in uncertainty and in business risk
What are the companies that occupy the strongest and weakest competitive positions
Use of strategic maps to evaluate the competitive positions of rival companies.
- Identify the characteristics that differentiate companies in the industry Locate companies on a two-variable map, using pairs of these differentiation characteristics Assign companies that have similar strategies to the same strategic group Draw circles around each strategic group, matching them to be proportionate to the group's respective share volume of total industry sales revenue
What are the key factors for competitive success?
The key success factors concern what each Company in the industry must competently do, or focus on achieving, in order to be financially and competitively successful.
FCEs are so important to the Company, as they are the prerequisites for success in the industry.
- On what basis do customers choose between the competing brands of the Companies? What must a Company do to be successful in the competitive aspect; what are the resources and competitive skills you need? What is needed for companies to achieve a sustainable competitive advantage?
Is the industry attractive and what are your prospects for above-average performance?
- The industry's growth potential Whether the competition currently allows adequate returns and whether the competitive ones will become more powerful or weaker Whether the prevailing driving forces will have a favorable or unfavorable impact on the industry's returns The Company's competitive position in the industry and whether its position is likely to become more powerful or weaker The potential for the Company to exploit the vulnerability of weaker rivals Whether the Company is isolated or able to defend itself against factors that make the industry unattractive How well it performs match the competitive capabilities of the Company with the key factors for the success of the industry The degrees of risk and uncertainty in the future of the industry The severity of the problems / aspects to whichaddresses the industry as a whole If continued participation in the industry adds to the Company's ability to be successful in other industries in which it may have interests
4.2 Internal Analysis (internal capacity profile)
The analysis of the Company's situation prepares the ground to adjust the strategy, both with the circumstances of its external market and with its internal resources and competitive capabilities.
- How well is the Company's current strategy working? What are the strengths and weaknesses of the Company's resources and its external opportunities and threats? Are the Company's prices and costs competitive? How powerful is it? the Company's competitive position relative to that of its rivals? What strategic issues does the Company face?
How well is the Company's current strategy working?
The actual performance of the Company can be evaluated by studying the following:
- If the Company's market share ranking in the industry increases, is stable or decreases If profit margins increase or decrease and what are their dimensions in relation to rival Companies Trends in the industry's net profits, profit on the investment,the economic value added and how it compares to the same trends in profitability for other companies in the industry If the Company's overall financial strength and credit rating is improving or declining Trends in the Company's share price and if the strategy is resulting in satisfactory gains in shareholder value If the Company's sales increase faster or more slowly than the market as a whole The image and reputation of the Company as a whole If the Company is regarded as a leader in technology, product innovation and quality, customer service or other relevant factors on which consumers base their choice of brandscustomer service or other relevant factors on which consumers base their choice of brandscustomer service or other relevant factors on which consumers base their choice of brands
What are the strengths and weaknesses of the Company's resources and its external opportunities and threats?
Identification of the strengths and resource capacities of the Company.
A strength is something in which the Company is competent, or a characteristic that makes it more competitive. These can be:
- An important skill or skill Valuable physical assets Valuable human assets Valuable organizational assets Valuable intangible assets Competitive capabilities An achievement or attribute that puts the Company in an advantageous position in the market Alliances or Cooperative Enterprises
Identification of the strengths and weaknesses of the Company's resources
A weakness means some lack of the Company, some poor performance or a condition that places it at a disadvantage. These can be related to:
- Competitively important deficiencies in skills or expertise A lack of physical, human, organizational or intangible assets that are important from a competitive point of view.
Internal weaknesses are therefore deficiencies in the Company's complement of resources.
Resource weakness suggests a need to review your base:
What are the resource gaps that need to be remedied?
Does the Company have significant gaps in its resources that need to be corrected?
What needs to be done to increase the future resource base of the Company?
Identification of the market opportunities of a Company
The most relevant market opportunities for a Company are those that offer important avenues for profitable growth, where a Company has the greatest potential to acquire a competitive advantage and that are well suited to the financial and organizational resource capabilities that the Company already possesses. Company or that can generate.
Identification of threats to the future profitability of a Company
- The emergence of cheaper technologies The introduction of better new products by rivals The entry of low-cost foreign competitors into the market The new regulations more onerous for the Company than for its competitors The vulnerability to an increase in interest rates The potential for a bad acquisition, Unfavorable demographic changes Adverse changes in currency exchange rates and other such factors
Opportunities and threats indicate the need for strategic action.
