In a broad sense, strategy represents the direction or path that the company adopts to adjust to its environment and achieve its objectives.
More precisely, business strategy is defined as the set of actions implemented by the organization's management with the purpose of aligning its resources and capabilities with a dynamic environment, maximizing opportunities and evaluating risks based on goals and objectives.
This is the action plan designed by management to compete effectively and generate profitability, based on a coherent set of strategic decisions.
The concept of strategy is not exclusive to for-profit organizations. Although it is essential for companies that seek profitability, its application is equally crucial in non-profit organizations[1] and other entities that do not pursue economic benefits as their main objective. These organizations must also design, execute and control effective strategies to fulfill their missions, optimize resources and achieve their goals.
In non-profit institutions, objectives are established related to the well-being of their target population. This involves the use of various metrics to measure said well-being. In this context, strategic management focuses on maximizing these metrics. However, these are always linked to the generation of money, either to maintain the trust of funders in NGOs, or to facilitate the population's ability to work and generate taxes in the case of state institutions.
Strategies constitute possible courses of action that require decision-making at the management level and the significant allocation of business resources. In addition, they influence the long-term sustainability of the organization, generally with a horizon of at least five years, which implies a future orientation. These strategies have implications at both a multifunctional and multidivisional level and must consider both internal and external factors that affect the company.
Some business strategies include geographic expansion, diversification, business acquisition, new product development, market penetration, cost reduction, divestiture, asset liquidation, and forming strategic alliances "Strategic Alliance (Business)").[2][3][4].
Other definitions of strategy (according to various authors) are the following:
• - It is the answer to two questions: What is our business? What should it be? (Peter Drucker, 1954).
• - The determination of basic long-term goals and objectives of the company, the adoption of courses of action and the allocation of resources necessary to achieve these goals (Alfred Chandler, 1962).
Horizontal growth plan
Introduction
In a broad sense, strategy represents the direction or path that the company adopts to adjust to its environment and achieve its objectives.
More precisely, business strategy is defined as the set of actions implemented by the organization's management with the purpose of aligning its resources and capabilities with a dynamic environment, maximizing opportunities and evaluating risks based on goals and objectives.
This is the action plan designed by management to compete effectively and generate profitability, based on a coherent set of strategic decisions.
The concept of strategy is not exclusive to for-profit organizations. Although it is essential for companies that seek profitability, its application is equally crucial in non-profit organizations[1] and other entities that do not pursue economic benefits as their main objective. These organizations must also design, execute and control effective strategies to fulfill their missions, optimize resources and achieve their goals.
In non-profit institutions, objectives are established related to the well-being of their target population. This involves the use of various metrics to measure said well-being. In this context, strategic management focuses on maximizing these metrics. However, these are always linked to the generation of money, either to maintain the trust of funders in NGOs, or to facilitate the population's ability to work and generate taxes in the case of state institutions.
Strategies constitute possible courses of action that require decision-making at the management level and the significant allocation of business resources. In addition, they influence the long-term sustainability of the organization, generally with a horizon of at least five years, which implies a future orientation. These strategies have implications at both a multifunctional and multidivisional level and must consider both internal and external factors that affect the company.
Some business strategies include geographic expansion, diversification, business acquisition, new product development, market penetration, cost reduction, divestiture, asset liquidation, and forming strategic alliances "Strategic Alliance (Business)").[2][3][4].
• - It is the pattern of objectives, purposes or goals, and the essential policies and plans to achieve these goals, established in such a way as to define what kind of business the company is or wants to be in and what kind of company it is or wants to be. It is a way of expressing a persistent concept of business in a changing world, in order to exclude some possible new activities and suggest the entry of others (Kenneth Andrews, 1965).
• - As the common link between the activities of the organization and the product/market relationships such that it defines the essential nature of the businesses in which the company is and those it plans for the future (Igor Ansoff, 1965).[2].
Basis
A strategy consists of a set of interrelated actions that managers implement with the purpose of improving the company's performance. For most, if not all organizations, achieving superior performance relative to their competitors represents the greatest challenge.
When a company's strategies lead to superior performance, it is considered to have achieved a competitive advantage.
Strategy involves differentiating oneself from the competition: carrying out activities that rivals do not perform or, ideally, doing what they cannot replicate. Every strategy must have a distinctive element that attracts customers "Market (marketing)") and generates a competitive advantage.
A company's strategy must respond to fundamental questions such as:
• - How to outperform competitors "Competitor (economics)").
• - How to adapt to changing economic and market conditions, taking advantage of growth opportunities.
• - How to manage each functional area of the business (for example, research and development, supply chain, production, sales and marketing, distribution, finance and human resources).
• - How to improve financial performance and market position.
A company is considered to achieve strategic competitiveness when it manages to formulate and implement a strategy that creates value. At the same time, it has a competitive advantage when it applies a strategy that its competitors cannot imitate or whose replication would be too costly.
However, it is essential to understand that no competitive advantage is permanent. How quickly competitors acquire the capabilities necessary to replicate the benefits of a strategy will determine the duration of that advantage.
Therefore, companies must develop strategic flexibility, understood as the set of capabilities that allows them to respond to various demands and opportunities in a dynamic and uncertain competitive environment, that is, develop dynamic capabilities. This involves managing uncertainty and associated risks. To achieve this, strategic flexibility must be applied in all operational areas of the company.
To create exceptional value for its shareholders, a company must learn faster than its competitors and apply that knowledge across the organization more quickly and effectively. Continuous strategic learning provides the company with a set of new and updated skills that allow it to adapt to changes in the environment.
A company's strategic decisions are rarely simple and, in many cases, involve complex modifications. However, this does not justify inaction in the face of the need to define a strategic course.
Likewise, company management must identify and take advantage of a strategic window, that is, a unique market opportunity that is only available for a limited time. The first company to detect and capitalize on a strategic window can position itself in a favorable niche and make it difficult for competitors to enter, as long as it has the necessary internal strengths.[5][3][6].
Business strategies are sometimes known as nonconformity mechanisms. This dissatisfaction prevents employees from feeling satisfied with what has been achieved and produces a different way of seeing the objectives, always aspiring to move forward and be better every day to achieve continuous goals.
Companies develop these strategies with the purpose of breaking with what is established, with the comfort zone. Although they never stop complying with short-term-oriented postulates, they have a greater focus on worrying, managing and producing new ideas for the long term.[7] Companies that implement this strategy spend a lot of time researching and increasing sales percentages, being able to manufacture many more products at a lower price.[7].
Instead of slowness and apprehension of change, the execution of business strategies generates a faster ability to access transformation and grow using new technologies, along with modern learning methods and providing employees with a greater scope of knowledge (e.g., through courses) that makes their companies visionary.[7][8].
Strategy formulation
To formulate the strategy the following methods can be used:.
• - Preparation exercises: Group of employees of a company who meet to discuss opportunities, improvements and at the same time generate innovative ideas.[7].
• - Eyes of the enemy: Simulate that the managers of a company work for the competition and find out how to reduce their weaknesses, how to intensify their strengths, how to position themselves in the market faster and better, etc. And based on the results of this project, answer the question of how the company should act.[7][9].
• - Outperform yesterday: Motivate employees with past profits and the best profits currently produced.[7].
The strategy is the action plan that the organization's management follows to compete successfully and obtain profits, based on an integrated set of options. They are the plans to achieve the mission and objectives; and for this, strategic policies must be formulated, which provide broad guidelines for decision-making.[10].
Strategy formulation represents management's commitment to undertake a particular set of actions. When choosing a strategy, management actually says: “Among the various ways of conducting and competing available to us, we leaned toward this particular combination of approaches to take the company in the desired direction, strengthen its market position and competitiveness, and improve its performance.
Strategic options: is the set of feasible strategies that have been formulated. Strategic choice involves evaluating different strategies and selecting the most appropriate option. It has been observed that in dynamic organizational environments, the best strategic decisions are not always achieved through absolute consensus. In fact, they often involve intense disagreements and even conflicts. This is especially true for companies that operate in global sectors. Because unresolved conflicts can be emotionally charged, decision makers suggest that strategic managers use “scheduled conflicts” to encourage the presentation of different positions without personal aspects influencing the analysis.
There are two techniques that help avoid the risk of consensual decisions without due questioning, as identified by Alfred Sloan:
Devil's Advocate: This technique has its origins in the medieval Catholic Church, where a person was assigned the task of presenting arguments against the canonization of a possible saint. In the area of strategic decision making, a devil's advocate (an individual or group) is appointed to point out possible errors or risks in an alternative strategy through formal analysis.
Dialectical investigation: Based on philosophical principles from Plato, Aristotle and Hegel, this technique focuses on confronting two opposing positions—a thesis and an antithesis—to reach a synthesis. In the strategic context, this involves developing two proposals that are based on different assumptions and defending them before decision makers. Based on the debate between both positions, one of them is selected or a new intermediate strategy is built that integrates the best elements of both.[5].
Types of strategy
Basic classification
Strategies are commonly classified into four main types: corporate, business, functional and operational.
I) Corporate strategy: this strategy establishes the general direction of the company, determining its approach to the growth and management of its various business lines and products. Generally, corporate strategies are aligned with three fundamental strategic postures: stability, growth and reduction. Its purpose is to optimize the joint performance of the businesses in which the company has diversified its activity. It covers decisions about which businesses to maintain or discontinue, which markets to enter, and what is the ideal form of entry (for example, acquisition, strategic alliance, or franchise). Likewise, it is linked to the scope of the organization, which implies diversification strategies, vertical integration and geographical expansion.
II) Business strategy: at the product or business unit level, this strategy seeks to strengthen the competitive position of a company's goods or services within the industry or in specific market segments. Its objective is to generate responses to changing environmental conditions and carry out actions that allow us to consolidate a competitive advantage, enhance distinctive capabilities, strengthen our position in the market and improve general performance. From an alternative perspective, business strategies can be grouped into two main categories: competitive strategies and cooperative strategies.
III) Functional strategy: this strategy refers to the approach adopted by each functional area of the company in order to achieve corporate and business objectives and strategies, optimizing the use of resources. It focuses on the development of distinctive competencies that give a competitive advantage to the organization or business unit. As examples within the area of research and development (R&D), technological imitation (reproduction of other companies' products) and technological leadership (introduction of innovations) can be mentioned. The main function of functional strategies is to provide a specific level of detail to the business strategy.
IV) Operational strategy: refers to initiatives and actions of a more limited scope aimed at the management of key operational units, such as production plants, distribution centers and purchasing points. It also covers specific strategic units, such as quality control, materials procurement, brand management or online sales. Despite their smaller breadth, these strategies provide details and refinements to both the functional strategies and the company's overall strategy.
In organizations, these four types of strategy coexist simultaneously. The strategic hierarchy defines the levels at which these strategies operate within the company, establishing relationships between them so that they complement and reinforce each other. Operational strategies support functional strategies, which in turn support business strategies, which ultimately contribute to the implementation of corporate strategy.[11][12][13].