Adjusting the strategy to the Company's situation implies:
- The search for market opportunities suitable for the Company's resource capabilities The development of a resource base that protects it from external threats to the business
Therefore the SWOT analysis is more than the four-point preparation. This involves evaluating the strengths, weaknesses, opportunities and threats of the Company and reaching concrete conclusions about:
- How to better deploy your resources in light of your internal and external situation How to develop your future resource base. What opportunities should be given top priority when it comes to resource allocation?
Are the Company's prices and costs competitive?
Competitors generally do not incur the same costs when providing their products to end users. The difference in cost may be due to the following factors:
- Difference in prices paid for raw materials, inputs, emergy and others Difference in basic technology and age of plant and equipment Difference in production costs, due to plant efficiency, learning curve and experience Difference in costs of marketing and in sales and promotion expenses Difference in the costs of transporting the inputs and shipping of the outputs Difference in the costs of the forward distribution channel Differences in the exposure of rival companies to the effects of inflation, changes in currency exchange rates and tax rates
Strategic options to achieve cost competitiveness
- Negotiate more favorable prices with suppliers Collaborate with suppliers to achieve lower costs Integrate backwards to have control over the costs of purchased items Try to use substitute inputs of a lower price Do a better job in managing the links between supply chains value of suppliers and the Company's own value chain Try to make up the difference by reducing costs in other parts of the chain Push distributors and other channel partners forward to lower their gross profit margins Collaborate closely with partners / forward channel customers Switch to a more economical distribution strategy,including forward integration Try to make up the difference by reducing costs earlier in the cost chain
When the source of the Company's cost disadvantage is internal, any of the following strategic approaches can be used to restore cost parity
- Modernize the operation of high-cost activities Plan a reengineering of business processes and labor practices Completely eliminate any activities that cause costs, reforming the value chain system Relocate high-cost activities in geographic areas where they can perform more economically Verify if certain activities can be allocated to external sources Invest in cost-saving technology improvements Innovate around costly components as new investments are made in plant and equipment Simplify product design so that it can be manufactured in a more economical way Compensating for the internal cost disadvantage through savings in the upstream and downstream portions of the value chain system
How strong is the Company's competitive position relative to its rivals?
To determine the Company's cost competitiveness, it is essential to make a broader assessment of the Company's competitive position and strength. The particular aspects that merit an examination include:
- Whether the Company's current market position can be expected to improve or deteriorate by continuing with the current strategy How the Company is ranked relative to its key rivals on each success factor for each industry and on each relevant measure of strength competitive advantage and resource capacity Whether the Company enjoys a competitive advantage over its key rivals or is currently disadvantaged The Company's ability to defend its market position in the face of competitive industry pressures and driving forces and of the anticipated measures of the rivals
Competitive strength assessments
The most revealing way to determine the strength with which a Company maintains its competitive position is to quantitatively assess whether the Company is stronger or weaker than its close rivals on each of the critical success factors in the industry and on each relevant indicator of success. potential capacity and competitive advantage.
- List the critical success factors in the industry and the most revealing determinants of competitive advantage or disadvantage Rate the Company and its key rivals on each strengths indicator (use ratings from 1 to 10) Add strength ratings general, in order to obtain a measure of competitive strength for each competitor Draw conclusions about the volume and degree of net competitive advantage or disadvantage of the Company and take note in a specific way of those measures of strength where the Company is more powerful or weak
What strategic problems does the Company face?
In order to accurately determine the issues for the Company's Strategic action agenda, the following should be considered:
- Does the current strategy offer attractive defenses against the five competitive forces,particularly those whose strength is expected to intensify? Does the current strategy need to be adjusted to better respond to the driving forces that are operating in the industry? Does the current strategy fit the future critical success factors in the industry? The current strategy adequately takes advantage of the strengths of the Company's resources? Which Company opportunities merit a top priority? Which ones should be assigned lower priority? Which are best suited to the Company's resource strength and capabilities? What does the Company need to do to correct its resource weaknesses and protect itself from external threats? To what extent is the Company vulnerable to competitive efforts by one or more rivals and what can you do to reduce this vulnerability?has a competitive advantage or must strive to compensate for its competitive disadvantage What are the strengths and weaknesses in the current strategy? Are additional actions necessary to improve the Company's cost position, to take advantage of emerging opportunities and to strengthen competitive position of the Company?