Other basic strategy classifications
This classification is based on the relationship between the external opportunities and threats faced by an organization and its internal strengths and weaknesses, generating four types of strategies:
• - FO Strategies: They focus on taking advantage of the company's strengths to capitalize on external opportunities.
• - FA Strategies: They use organizational strengths as a defense mechanism against external threats.
• - DO Strategies: They seek to overcome internal weaknesses by taking advantage of opportunities in the environment.
• - DA Strategies: They are defensive in nature and are aimed at minimizing weaknesses and avoiding external threats.
• - Deliberate or proactive strategy: It includes the strategy elements planned and executed as planned. It consists of proactive actions designed to improve financial performance and strengthen the company's competitive advantage.
• - Adaptive or reactive strategy: These are responses to unforeseen events and unanticipated market conditions. It is formulated as new circumstances arise.
• - Emergent or executed strategy: Represents the company's global strategy in practice, combining proactive and reactive elements. It is reflected in the pattern of decisions and actions taken over time.
Chaffee wrote that there were 3 strategy models, which were not mutually exclusive:.
• - Linear strategy: A planned determination of goals, initiatives and distribution of resources. This is more consistent with strategic planning approaches and can have a broad planning horizon. Strategy "deals" with the business ecosystem but it is not its main concern.
• - Adaptive strategy: In this model, the goals and activities of the organization are closely related to adaptation to the ecosystem, in analogy to biological organisms. The need for continuous adaptation reduces or eliminates the planning window. There is a greater focus on means (resource mobilization). The strategy is less centralized than in the linear model.
• - Interpretive strategy: It is a more recent and less developed model than the previous ones. The interpretive strategy has the objective of generating legitimacy or credibility among the agents that participate (stakeholders). It has emphasis on language and symbols to influence the mind of the consumer, rather than the physical product of the organization.[14].
Corporate and business strategy
A corporation is defined as a primary business entity that exercises control over several subordinate companies or, alternatively, as a large organization with multiple strategic business units. Instead, a company refers to an individual unit that operates within one or several related product lines, focusing on a single business area.
The strategies can be applied to both the corporation and the company, depending on the specific context. These strategies constitute fundamental approaches to business management.
Corporate strategy, or failing that, company strategy, focuses on three fundamental dimensions that affect the corporation as a whole:
General management of the company, covering decision-making regarding growth, stability or reduction of operations (directional strategy).
Definition of the sectors and industries in which the company participates, through its products and business units (portfolio strategy).
Internal coordination of resources and capabilities, including the management of activities, the redistribution of resources between product lines and the strengthening of competencies within business units (umbrella strategy).
The directional strategy of a corporation is structured around three primary orientations, commonly called master strategies:.
These strategies seek the expansion of the company's operations. Within the corporate sphere, growth-oriented directional strategies are widely used, since their purpose is to increase the sales volume, the amount of assets and the profitability of the organization. In expanding sectors, companies must grow to maintain their competitiveness and viability. Furthermore, sustained growth allows us to take advantage of economies of scale and experience curves that favor the reduction of unit costs and, consequently, the improvement of profit margins.
Within this category, two main types of strategies are distinguished:
• - Integration Strategy**:** It is subdivided into:
Vertical integration, which implies the expansion of the company towards previous or subsequent activities in the value chain, ranging from the acquisition of suppliers to distribution to the final consumer.
Horizontal integration, which consists of expansion through acquisition or merger with competing companies within the same sector.
• - Diversification strategy: It can be classified into:
Functional strategy
The functional strategy represents the approach adopted by a functional area with the purpose of achieving the stated objectives, aligning with the strategies of the corporation and the business units to optimize the use of available resources. Its purpose lies in the development and strengthening of a functional capacity that allows generating a competitive advantage for the company or business unit.
Each company or business unit has different departments, each of which implements its own functional strategy. The direction of this strategy is determined by the general strategy of the business unit or the parent company.
It focuses on aspects such as price determination, commercial communication and management of distribution and coverage in various locations.
1- Intensive growth strategy.
There are different strategies aimed at expanding the presence in the market "Market (marketing)") and enhancing the growth of the company:
• - Capturing a greater market share: The aim is to increase participation within an already existing market through market saturation and penetration tactics.
• - Expansion into new markets: The development of new markets for current products is pursued.
• - Market penetration: Involves the implementation of measures aimed at increasing the volume of sales within the target market.
• - Product development "Product (marketing)"): It consists of the creation of products linked to the current offer, with the aim of marketing them in the existing market.
• - Market development: It involves the identification of new consumer segments or new markets where the product can be successfully marketed.
• - Diversification: This is the exploration of new markets through the introduction of products that may or may not be related to the company's current offering.[17].
To execute this growth strategy, an appropriate brand strategy must be defined, which may include the following alternatives:
• - Line extension: Incorporation of new variants within the same product category under the same brand, such as new flavors, formats, colors or ingredients.
• - Brand extension: Introduction of new products in different categories using the same brand, as in the case of Bic, which sells pens, lighters and shavers.
• - Multiple brands: Strategy in which a company markets the same product under various brands, as Procter & Gamble does with Gillette, Ariel and Duracell.
• - Creation of a new brand: It is decided to launch a new brand when none of the previous strategies are convenient.[18].
Purchasing strategy
The purchasing strategy focuses on the acquisition of raw materials, components and supplies essential for business operations. Its importance lies in the fact that purchased inputs represent approximately 50% of the total manufacturing cost in industries in countries such as the United Kingdom, the United States, Australia, Belgium and Finland.
There are three main approaches to purchasing management:
Multiple acquisition:
It consists of requesting the same input from various suppliers.
Encourages competition between suppliers, which can reduce costs.
Ensures availability of supplies by having alternatives in case of delivery failures.
*However, prioritizing the lowest bid may affect quality.
Single source:
Promoted by W. Edwards Deming, this strategy involves working with a single supplier for each specific component.
Allows a closer relationship between buyer and supplier, ensuring quality from product design.
Facilitates the implementation of the Just-In-Time (JIT) model, where supplies arrive just when they are needed, eliminating storage costs.
JIT II, developed at Bose Corporation, extends this concept by integrating supplier representatives into the buyer's facilities to coordinate production and sales in real time. Companies such as IBM and Honeywell have adopted this methodology successfully.
Parallel supply:
It emerges as an alternative to the single source to reduce risks.
Involves two exclusive suppliers of different components, who can support each other in case of failures.
This strategy combines supply stability with access to technological innovations.
The use of the Internet has revolutionized acquisition processes. Facilitates the search for suppliers and the efficient replenishment of inventories.
Hewlett-Packard implemented an online purchasing system that allowed 84,000 employees to purchase supplies from standardized suppliers.
This optimization reduced acquisition costs in a range of 60 to 100 million dollars annually.[5].
The ARH strategy addresses a key issue:
• - Is it better to hire many low-skilled, low-paid employees for repetitive, high-turnover jobs? (example: McDonald's).
History
Contenido
La existencia de una estrategia para la empresa es consustancial a la existencia de las propias organizaciones empresariales, por lo que se remonta a la Revolución Industrial. Pero históricamente, la estrategia primero fue aplicada al llamado arte militar. Mientras ahí es un concepto amplio y vagamente definido en una campaña militar para la aplicación de fuerzas contra el enemigo, a nivel empresarial se puede entender al enemigo como la competencia y las fuerzas se pueden entender como las decisiones tomadas por el empresario para obtener beneficios de las oportunidades. En este contexto, John von Neumann y Oskar Morgenstern publicaron en 1944 el libro Theory of Games and Economic Behavior. Con su teoría de juegos, Von Neumann y Morgenstern iniciaron el uso de la estrategia en el mundo de los negocios. No obstante, en las décadas siguientes, dicha estrategia fue implícita y parcial, hasta llegar a la década de 1980, donde empezó a cobrar mayor consistencia.
game theory
Game theory was originally applied to the analysis of the nuclear confrontation between the superpowers during the Cold War. Thus, it was used in economics to examine competition and cooperation within a group of small businesses. The theory helped provide an approach that models the behavior of irrational actors who operate according to their self-interest. As an example, it is the perverse contrast between good intentions and bad results that makes the prisoner's dilemma relevant to a wide range of business situations. Companies often find themselves in situations where unfettered competition would produce detrimental results for everyone; Cooperation, in such cases, is objectively preferable to fierce competition.
Considering the zero-sum game, in the business field it gives more results to reduce competition (in prices and industries) in a lose and lose situation rather than a win and win situation, putting only customer loyalty as competition. This theory specifically does not provide an exact answer to the questions and problems that arise; Instead, game theory is an assistive tool in the strategy formation process, providing key concepts to help understand dynamic strategic maneuvers vis-à-vis buyers.
• - At least two players.
• - Strategies.
• - Rules.
• - Incentives.
• - Benefits.
• - Goals.
The interdependence of each participating agent depends on the pre-established strategies and the objectives of the game.
This type of theory seeks to normalize and impose patterns that regulate the behavior of the agents involved through previously established norms. These factors respond to morality, equity and justice.
This theory focuses on studying the presence of laws and their conflicts, which is why it turns out to be an appropriate analysis tool. Additionally, in the theory of non-cooperative games, there is no interaction or relationship between players to reach an agreement, unless the rules of the game are different. Likewise, the theory is based on recommendations in such a way that none of the players obtain individual benefits.
First planning work
Since the late 1970s and early 1980s, the first works on strategic planning appear, led by authors such as George A. Steiner"), who took the first steps to provide methodology to this area. Although many of their applications and recommendations initially failed, they gave the signal to a path that is increasingly deepened and formalized more and more. These studies were joined by Peter Drucker,[21] father of modern administration,[22] as well as some publications by Michael Porter, Al Ries") and Jack Trout, among others.
In the 1980s, business strategists also realized that there is a great knowledge of thousands of years that they had barely examined, which is why they turned to classic military strategy books for business management. Common examples are The Art of War, by Sun Tzu; On War, by Carl von Clausewitz, and Mao's Red Book, becoming essential works of reference because they examine important topics for marketing such as leadership, motivation, logistics, communications and intelligence from a context other than business.
In these books there is a subjective contemplation of power, where it considers that direct and indirect risks are the two main categories. Direct risks are generally those that an organization has control over or can affect. These risks frequently affect the company's supply chain, workforce, operations, and competitive position. The positioning strategy school is very skillful in managing risks in the market. However, the depth of the analysis depends on the variables considered by the analysts. This risk management process softens the company's focus and unnecessarily expands the cost by defining operational plans every time.
Porter and his positioning school
Part of the structure of business strategy was described in the late 1980s with the so-called positioning school, which includes elements of the design and planning schools. In 1980, Michael Porter published Competitive Strategy: Techniques for the Analysis of the Company and its Competitors, one of the most analyzed books on the subject, and in 1985 he published Competitive Advantage: Creation and Sustainability of Superior Performance, which portrayed the dissatisfaction with the aforementioned schools of design and planning. The prescriptive nature of the first two schools added to the focus on content and substantial research of the positioning school. Thus, there are five premises for the positioning school:
Strategies are generic positions, specifically common and identifiable in the market.
The market, as a context for strategies, is economic and competitive.
The process of formulating a strategy is a matter of selecting a generic position based on calculation and analysis.
Analysts play an essential role in the process of providing the results of calculations and analysis to company managers, who officially control strategic options.
Strategies are the result of a regulated process, and then they are implemented and articulated.[23].
The positioning strategy school is very skillful in managing risks in the market. However, the depth of the analysis depends on the variables considered by it. This risk management process obscures the company's focus and unnecessarily expands the cost by defining operational plans every time. Competitive strategy: Techniques for analyzing the company and its competitors captured the interests of academics and consultants, and made the positioning school dominant. The positioning school considers multiple strategies that differ from the design school that only derives from a single strategy. It provides a set of analytical tools in which it helps strategists discover which strategies work best and where.
With the advances in business strategy, numerous academic programs have been developed to study it. The university with the greatest reputation in this regard is Harvard University, although practically all universities in the world with a focus on business management have programs in this regard, such as the University of Pennsylvania (Warton), the London Business School, Tuck School of Business at Dartmouth, Columbia Business School and the English-speaking MIT. In Spain there are important business schools, such as IE, IESE, ESADE or EADA.
Value chain
According to Porter's value chain, several important concepts are obtained:
• - Cost leadership or lowest cost leadership: Focuses on being the lowest cost producer.
• - Support activities: company infrastructure.
• - Differentiation: It involves the development of a unique and unrepeatable product due to design or technology.
• - Focus: Seeks to serve narrow market segments.
• - Resources: Inbound logistics, operations, outbound logistics, marketing and sales, services, etc.
Criticism of the positioning school
The positioning school bases its criticism on the separation of thinking from acting, the formulation of strategies made by the company's management through conscious thinking based on a formal analysis where its implementation follows a descending order through acting. And strategic learning is excessively deliberate, in addition to the fact that there are dangers in looking at the future by extrapolating present trends, relying excessively on quantifiable information and also over-formalizing the process of developing the strategy.[26].
As can be seen in the other schools, the approach of the positioning school is too broad and does not relate to a specific topic to be able to generate a strategy according to a problem. In this school, the merely economic and quantifiable aspects are taken into consideration without considering that perhaps the social, political and even the non-quantifiable economic aspect show relevant aspects to be able to manage a business or generate a strategy around those data that are being omitted. This behavior became more common in the second wave, when the most important thing was market participation and generating profits for the business.[26].
The positioning school has also been criticized for the context in which it is developed. In this case, the context is as broad as the focus. However, it is a matter of bias regarding the subject of analysis of this school. According to Mintzberg,[26] the context develops around large traditional companies, reducing the effectiveness of this school. In other words, this school of thought biases thinking that large equals stable. Therefore, the fact that this school places external positioning as the main focus of study without taking into account the internal capacity of companies is criticized.
The goal of positioning school is to calculate and analyze before formulating an optimal strategy. The strategist must solve all abstract problems on paper with the goal of closing sales. Von Clausewitz argues that calculation is the most important phase to achieve a competitive advantage.[26] However, the dilemma is how to calculate all possible variables in any problem; this is not possible. Calculating, in some cases, repels the development of creativity and learning, weakening the strategist's personal commitment.
• - Digital education").
• - Porter's generic strategies.
• - Negotiation.
• - Leadership.
• - Strategic map.
References
[1] ↑ Robbins, Stephen P.; Coulter, Mary (2005). Administración (8a. ed.). Pearson Educación. ISBN 978-970-26-0555-3. |fechaacceso= requiere |url= (ayuda).
[2] ↑ a b Jorge Hermida. Roberto Serra. Eduardo Kastika. Administración y Estrategia: teoría y práctica. Editorial Norma, Argentina. p. 305, ss.
[3] ↑ a b c d e f g Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. México. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V. p. 1 - 200.
[4] ↑ Fred R. David. Conceptos de administración estratégica. Decimocuarta edición. PEARSON EDUCACIÓN, México, 2013. p .11.
[5] ↑ a b c d e f g h i j k l L. WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición. PEARSON EDUCACIÓN, México, 2007. p.15- 200.
[6] ↑ a b Michael A. Hitt; R. Duane Ireland; Robert E. Hoskisson. Administración estratégica. Competitividad y globalización.7a. edición, México, 2008. Cengage Learning. p 5 - 15.
[7] ↑ a b c d e f Collins, J.C.; Porras, J.I. (1995). Empresas que perduran: principios exitosos de compañías triunfadoras. Bogotá: Norma.
[8] ↑ Kurb, M. (1980). La consultoría de empresas: guía de la profesión. Ginebra: Organización Internacional del Trabajo.
[9] ↑ «How to Start a Consulting Business». Consulting Business start-up guide. 4ª ed. 2014. Consultado el 27 de febrero de 2015.: http://www.entrepreneur.com/article/41384
[10] ↑ WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición PEARSON EDUCACIÓN, México, 2007. p. 137.
[11] ↑ L. WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición. PEARSON EDUCACIÓN, México, 2007. p.15- 200.
[12] ↑ Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. México. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V. p. 1 - 200.
[13] ↑ Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V., México, 2012. p. 15.
[14] ↑ Chaffee, E. “Three models of strategy”, Academy of Management Review, vol 10, no. 1, 1985.
[15] ↑ a b Charles W. L. Hill; Gareth R. Jones. ADMINISTRACIÓN ESTRATÉGICA. Octava edición. McGRAW-HILL INTERAMERICANA EDITORES, S.A. de C.V. méxico, 2009.
[16] ↑ a b Charles W. L. Hill; Gareth R. Jones. Administración estratégica. Un enfoque integral. Cengage Learning, Mexico, 2011. P. 160.
[21] ↑ Drucker, Peter F. (2001). La administración en una época de grandes cambios. Buenos Aires: Sudamericana. ISBN 9500715295.
[22] ↑ Drucker, Peter F. (1999). Harvard Business Review: Cómo medir el rendimiento de la empresa. Zalla: Deusto. ISBN 8423420493.
[23] ↑ Mintzberg, Henry; Ahlstrand, Bruce; Lampel, Joseph (1998). «The Planning School». Strategy safari: a guided tour through the wilds of strategic management (en inglés). Nueva York: The Free Press. ISBN 0684847434.: https://archive.org/details/strategysafarigu00mint_0
[24] ↑ Kaplan, Robert S.; Norton, David P. (1997). El Cuadro de Mando Integral (The Balanced Scorecard). Barcelona: Gestión 2000. ISBN 9788498750485.
[25] ↑ Kaplan, Robert S.; Norton, David P. (2001). Cómo utilizar el Cuadro de Mando Integral (The Strategy Focused Organization). Barcelona: Gestión 2000. ISBN 9788498754278.
[26] ↑ a b c d Mintzberg, Henry; Ahlstrand, Bruce; Lampel, Joseph (1998). «The Positioning School». Strategy safari: a guided tour through the wilds of strategic management (en inglés). Nueva York: The Free Press. ISBN 0684847434.: https://archive.org/details/strategysafarigu00mint_0
Other definitions of strategy (according to various authors) are the following:
• - It is the answer to two questions: What is our business? What should it be? (Peter Drucker, 1954).
• - The determination of basic long-term goals and objectives of the company, the adoption of courses of action and the allocation of resources necessary to achieve these goals (Alfred Chandler, 1962).
• - It is the pattern of objectives, purposes or goals, and the essential policies and plans to achieve these goals, established in such a way as to define what kind of business the company is or wants to be in and what kind of company it is or wants to be. It is a way of expressing a persistent concept of business in a changing world, in order to exclude some possible new activities and suggest the entry of others (Kenneth Andrews, 1965).
• - As the common link between the activities of the organization and the product/market relationships such that it defines the essential nature of the businesses in which the company is and those it plans for the future (Igor Ansoff, 1965).[2].
Basis
A strategy consists of a set of interrelated actions that managers implement with the purpose of improving the company's performance. For most, if not all organizations, achieving superior performance relative to their competitors represents the greatest challenge.
When a company's strategies lead to superior performance, it is considered to have achieved a competitive advantage.
Strategy involves differentiating oneself from the competition: carrying out activities that rivals do not perform or, ideally, doing what they cannot replicate. Every strategy must have a distinctive element that attracts customers "Market (marketing)") and generates a competitive advantage.
A company's strategy must respond to fundamental questions such as:
• - How to outperform competitors "Competitor (economics)").
• - How to adapt to changing economic and market conditions, taking advantage of growth opportunities.
• - How to manage each functional area of the business (for example, research and development, supply chain, production, sales and marketing, distribution, finance and human resources).
• - How to improve financial performance and market position.
A company is considered to achieve strategic competitiveness when it manages to formulate and implement a strategy that creates value. At the same time, it has a competitive advantage when it applies a strategy that its competitors cannot imitate or whose replication would be too costly.
However, it is essential to understand that no competitive advantage is permanent. How quickly competitors acquire the capabilities necessary to replicate the benefits of a strategy will determine the duration of that advantage.
Therefore, companies must develop strategic flexibility, understood as the set of capabilities that allows them to respond to various demands and opportunities in a dynamic and uncertain competitive environment, that is, develop dynamic capabilities. This involves managing uncertainty and associated risks. To achieve this, strategic flexibility must be applied in all operational areas of the company.
To create exceptional value for its shareholders, a company must learn faster than its competitors and apply that knowledge across the organization more quickly and effectively. Continuous strategic learning provides the company with a set of new and updated skills that allow it to adapt to changes in the environment.
A company's strategic decisions are rarely simple and, in many cases, involve complex modifications. However, this does not justify inaction in the face of the need to define a strategic course.
Likewise, company management must identify and take advantage of a strategic window, that is, a unique market opportunity that is only available for a limited time. The first company to detect and capitalize on a strategic window can position itself in a favorable niche and make it difficult for competitors to enter, as long as it has the necessary internal strengths.[5][3][6].
Business strategies are sometimes known as nonconformity mechanisms. This dissatisfaction prevents employees from feeling satisfied with what has been achieved and produces a different way of seeing the objectives, always aspiring to move forward and be better every day to achieve continuous goals.
Companies develop these strategies with the purpose of breaking with what is established, with the comfort zone. Although they never stop complying with short-term-oriented postulates, they have a greater focus on worrying, managing and producing new ideas for the long term.[7] Companies that implement this strategy spend a lot of time researching and increasing sales percentages, being able to manufacture many more products at a lower price.[7].
Instead of slowness and apprehension of change, the execution of business strategies generates a faster ability to access transformation and grow using new technologies, along with modern learning methods and providing employees with a greater scope of knowledge (e.g., through courses) that makes their companies visionary.[7][8].
Strategy formulation
To formulate the strategy the following methods can be used:.
• - Preparation exercises: Group of employees of a company who meet to discuss opportunities, improvements and at the same time generate innovative ideas.[7].
• - Eyes of the enemy: Simulate that the managers of a company work for the competition and find out how to reduce their weaknesses, how to intensify their strengths, how to position themselves in the market faster and better, etc. And based on the results of this project, answer the question of how the company should act.[7][9].
• - Outperform yesterday: Motivate employees with past profits and the best profits currently produced.[7].
The strategy is the action plan that the organization's management follows to compete successfully and obtain profits, based on an integrated set of options. They are the plans to achieve the mission and objectives; and for this, strategic policies must be formulated, which provide broad guidelines for decision-making.[10].
Strategy formulation represents management's commitment to undertake a particular set of actions. When choosing a strategy, management actually says: “Among the various ways of conducting and competing available to us, we leaned toward this particular combination of approaches to take the company in the desired direction, strengthen its market position and competitiveness, and improve its performance.
Strategic options: is the set of feasible strategies that have been formulated. Strategic choice involves evaluating different strategies and selecting the most appropriate option. It has been observed that in dynamic organizational environments, the best strategic decisions are not always achieved through absolute consensus. In fact, they often involve intense disagreements and even conflicts. This is especially true for companies that operate in global sectors. Because unresolved conflicts can be emotionally charged, decision makers suggest that strategic managers use “scheduled conflicts” to encourage the presentation of different positions without personal aspects influencing the analysis.
There are two techniques that help avoid the risk of consensual decisions without due questioning, as identified by Alfred Sloan:
Devil's Advocate: This technique has its origins in the medieval Catholic Church, where a person was assigned the task of presenting arguments against the canonization of a possible saint. In the area of strategic decision making, a devil's advocate (an individual or group) is appointed to point out possible errors or risks in an alternative strategy through formal analysis.
Dialectical investigation: Based on philosophical principles from Plato, Aristotle and Hegel, this technique focuses on confronting two opposing positions—a thesis and an antithesis—to reach a synthesis. In the strategic context, this involves developing two proposals that are based on different assumptions and defending them before decision makers. Based on the debate between both positions, one of them is selected or a new intermediate strategy is built that integrates the best elements of both.[5].
Types of strategy
Basic classification
Strategies are commonly classified into four main types: corporate, business, functional and operational.
I) Corporate strategy: this strategy establishes the general direction of the company, determining its approach to the growth and management of its various business lines and products. Generally, corporate strategies are aligned with three fundamental strategic postures: stability, growth and reduction. Its purpose is to optimize the joint performance of the businesses in which the company has diversified its activity. It covers decisions about which businesses to maintain or discontinue, which markets to enter, and what is the ideal form of entry (for example, acquisition, strategic alliance, or franchise). Likewise, it is linked to the scope of the organization, which implies diversification strategies, vertical integration and geographical expansion.
II) Business strategy: at the product or business unit level, this strategy seeks to strengthen the competitive position of a company's goods or services within the industry or in specific market segments. Its objective is to generate responses to changing environmental conditions and carry out actions that allow us to consolidate a competitive advantage, enhance distinctive capabilities, strengthen our position in the market and improve general performance. From an alternative perspective, business strategies can be grouped into two main categories: competitive strategies and cooperative strategies.
III) Functional strategy: this strategy refers to the approach adopted by each functional area of the company in order to achieve corporate and business objectives and strategies, optimizing the use of resources. It focuses on the development of distinctive competencies that give a competitive advantage to the organization or business unit. As examples within the area of research and development (R&D), technological imitation (reproduction of other companies' products) and technological leadership (introduction of innovations) can be mentioned. The main function of functional strategies is to provide a specific level of detail to the business strategy.
IV) Operational strategy: refers to initiatives and actions of a more limited scope aimed at the management of key operational units, such as production plants, distribution centers and purchasing points. It also covers specific strategic units, such as quality control, materials procurement, brand management or online sales. Despite their smaller breadth, these strategies provide details and refinements to both the functional strategies and the company's overall strategy.
In organizations, these four types of strategy coexist simultaneously. The strategic hierarchy defines the levels at which these strategies operate within the company, establishing relationships between them so that they complement and reinforce each other. Operational strategies support functional strategies, which in turn support business strategies, which ultimately contribute to the implementation of corporate strategy.[11][12][13].
Other basic strategy classifications
This classification is based on the relationship between the external opportunities and threats faced by an organization and its internal strengths and weaknesses, generating four types of strategies:
• - FO Strategies: They focus on taking advantage of the company's strengths to capitalize on external opportunities.
• - FA Strategies: They use organizational strengths as a defense mechanism against external threats.
• - DO Strategies: They seek to overcome internal weaknesses by taking advantage of opportunities in the environment.
• - DA Strategies: They are defensive in nature and are aimed at minimizing weaknesses and avoiding external threats.
• - Deliberate or proactive strategy: It includes the strategy elements planned and executed as planned. It consists of proactive actions designed to improve financial performance and strengthen the company's competitive advantage.
• - Adaptive or reactive strategy: These are responses to unforeseen events and unanticipated market conditions. It is formulated as new circumstances arise.
• - Emergent or executed strategy: Represents the company's global strategy in practice, combining proactive and reactive elements. It is reflected in the pattern of decisions and actions taken over time.
Chaffee wrote that there were 3 strategy models, which were not mutually exclusive:.
• - Linear strategy: A planned determination of goals, initiatives and distribution of resources. This is more consistent with strategic planning approaches and can have a broad planning horizon. Strategy "deals" with the business ecosystem but it is not its main concern.
• - Adaptive strategy: In this model, the goals and activities of the organization are closely related to adaptation to the ecosystem, in analogy to biological organisms. The need for continuous adaptation reduces or eliminates the planning window. There is a greater focus on means (resource mobilization). The strategy is less centralized than in the linear model.
• - Interpretive strategy: It is a more recent and less developed model than the previous ones. The interpretive strategy has the objective of generating legitimacy or credibility among the agents that participate (stakeholders). It has emphasis on language and symbols to influence the mind of the consumer, rather than the physical product of the organization.[14].
Corporate and business strategy
A corporation is defined as a primary business entity that exercises control over several subordinate companies or, alternatively, as a large organization with multiple strategic business units. Instead, a company refers to an individual unit that operates within one or several related product lines, focusing on a single business area.
The strategies can be applied to both the corporation and the company, depending on the specific context. These strategies constitute fundamental approaches to business management.
Corporate strategy, or failing that, company strategy, focuses on three fundamental dimensions that affect the corporation as a whole:
General management of the company, covering decision-making regarding growth, stability or reduction of operations (directional strategy).
Definition of the sectors and industries in which the company participates, through its products and business units (portfolio strategy).
Internal coordination of resources and capabilities, including the management of activities, the redistribution of resources between product lines and the strengthening of competencies within business units (umbrella strategy).
The directional strategy of a corporation is structured around three primary orientations, commonly called master strategies:.
These strategies seek the expansion of the company's operations. Within the corporate sphere, growth-oriented directional strategies are widely used, since their purpose is to increase the sales volume, the amount of assets and the profitability of the organization. In expanding sectors, companies must grow to maintain their competitiveness and viability. Furthermore, sustained growth allows us to take advantage of economies of scale and experience curves that favor the reduction of unit costs and, consequently, the improvement of profit margins.
Within this category, two main types of strategies are distinguished:
• - Integration Strategy**:** It is subdivided into:
Vertical integration, which implies the expansion of the company towards previous or subsequent activities in the value chain, ranging from the acquisition of suppliers to distribution to the final consumer.
Horizontal integration, which consists of expansion through acquisition or merger with competing companies within the same sector.
• - Diversification strategy: It can be classified into:
Functional strategy
The functional strategy represents the approach adopted by a functional area with the purpose of achieving the stated objectives, aligning with the strategies of the corporation and the business units to optimize the use of available resources. Its purpose lies in the development and strengthening of a functional capacity that allows generating a competitive advantage for the company or business unit.
Each company or business unit has different departments, each of which implements its own functional strategy. The direction of this strategy is determined by the general strategy of the business unit or the parent company.
It focuses on aspects such as price determination, commercial communication and management of distribution and coverage in various locations.
1- Intensive growth strategy.
There are different strategies aimed at expanding the presence in the market "Market (marketing)") and enhancing the growth of the company:
• - Capturing a greater market share: The aim is to increase participation within an already existing market through market saturation and penetration tactics.
• - Expansion into new markets: The development of new markets for current products is pursued.
• - Market penetration: Involves the implementation of measures aimed at increasing the volume of sales within the target market.
• - Product development "Product (marketing)"): It consists of the creation of products linked to the current offer, with the aim of marketing them in the existing market.
• - Market development: It involves the identification of new consumer segments or new markets where the product can be successfully marketed.
• - Diversification: This is the exploration of new markets through the introduction of products that may or may not be related to the company's current offering.[17].
To execute this growth strategy, an appropriate brand strategy must be defined, which may include the following alternatives:
• - Line extension: Incorporation of new variants within the same product category under the same brand, such as new flavors, formats, colors or ingredients.
• - Brand extension: Introduction of new products in different categories using the same brand, as in the case of Bic, which sells pens, lighters and shavers.
• - Multiple brands: Strategy in which a company markets the same product under various brands, as Procter & Gamble does with Gillette, Ariel and Duracell.
• - Creation of a new brand: It is decided to launch a new brand when none of the previous strategies are convenient.[18].
Purchasing strategy
The purchasing strategy focuses on the acquisition of raw materials, components and supplies essential for business operations. Its importance lies in the fact that purchased inputs represent approximately 50% of the total manufacturing cost in industries in countries such as the United Kingdom, the United States, Australia, Belgium and Finland.
There are three main approaches to purchasing management:
Multiple acquisition:
It consists of requesting the same input from various suppliers.
Encourages competition between suppliers, which can reduce costs.
Ensures availability of supplies by having alternatives in case of delivery failures.
*However, prioritizing the lowest bid may affect quality.
Single source:
Promoted by W. Edwards Deming, this strategy involves working with a single supplier for each specific component.
Allows a closer relationship between buyer and supplier, ensuring quality from product design.
Facilitates the implementation of the Just-In-Time (JIT) model, where supplies arrive just when they are needed, eliminating storage costs.
JIT II, developed at Bose Corporation, extends this concept by integrating supplier representatives into the buyer's facilities to coordinate production and sales in real time. Companies such as IBM and Honeywell have adopted this methodology successfully.
Parallel supply:
It emerges as an alternative to the single source to reduce risks.
Involves two exclusive suppliers of different components, who can support each other in case of failures.
This strategy combines supply stability with access to technological innovations.
The use of the Internet has revolutionized acquisition processes. Facilitates the search for suppliers and the efficient replenishment of inventories.
Hewlett-Packard implemented an online purchasing system that allowed 84,000 employees to purchase supplies from standardized suppliers.
This optimization reduced acquisition costs in a range of 60 to 100 million dollars annually.[5].
The ARH strategy addresses a key issue:
• - Is it better to hire many low-skilled, low-paid employees for repetitive, high-turnover jobs? (example: McDonald's).
History
Contenido
La existencia de una estrategia para la empresa es consustancial a la existencia de las propias organizaciones empresariales, por lo que se remonta a la Revolución Industrial. Pero históricamente, la estrategia primero fue aplicada al llamado arte militar. Mientras ahí es un concepto amplio y vagamente definido en una campaña militar para la aplicación de fuerzas contra el enemigo, a nivel empresarial se puede entender al enemigo como la competencia y las fuerzas se pueden entender como las decisiones tomadas por el empresario para obtener beneficios de las oportunidades. En este contexto, John von Neumann y Oskar Morgenstern publicaron en 1944 el libro Theory of Games and Economic Behavior. Con su teoría de juegos, Von Neumann y Morgenstern iniciaron el uso de la estrategia en el mundo de los negocios. No obstante, en las décadas siguientes, dicha estrategia fue implícita y parcial, hasta llegar a la década de 1980, donde empezó a cobrar mayor consistencia.
game theory
Game theory was originally applied to the analysis of the nuclear confrontation between the superpowers during the Cold War. Thus, it was used in economics to examine competition and cooperation within a group of small businesses. The theory helped provide an approach that models the behavior of irrational actors who operate according to their self-interest. As an example, it is the perverse contrast between good intentions and bad results that makes the prisoner's dilemma relevant to a wide range of business situations. Companies often find themselves in situations where unfettered competition would produce detrimental results for everyone; Cooperation, in such cases, is objectively preferable to fierce competition.
Considering the zero-sum game, in the business field it gives more results to reduce competition (in prices and industries) in a lose and lose situation rather than a win and win situation, putting only customer loyalty as competition. This theory specifically does not provide an exact answer to the questions and problems that arise; Instead, game theory is an assistive tool in the strategy formation process, providing key concepts to help understand dynamic strategic maneuvers vis-à-vis buyers.
• - At least two players.
• - Strategies.
• - Rules.
• - Incentives.
• - Benefits.
• - Goals.
The interdependence of each participating agent depends on the pre-established strategies and the objectives of the game.
This type of theory seeks to normalize and impose patterns that regulate the behavior of the agents involved through previously established norms. These factors respond to morality, equity and justice.
This theory focuses on studying the presence of laws and their conflicts, which is why it turns out to be an appropriate analysis tool. Additionally, in the theory of non-cooperative games, there is no interaction or relationship between players to reach an agreement, unless the rules of the game are different. Likewise, the theory is based on recommendations in such a way that none of the players obtain individual benefits.
First planning work
Since the late 1970s and early 1980s, the first works on strategic planning appear, led by authors such as George A. Steiner"), who took the first steps to provide methodology to this area. Although many of their applications and recommendations initially failed, they gave the signal to a path that is increasingly deepened and formalized more and more. These studies were joined by Peter Drucker,[21] father of modern administration,[22] as well as some publications by Michael Porter, Al Ries") and Jack Trout, among others.
In the 1980s, business strategists also realized that there is a great knowledge of thousands of years that they had barely examined, which is why they turned to classic military strategy books for business management. Common examples are The Art of War, by Sun Tzu; On War, by Carl von Clausewitz, and Mao's Red Book, becoming essential works of reference because they examine important topics for marketing such as leadership, motivation, logistics, communications and intelligence from a context other than business.
In these books there is a subjective contemplation of power, where it considers that direct and indirect risks are the two main categories. Direct risks are generally those that an organization has control over or can affect. These risks frequently affect the company's supply chain, workforce, operations, and competitive position. The positioning strategy school is very skillful in managing risks in the market. However, the depth of the analysis depends on the variables considered by the analysts. This risk management process softens the company's focus and unnecessarily expands the cost by defining operational plans every time.
Porter and his positioning school
Part of the structure of business strategy was described in the late 1980s with the so-called positioning school, which includes elements of the design and planning schools. In 1980, Michael Porter published Competitive Strategy: Techniques for the Analysis of the Company and its Competitors, one of the most analyzed books on the subject, and in 1985 he published Competitive Advantage: Creation and Sustainability of Superior Performance, which portrayed the dissatisfaction with the aforementioned schools of design and planning. The prescriptive nature of the first two schools added to the focus on content and substantial research of the positioning school. Thus, there are five premises for the positioning school:
Strategies are generic positions, specifically common and identifiable in the market.
The market, as a context for strategies, is economic and competitive.
The process of formulating a strategy is a matter of selecting a generic position based on calculation and analysis.
Analysts play an essential role in the process of providing the results of calculations and analysis to company managers, who officially control strategic options.
Strategies are the result of a regulated process, and then they are implemented and articulated.[23].
The positioning strategy school is very skillful in managing risks in the market. However, the depth of the analysis depends on the variables considered by it. This risk management process obscures the company's focus and unnecessarily expands the cost by defining operational plans every time. Competitive strategy: Techniques for analyzing the company and its competitors captured the interests of academics and consultants, and made the positioning school dominant. The positioning school considers multiple strategies that differ from the design school that only derives from a single strategy. It provides a set of analytical tools in which it helps strategists discover which strategies work best and where.
With the advances in business strategy, numerous academic programs have been developed to study it. The university with the greatest reputation in this regard is Harvard University, although practically all universities in the world with a focus on business management have programs in this regard, such as the University of Pennsylvania (Warton), the London Business School, Tuck School of Business at Dartmouth, Columbia Business School and the English-speaking MIT. In Spain there are important business schools, such as IE, IESE, ESADE or EADA.
Value chain
According to Porter's value chain, several important concepts are obtained:
• - Cost leadership or lowest cost leadership: Focuses on being the lowest cost producer.
• - Support activities: company infrastructure.
• - Differentiation: It involves the development of a unique and unrepeatable product due to design or technology.
• - Focus: Seeks to serve narrow market segments.
• - Resources: Inbound logistics, operations, outbound logistics, marketing and sales, services, etc.
Criticism of the positioning school
The positioning school bases its criticism on the separation of thinking from acting, the formulation of strategies made by the company's management through conscious thinking based on a formal analysis where its implementation follows a descending order through acting. And strategic learning is excessively deliberate, in addition to the fact that there are dangers in looking at the future by extrapolating present trends, relying excessively on quantifiable information and also over-formalizing the process of developing the strategy.[26].
As can be seen in the other schools, the approach of the positioning school is too broad and does not relate to a specific topic to be able to generate a strategy according to a problem. In this school, the merely economic and quantifiable aspects are taken into consideration without considering that perhaps the social, political and even the non-quantifiable economic aspect show relevant aspects to be able to manage a business or generate a strategy around those data that are being omitted. This behavior became more common in the second wave, when the most important thing was market participation and generating profits for the business.[26].
The positioning school has also been criticized for the context in which it is developed. In this case, the context is as broad as the focus. However, it is a matter of bias regarding the subject of analysis of this school. According to Mintzberg,[26] the context develops around large traditional companies, reducing the effectiveness of this school. In other words, this school of thought biases thinking that large equals stable. Therefore, the fact that this school places external positioning as the main focus of study without taking into account the internal capacity of companies is criticized.
The goal of positioning school is to calculate and analyze before formulating an optimal strategy. The strategist must solve all abstract problems on paper with the goal of closing sales. Von Clausewitz argues that calculation is the most important phase to achieve a competitive advantage.[26] However, the dilemma is how to calculate all possible variables in any problem; this is not possible. Calculating, in some cases, repels the development of creativity and learning, weakening the strategist's personal commitment.
• - Digital education").
• - Porter's generic strategies.
• - Negotiation.
• - Leadership.
• - Strategic map.
References
[1] ↑ Robbins, Stephen P.; Coulter, Mary (2005). Administración (8a. ed.). Pearson Educación. ISBN 978-970-26-0555-3. |fechaacceso= requiere |url= (ayuda).
[2] ↑ a b Jorge Hermida. Roberto Serra. Eduardo Kastika. Administración y Estrategia: teoría y práctica. Editorial Norma, Argentina. p. 305, ss.
[3] ↑ a b c d e f g Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. México. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V. p. 1 - 200.
[4] ↑ Fred R. David. Conceptos de administración estratégica. Decimocuarta edición. PEARSON EDUCACIÓN, México, 2013. p .11.
[5] ↑ a b c d e f g h i j k l L. WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición. PEARSON EDUCACIÓN, México, 2007. p.15- 200.
[6] ↑ a b Michael A. Hitt; R. Duane Ireland; Robert E. Hoskisson. Administración estratégica. Competitividad y globalización.7a. edición, México, 2008. Cengage Learning. p 5 - 15.
[7] ↑ a b c d e f Collins, J.C.; Porras, J.I. (1995). Empresas que perduran: principios exitosos de compañías triunfadoras. Bogotá: Norma.
[8] ↑ Kurb, M. (1980). La consultoría de empresas: guía de la profesión. Ginebra: Organización Internacional del Trabajo.
[9] ↑ «How to Start a Consulting Business». Consulting Business start-up guide. 4ª ed. 2014. Consultado el 27 de febrero de 2015.: http://www.entrepreneur.com/article/41384
[10] ↑ WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición PEARSON EDUCACIÓN, México, 2007. p. 137.
[11] ↑ L. WHEELEN, THOMAS y HUNGER, J. DAVID. Administración estratégica y política de negocios. Décima edición. PEARSON EDUCACIÓN, México, 2007. p.15- 200.
[12] ↑ Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. México. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V. p. 1 - 200.
[13] ↑ Arthur A. Thompson; Margaret A. Peteraf; John E. Gamble; A. J. Strickland III. ADMINISTRACIÓN ESTRATÉGICA. Decimoctava edición. McGRAW-HILL/INTERAMERICANA EDITORES, S.A. DE C.V., México, 2012. p. 15.
[14] ↑ Chaffee, E. “Three models of strategy”, Academy of Management Review, vol 10, no. 1, 1985.
[15] ↑ a b Charles W. L. Hill; Gareth R. Jones. ADMINISTRACIÓN ESTRATÉGICA. Octava edición. McGRAW-HILL INTERAMERICANA EDITORES, S.A. de C.V. méxico, 2009.
[16] ↑ a b Charles W. L. Hill; Gareth R. Jones. Administración estratégica. Un enfoque integral. Cengage Learning, Mexico, 2011. P. 160.
[21] ↑ Drucker, Peter F. (2001). La administración en una época de grandes cambios. Buenos Aires: Sudamericana. ISBN 9500715295.
[22] ↑ Drucker, Peter F. (1999). Harvard Business Review: Cómo medir el rendimiento de la empresa. Zalla: Deusto. ISBN 8423420493.
[23] ↑ Mintzberg, Henry; Ahlstrand, Bruce; Lampel, Joseph (1998). «The Planning School». Strategy safari: a guided tour through the wilds of strategic management (en inglés). Nueva York: The Free Press. ISBN 0684847434.: https://archive.org/details/strategysafarigu00mint_0
[24] ↑ Kaplan, Robert S.; Norton, David P. (1997). El Cuadro de Mando Integral (The Balanced Scorecard). Barcelona: Gestión 2000. ISBN 9788498750485.
[25] ↑ Kaplan, Robert S.; Norton, David P. (2001). Cómo utilizar el Cuadro de Mando Integral (The Strategy Focused Organization). Barcelona: Gestión 2000. ISBN 9788498754278.
[26] ↑ a b c d Mintzberg, Henry; Ahlstrand, Bruce; Lampel, Joseph (1998). «The Positioning School». Strategy safari: a guided tour through the wilds of strategic management (en inglés). Nueva York: The Free Press. ISBN 0684847434.: https://archive.org/details/strategysafarigu00mint_0
Concentric or related diversification, which seeks to expand the product offering while maintaining a relationship with existing business lines.
Conglomerate or unrelated diversification, in which the company ventures into sectors other than its main activity to reduce risks and take advantage of new market opportunities.[15].
These strategies are adopted when the company decides not to make significant changes in its current operations, prioritizing the consolidation of its position in the market. They are appropriate in contexts of uncertainty or when the company has already achieved an optimal position within its industry. They are divided into three main approaches:
• - Pause and proceed with caution strategy: This is a transitory strategy used to stabilize the company before resuming a growth or reduction phase. Its purpose is to strengthen resources and capabilities before facing new challenges or environmental changes.
• - Strategy without change: It consists of maintaining operational continuity without making substantial modifications. It is generally applied when the industry shows little growth and the company is in a stable competitive position.
• - Profit strategy: It is implemented in adverse situations, in which the company chooses to reduce investments and discretionary expenses in order to artificially sustain profit margins in the face of a drop in sales.
When a company faces a decline in performance, it may opt for strategies that reduce its level of activity in order to regain profitability or minimize losses. These strategies include:
• - Change strategy: Oriented towards operational optimization through cost reduction, process restructuring and sale of non-essential assets.
• - Captive company strategy: It involves giving up autonomy in exchange for security, establishing agreements with strategic clients that guarantee the viability of the company through long-term contracts.
• - Full sale or divestiture strategy: It is applied when the sale of the company in its entirety or one of its divisions represents the best option to maximize the return for shareholders and ensure business continuity under new management.
• - Bankruptcy or liquidation strategy: In extreme cases, when the company does not find viable alternatives, it may opt for bankruptcy to negotiate its debt or for the total liquidation of assets to recover part of the invested capital.[3][5].
Portfolio strategy views product lines and business units as an investment portfolio that must be managed strategically to maximize the return on corporate investment. Its approach is based on evaluating how business units can generate competitive advantages and contribute to the overall performance of the company.
To do this, analytical tools are used such as the BCG matrix and the GE matrix, which help determine the optimal allocation of resources and define investment priorities based on the growth and profitability potential of each business unit.
Key questions in this strategy raise:
• - How much capital and time should be allocated to the most successful products and business units to ensure their continuity?
• - How much should be invested in the development of new products, considering that many of them will not be able to position themselves in the market?
This approach views the corporation as a set of resources and capabilities that can generate synergies between business units. Its objective is to create value by optimizing the core competencies of the parent company and efficiently articulating the relationships between the different operating units.
From this perspective, the umbrella strategy seeks to coordinate shared activities, transfer key skills between business units, and optimize resource allocation to achieve economies of scope, such as purchasing centralization or joint technology development.
Fundamental questions that guide this strategy raise:
• - What businesses should be part of the company and what is their strategic justification?
• - What organizational structure and administrative systems will allow maximizing the performance of the business units?
Depending on its purpose, the umbrella strategy can take a horizontal approach, if its objective is to generate corporate synergies, or a competitive approach, if its goal is to strengthen the market position of a business unit or product line.
Directional, portfolio and umbrella strategies address three fundamental issues in corporate management: the general orientation of the company, the sectors in which it competes and the internal coordination of its activities and resources. The appropriate combination of these strategies is key to guarantee sustainable growth, operational stability and profitability in the long term.[3][6].
Some authors may consider them tactics:
1- Offensive strategy:.
Its purpose is to strengthen the competitive position in the market and improve the global performance of the company. It becomes essential when opportunities are identified to capture market share at the expense of competitors or when it becomes imperative to erode the competitive advantage of a strong rival. The most effective strategic offensives are based on certain fundamental principles:.
• - Constantly seek a competitive advantage and work to make it sustainable.
• - Mobilize strategic resources in a way that forces competitors to focus on defense.
• - Take advantage of the surprise factor instead of opting for predictable moves that rivals can anticipate.
• - Implement decisive, quick and forceful actions to surpass the competition.
The most effective offensive strategies use the company's key competitive resources to attack competitors' weaknesses, through actions such as:.
• - Apply cost advantages to compete on price or value.
• - Adopt next-generation technologies before competitors.
• - Continuously innovate products to gain market share.
• - Incorporate and improve successful ideas from other companies.
• - Use attack and retreat tactics to capture market share from unsuspecting competitors.
• - Apply preventive strikes that strengthen the company's position and make imitation by rivals difficult, such as securing strategic relationships with key distributors, obtaining privileged locations or guaranteeing supply with reliable suppliers.
Attack objectives:.
• - Vulnerable leading companies.
• - Growing companies with weaknesses in areas where the attacking company is strong.
• - Companies in difficulties close to leaving the market.
• - Local or regional companies with limited capabilities.
Offensive tactics:.
• - Frontal assault: Directly attacking a competitor in all aspects, such as price, distribution and promotion. It requires superior resources and great determination, but can be costly and provoke an aggressive response.
• - Flanking maneuver: Instead of confronting the rival's strength, a market segment where it is weaker is attacked.
• - Evasion attack: The aim is to change the rules of the game by offering a product or service that makes the competitor's offer obsolete.
• - Surrounding attack: The competitor is surrounded by attacking its products, markets or both, with a broader and more varied offer.
• - Guerrilla warfare: Consists of intermittent, low-cost attacks on specific segments, ideal for new entrants or small companies seeking to compete without direct confrontations with large players.
• - * Blue Ocean Strategy:.
This strategy actually circumvents the competition. It focuses on creating new market segments without direct competition, generating unprecedented demand and ensuring growth and profitability opportunities in spaces not yet disputed.
2- Defensive strategy:.
Its objective is to preserve market position and competitive advantage, through three key actions:.
• - Reduce the probability of being attacked.
• - Minimize the impact of an attack.
• - Dissuade competitors to focus their efforts on other market players.
Defensive approaches can be divided into:
• - Blocking access to competitors: Achieved by expanding product lines, introducing additional models, or maintaining affordable price options to make it difficult for rivals to enter.
• - Retaliation signals: They are used to discourage attacks from competitors through strategies such as:
Public statements of the company's commitment to its market share.
Explicit policies of price matching with rivals.
Sporadic offensive responses against weaker actors to strengthen the company's image as an aggressive defender.
• - Maintain cash reserves and liquid assets as backup against competitive attacks.[3][5].
• - Broad vertical integration: The company expands its control over different stages of the value chain, either backward (supplier control) or forward (distribution and marketing control). It can be total (presence in all stages) or partial (participation in key stages).
• - Reduced vertical integration: Internal and external operations are combined in certain phases of the value chain, such as sourcing from both internal and external suppliers or marketing products with own and third-party sellers.
• - Horizontal integration: Involves the acquisition or merger with competitors in the same sector to increase the scale of operations and strengthen the competitive position.
• - Divestiture strategy: It is applied when a company considers that a business is no longer profitable or when it needs to free up resources for other opportunities. This may involve the sale of a business unit or a portion of its shares.
• - Outsourcing strategy: It consists of delegating certain activities of the value chain to specialized suppliers, instead of carrying them out internally, reducing costs and increasing operational efficiency. However, excessive use can weaken the company's competitive ability.
• - Alliance and association strategies: Agreements are established with other companies to share resources and capabilities, without the need for mergers or acquisitions. An example is the joint venture, in which two companies create a new shared entity to develop a business together. Others may be strategic alliances, cooperation or consortium.
• - Collusion strategy: It involves agreements between companies in the same industry to limit production or raise prices, avoiding competition under normal market conditions. It can be explicit (through formal agreements) or tacit (through indirect signals).
• - Licensing and franchising strategy: Rights are granted to third parties to produce or market a product under a recognized brand, in exchange for compensation. It is an effective alternative to expand without the need for large direct investments.[3][5].
These strategies are only for companies or businesses. The generic competitive strategies stated by Michael Porter are as follows:
• - Leadership strategyinfocused costs: seeks to offer low-price products to customers, and to only a group of customers (segment or niche).
• - Cost leadership strategy: seeks to offer low-priced products to customers, and to many types of customers (general market or many segments).
• - Differentiation strategy: seeks to offer unique or distinctive products to customers, and to many types of customers (market in general or many segments).
• - Focused differentiation strategy: seeks to offer unique or distinctive products to customers, and to only a group of customers (segment or niche).[16].
2- Push and pull strategy.
It refers to promotional and advertising strategies that seek to encourage sales:.
• - Push Strategy: It focuses on the use of promotions, discounts and offers at points of sale in order to boost product distribution.
• - Pull or pull strategy: Focuses on advertising directed at the final consumer to generate demand and stimulate the request for the product in distribution channels.
3- Price strategies.
Prices can be set based on factors such as competition, perceived value, or demand. Among the most used strategies are:
• - Price skimming: A high price is set at the launch of the product to attract customers with greater purchasing power, and is subsequently reduced as competition increases.
• - Market penetration: The product is introduced with a low initial price to attract customers and, as demand grows, prices are increased.
• - Dynamic prices: Price adjustment based on demand, seasonality and availability, as occurs in the airline industry or on shared transportation platforms.
• - Strategy based on competition: Prices are established taking into account competitors, either matching, reducing or raising the price based on the desired perception of the product.
• - Strategy based on cost: The price is determined by adding production costs and a profit margin, without considering consumer perception.
• - Value-based strategy: Prices are set based on the value perceived by customers, which allows generating higher margins and promoting loyalty.
• - Psychological pricing strategy: Techniques are used to influence consumer perception, such as prices ending in nine to generate the impression of lower cost.[19].
4- Distribution strategy.
It defines the route that the product will follow from the manufacturer to the final consumer. Among the most common distribution strategies are:
• - Exclusive distribution: The marketing of the product is limited to specific distributors with the aim of maintaining its exclusivity and reinforcing the brand image.
• - Selective distribution: Strategic points of sale are chosen to optimize resources and better control marketing, which is ideal for specialized products.
• - Intensive distribution: The greatest possible presence is sought in the sales channels with the purpose of maximizing product availability, a common strategy in mass consumption goods.[20].
Evaluates the financial implications of strategic decisions at the corporate and business unit level, with the objective of identifying the most financially beneficial course of action. This strategy creates a competitive advantage by minimizing the cost of funds and ensuring flexibility in raising capital to support business initiatives.
One of the fundamental aspects of the financial strategy is to achieve a balance between the desired level of leverage and the use of long-term internal financing through cash flow.
Some common financial strategies include:.
• - Leveraged buyout: One company acquires another through a transaction financed mostly with debt, which is subsequently covered with the income generated by the acquired company or with the sale of its assets.
• - Dividend administration: In periods of market expansion, the company may choose not to distribute dividends to shareholders, allocating said resources to investment in order to consolidate its market share. Growth in sales and profits can be reflected in an increase in share value.
• - Reduction of shares in circulation: It consists of the repurchase of shares by the company to reduce the number of shares available in the market, which can contribute to sustaining their value.
• - Tracking action: These are actions linked to a specific business unit within a corporation. This mechanism makes it possible to highlight a high-growth division without selling it, giving it the ability to finance itself independently without losing corporate control. It is listed on the stock exchange as an Initial Public Offering (IPO) and pays dividends based on the performance of the business unit, although it actually represents participation in the parent company and not in the subsidiary.[3][5][15][16].
The R&D strategy focuses on the innovation and optimization of products and processes, considering the appropriate combination of basic, product and process R&D. It also analyzes access to new technologies through internal development, acquisitions or strategic alliances.
Companies can choose to be:.
• - Technological leaders, introducing pioneering innovations before competitors.
• - Technological followers, imitating existing products. According to Porter, this decision may favor a low-cost or differentiation strategy.
Nike, for example, invests significantly in R&D to differentiate its products and attract high-performance athletes. In contrast, Dean Foods prioritizes a low-cost strategy, focusing on producing cheaper alternatives without expensive labeling, aligning with customer needs.
In terms of cost reduction, a leading technology company can innovate in lower-cost production design, be the first to reach the lowest part of the learning curve, and develop efficient methods for performing valuable activities. On the other hand, a technology follower company can reduce costs by learning from the leader's experience and avoiding the expenses associated with R&D through imitation.
Regarding differentiation, technological leadership allows us to be a pioneer in the development of unique products that increase value for the buyer and to innovate in various activities to improve the value proposition. In contrast, a follower company can adapt products or delivery systems more precisely to consumer needs, based on the leader's experience.[5].
• - Collaborate with suppliers to stay technologically updated, since depending only on internal development does not guarantee competitiveness. Chrysler, for example, has reduced design costs by working with its suppliers.
• - Strategic alliances "Strategic alliance (business)") in technology allow combining R&D capabilities, as Maytag did by applying fuzzy logic in its IntelliSense™ dishwashers, accelerating its development.
• - Open innovation, where companies collaborate with laboratories and universities to access technological advances. Intel, for example, created research centers with universities, and companies such as Mattel and Wal-Mart turn to the Big Idea Group to evaluate new product ideas. P&G adopted the strategy of obtaining 50% of its ideas from external sources and implemented technology scouts to identify innovations.
• - Corporate venture capital, where large companies such as IBM and Microsoft invest in technological startups, accessing innovations at a lower cost than if they developed them internally.[5].
The operations strategy defines the production processes of goods and services, determining key aspects such as:.
• - Production location and structure: Defines where and how manufacturing will take place.
• - Level of vertical integration: Determines which parts of the production process are internalized or outsourced.
• - Deployment of physical resources: Involves the distribution of productive facilities and equipment.
• - Relationship with suppliers: Influences the efficiency of the supply chain.
• - Technological incorporation: Establishes the optimal degree of technology to be used in operational processes.
The development of Advanced Manufacturing Technology (AMT) has transformed the industry through the implementation of tools such as:
• - Computer-aided design and manufacturing (CAD/CAM).
• - Flexible manufacturing systems.
• - Robotics and industrial automation.
• - Manufacturing resource planning (MRP II).
• - Just in Time (JIT) production techniques.
While these innovations increase efficiency and flexibility, they also raise fixed costs and require economies of scale to be profitable.
Production strategy is influenced by the product life cycle, where companies can choose different approaches:
• - Batch flow: Integrates standardized processes with some flexibility.
• - Flexible manufacturing: Allows the production of a wide variety of items within the same system.
• - Dedicated transfer lines: Highly automated, aimed at mass production with minimal human intervention.
As a product matures and demand grows, it moves from flexible models to more efficient and automated strategies.
The intensification of competition has led companies to migrate from traditional mass production to more dynamic models such as:
• - Continuous improvement: Inspired by the Japanese model, it encourages constant optimization with the active participation of workers.
• - Modular manufacturing: It is based on the integration of pre-assembled subassemblies to speed up final assembly and reduce costs.
• - Mass customization: Seeks to adapt products to the specific requirements of each client without losing productive efficiency.
Mass customization, used by companies such as Dell, allows products to be manufactured to consumer specifications using flexible and highly coordinated systems.[5].
• - Or hire more skilled employees, with higher salaries and training in various areas to work in self-directed teams?
As jobs become more complex, the second option is more effective, especially in innovative product development projects.
• - Use of self-directed work teams:.
More and more multinational companies adopt this equipment both in their foreign subsidiaries and in local operations.
Studies indicate that teamwork improves quality, productivity and employee commitment.
• - Performance evaluations:.
Companies with quality-based differentiation strategies more frequently use evaluations with feedback from subordinates and colleagues.
The 360-degree assessment, which gathers information from multiple sources, is one of the most used tools for developing new managers in the United States.
• - Diversity in the workforce:.
Greater racial diversity, combined with growth strategies, has been shown to increase productivity.
Example: Avon managed to recover unprofitable markets in urban areas by hiring African-American and Hispanic managers specialized in these segments.
Diversity in age and nationality also brings benefits:.
DuPont uses multinational teams to expand its products globally.
McDonald's has found that older employees perform as well or better than younger ones.[5].
• - Use of technology as a competitive advantage:.
FedEx was a pioneer in offering its customers software to store addresses, print labels and track packages, which increased its sales.
UPS reacted with its own software to compete.
FedEx then used its website for shipment tracking, which again set it apart until UPS implemented the same service.
• - Investment in technology:.
Even though the technology has become common, it is still crucial: companies invest more than $2 trillion a year in this sector.
• - Global administration through intranets:.
Multinationals use advanced intranets to facilitate collaborative work across time zones.
Sun-following management allows teams from different countries to work in sequence without the need for night shifts.
Instant translation software improves communication in different languages.
Mattel has reduced its product development time by 10% by allowing international collaboration in toy design.
IBM uses its intranet for training and collaboration, reducing training and travel costs.
• - Extranets and relationship with suppliers:.
Companies like Lockheed Martin and Whirlpool have strengthened relationships with customers and suppliers through advanced extranets.
General Electric (GE) implemented the Trading Process Network, where suppliers can:.
Download GE Requests for Proposals.
See part specification diagrams.
Communicate directly with purchasing managers.
Thanks to this network, GE has managed to reduce purchase processing time by a third.[5].
These academic developments were also joined by other works and approaches from consulting firms that expanded the spectrum and gave greater pragmatism to the theories, turning them into successfully applicable tools, such as Booz & Co., Boston Consulting Group, Integra Trust, McKinsey & Company, Arthur D. Little, Shocron Benmuyal & Asoc., Accenture, Strategos, Gallen, etc.
With the arrival of the 1990s, business strategy began to have better tools and structure, the result of collaborations such as those of Henry Mintzberg, Peter Senge, Michael Hammer"), George Yip"), Jan Carlzon and Gary Hamel, among others. At the arrival of the century, a convergence of all currents in strategic management models is observed. On the other hand, business intelligence models and tools such as the balanced scorecard have also been added to it,[24] which has enhanced the results of the business strategy.[25].
Concentric or related diversification, which seeks to expand the product offering while maintaining a relationship with existing business lines.
Conglomerate or unrelated diversification, in which the company ventures into sectors other than its main activity to reduce risks and take advantage of new market opportunities.[15].
These strategies are adopted when the company decides not to make significant changes in its current operations, prioritizing the consolidation of its position in the market. They are appropriate in contexts of uncertainty or when the company has already achieved an optimal position within its industry. They are divided into three main approaches:
• - Pause and proceed with caution strategy: This is a transitory strategy used to stabilize the company before resuming a growth or reduction phase. Its purpose is to strengthen resources and capabilities before facing new challenges or environmental changes.
• - Strategy without change: It consists of maintaining operational continuity without making substantial modifications. It is generally applied when the industry shows little growth and the company is in a stable competitive position.
• - Profit strategy: It is implemented in adverse situations, in which the company chooses to reduce investments and discretionary expenses in order to artificially sustain profit margins in the face of a drop in sales.
When a company faces a decline in performance, it may opt for strategies that reduce its level of activity in order to regain profitability or minimize losses. These strategies include:
• - Change strategy: Oriented towards operational optimization through cost reduction, process restructuring and sale of non-essential assets.
• - Captive company strategy: It involves giving up autonomy in exchange for security, establishing agreements with strategic clients that guarantee the viability of the company through long-term contracts.
• - Full sale or divestiture strategy: It is applied when the sale of the company in its entirety or one of its divisions represents the best option to maximize the return for shareholders and ensure business continuity under new management.
• - Bankruptcy or liquidation strategy: In extreme cases, when the company does not find viable alternatives, it may opt for bankruptcy to negotiate its debt or for the total liquidation of assets to recover part of the invested capital.[3][5].
Portfolio strategy views product lines and business units as an investment portfolio that must be managed strategically to maximize the return on corporate investment. Its approach is based on evaluating how business units can generate competitive advantages and contribute to the overall performance of the company.
To do this, analytical tools are used such as the BCG matrix and the GE matrix, which help determine the optimal allocation of resources and define investment priorities based on the growth and profitability potential of each business unit.
Key questions in this strategy raise:
• - How much capital and time should be allocated to the most successful products and business units to ensure their continuity?
• - How much should be invested in the development of new products, considering that many of them will not be able to position themselves in the market?
This approach views the corporation as a set of resources and capabilities that can generate synergies between business units. Its objective is to create value by optimizing the core competencies of the parent company and efficiently articulating the relationships between the different operating units.
From this perspective, the umbrella strategy seeks to coordinate shared activities, transfer key skills between business units, and optimize resource allocation to achieve economies of scope, such as purchasing centralization or joint technology development.
Fundamental questions that guide this strategy raise:
• - What businesses should be part of the company and what is their strategic justification?
• - What organizational structure and administrative systems will allow maximizing the performance of the business units?
Depending on its purpose, the umbrella strategy can take a horizontal approach, if its objective is to generate corporate synergies, or a competitive approach, if its goal is to strengthen the market position of a business unit or product line.
Directional, portfolio and umbrella strategies address three fundamental issues in corporate management: the general orientation of the company, the sectors in which it competes and the internal coordination of its activities and resources. The appropriate combination of these strategies is key to guarantee sustainable growth, operational stability and profitability in the long term.[3][6].
Some authors may consider them tactics:
1- Offensive strategy:.
Its purpose is to strengthen the competitive position in the market and improve the global performance of the company. It becomes essential when opportunities are identified to capture market share at the expense of competitors or when it becomes imperative to erode the competitive advantage of a strong rival. The most effective strategic offensives are based on certain fundamental principles:.
• - Constantly seek a competitive advantage and work to make it sustainable.
• - Mobilize strategic resources in a way that forces competitors to focus on defense.
• - Take advantage of the surprise factor instead of opting for predictable moves that rivals can anticipate.
• - Implement decisive, quick and forceful actions to surpass the competition.
The most effective offensive strategies use the company's key competitive resources to attack competitors' weaknesses, through actions such as:.
• - Apply cost advantages to compete on price or value.
• - Adopt next-generation technologies before competitors.
• - Continuously innovate products to gain market share.
• - Incorporate and improve successful ideas from other companies.
• - Use attack and retreat tactics to capture market share from unsuspecting competitors.
• - Apply preventive strikes that strengthen the company's position and make imitation by rivals difficult, such as securing strategic relationships with key distributors, obtaining privileged locations or guaranteeing supply with reliable suppliers.
Attack objectives:.
• - Vulnerable leading companies.
• - Growing companies with weaknesses in areas where the attacking company is strong.
• - Companies in difficulties close to leaving the market.
• - Local or regional companies with limited capabilities.
Offensive tactics:.
• - Frontal assault: Directly attacking a competitor in all aspects, such as price, distribution and promotion. It requires superior resources and great determination, but can be costly and provoke an aggressive response.
• - Flanking maneuver: Instead of confronting the rival's strength, a market segment where it is weaker is attacked.
• - Evasion attack: The aim is to change the rules of the game by offering a product or service that makes the competitor's offer obsolete.
• - Surrounding attack: The competitor is surrounded by attacking its products, markets or both, with a broader and more varied offer.
• - Guerrilla warfare: Consists of intermittent, low-cost attacks on specific segments, ideal for new entrants or small companies seeking to compete without direct confrontations with large players.
• - * Blue Ocean Strategy:.
This strategy actually circumvents the competition. It focuses on creating new market segments without direct competition, generating unprecedented demand and ensuring growth and profitability opportunities in spaces not yet disputed.
2- Defensive strategy:.
Its objective is to preserve market position and competitive advantage, through three key actions:.
• - Reduce the probability of being attacked.
• - Minimize the impact of an attack.
• - Dissuade competitors to focus their efforts on other market players.
Defensive approaches can be divided into:
• - Blocking access to competitors: Achieved by expanding product lines, introducing additional models, or maintaining affordable price options to make it difficult for rivals to enter.
• - Retaliation signals: They are used to discourage attacks from competitors through strategies such as:
Public statements of the company's commitment to its market share.
Explicit policies of price matching with rivals.
Sporadic offensive responses against weaker actors to strengthen the company's image as an aggressive defender.
• - Maintain cash reserves and liquid assets as backup against competitive attacks.[3][5].
• - Broad vertical integration: The company expands its control over different stages of the value chain, either backward (supplier control) or forward (distribution and marketing control). It can be total (presence in all stages) or partial (participation in key stages).
• - Reduced vertical integration: Internal and external operations are combined in certain phases of the value chain, such as sourcing from both internal and external suppliers or marketing products with own and third-party sellers.
• - Horizontal integration: Involves the acquisition or merger with competitors in the same sector to increase the scale of operations and strengthen the competitive position.
• - Divestiture strategy: It is applied when a company considers that a business is no longer profitable or when it needs to free up resources for other opportunities. This may involve the sale of a business unit or a portion of its shares.
• - Outsourcing strategy: It consists of delegating certain activities of the value chain to specialized suppliers, instead of carrying them out internally, reducing costs and increasing operational efficiency. However, excessive use can weaken the company's competitive ability.
• - Alliance and association strategies: Agreements are established with other companies to share resources and capabilities, without the need for mergers or acquisitions. An example is the joint venture, in which two companies create a new shared entity to develop a business together. Others may be strategic alliances, cooperation or consortium.
• - Collusion strategy: It involves agreements between companies in the same industry to limit production or raise prices, avoiding competition under normal market conditions. It can be explicit (through formal agreements) or tacit (through indirect signals).
• - Licensing and franchising strategy: Rights are granted to third parties to produce or market a product under a recognized brand, in exchange for compensation. It is an effective alternative to expand without the need for large direct investments.[3][5].
These strategies are only for companies or businesses. The generic competitive strategies stated by Michael Porter are as follows:
• - Leadership strategyinfocused costs: seeks to offer low-price products to customers, and to only a group of customers (segment or niche).
• - Cost leadership strategy: seeks to offer low-priced products to customers, and to many types of customers (general market or many segments).
• - Differentiation strategy: seeks to offer unique or distinctive products to customers, and to many types of customers (market in general or many segments).
• - Focused differentiation strategy: seeks to offer unique or distinctive products to customers, and to only a group of customers (segment or niche).[16].
2- Push and pull strategy.
It refers to promotional and advertising strategies that seek to encourage sales:.
• - Push Strategy: It focuses on the use of promotions, discounts and offers at points of sale in order to boost product distribution.
• - Pull or pull strategy: Focuses on advertising directed at the final consumer to generate demand and stimulate the request for the product in distribution channels.
3- Price strategies.
Prices can be set based on factors such as competition, perceived value, or demand. Among the most used strategies are:
• - Price skimming: A high price is set at the launch of the product to attract customers with greater purchasing power, and is subsequently reduced as competition increases.
• - Market penetration: The product is introduced with a low initial price to attract customers and, as demand grows, prices are increased.
• - Dynamic prices: Price adjustment based on demand, seasonality and availability, as occurs in the airline industry or on shared transportation platforms.
• - Strategy based on competition: Prices are established taking into account competitors, either matching, reducing or raising the price based on the desired perception of the product.
• - Strategy based on cost: The price is determined by adding production costs and a profit margin, without considering consumer perception.
• - Value-based strategy: Prices are set based on the value perceived by customers, which allows generating higher margins and promoting loyalty.
• - Psychological pricing strategy: Techniques are used to influence consumer perception, such as prices ending in nine to generate the impression of lower cost.[19].
4- Distribution strategy.
It defines the route that the product will follow from the manufacturer to the final consumer. Among the most common distribution strategies are:
• - Exclusive distribution: The marketing of the product is limited to specific distributors with the aim of maintaining its exclusivity and reinforcing the brand image.
• - Selective distribution: Strategic points of sale are chosen to optimize resources and better control marketing, which is ideal for specialized products.
• - Intensive distribution: The greatest possible presence is sought in the sales channels with the purpose of maximizing product availability, a common strategy in mass consumption goods.[20].
Evaluates the financial implications of strategic decisions at the corporate and business unit level, with the objective of identifying the most financially beneficial course of action. This strategy creates a competitive advantage by minimizing the cost of funds and ensuring flexibility in raising capital to support business initiatives.
One of the fundamental aspects of the financial strategy is to achieve a balance between the desired level of leverage and the use of long-term internal financing through cash flow.
Some common financial strategies include:.
• - Leveraged buyout: One company acquires another through a transaction financed mostly with debt, which is subsequently covered with the income generated by the acquired company or with the sale of its assets.
• - Dividend administration: In periods of market expansion, the company may choose not to distribute dividends to shareholders, allocating said resources to investment in order to consolidate its market share. Growth in sales and profits can be reflected in an increase in share value.
• - Reduction of shares in circulation: It consists of the repurchase of shares by the company to reduce the number of shares available in the market, which can contribute to sustaining their value.
• - Tracking action: These are actions linked to a specific business unit within a corporation. This mechanism makes it possible to highlight a high-growth division without selling it, giving it the ability to finance itself independently without losing corporate control. It is listed on the stock exchange as an Initial Public Offering (IPO) and pays dividends based on the performance of the business unit, although it actually represents participation in the parent company and not in the subsidiary.[3][5][15][16].
The R&D strategy focuses on the innovation and optimization of products and processes, considering the appropriate combination of basic, product and process R&D. It also analyzes access to new technologies through internal development, acquisitions or strategic alliances.
Companies can choose to be:.
• - Technological leaders, introducing pioneering innovations before competitors.
• - Technological followers, imitating existing products. According to Porter, this decision may favor a low-cost or differentiation strategy.
Nike, for example, invests significantly in R&D to differentiate its products and attract high-performance athletes. In contrast, Dean Foods prioritizes a low-cost strategy, focusing on producing cheaper alternatives without expensive labeling, aligning with customer needs.
In terms of cost reduction, a leading technology company can innovate in lower-cost production design, be the first to reach the lowest part of the learning curve, and develop efficient methods for performing valuable activities. On the other hand, a technology follower company can reduce costs by learning from the leader's experience and avoiding the expenses associated with R&D through imitation.
Regarding differentiation, technological leadership allows us to be a pioneer in the development of unique products that increase value for the buyer and to innovate in various activities to improve the value proposition. In contrast, a follower company can adapt products or delivery systems more precisely to consumer needs, based on the leader's experience.[5].
• - Collaborate with suppliers to stay technologically updated, since depending only on internal development does not guarantee competitiveness. Chrysler, for example, has reduced design costs by working with its suppliers.
• - Strategic alliances "Strategic alliance (business)") in technology allow combining R&D capabilities, as Maytag did by applying fuzzy logic in its IntelliSense™ dishwashers, accelerating its development.
• - Open innovation, where companies collaborate with laboratories and universities to access technological advances. Intel, for example, created research centers with universities, and companies such as Mattel and Wal-Mart turn to the Big Idea Group to evaluate new product ideas. P&G adopted the strategy of obtaining 50% of its ideas from external sources and implemented technology scouts to identify innovations.
• - Corporate venture capital, where large companies such as IBM and Microsoft invest in technological startups, accessing innovations at a lower cost than if they developed them internally.[5].
The operations strategy defines the production processes of goods and services, determining key aspects such as:.
• - Production location and structure: Defines where and how manufacturing will take place.
• - Level of vertical integration: Determines which parts of the production process are internalized or outsourced.
• - Deployment of physical resources: Involves the distribution of productive facilities and equipment.
• - Relationship with suppliers: Influences the efficiency of the supply chain.
• - Technological incorporation: Establishes the optimal degree of technology to be used in operational processes.
The development of Advanced Manufacturing Technology (AMT) has transformed the industry through the implementation of tools such as:
• - Computer-aided design and manufacturing (CAD/CAM).
• - Flexible manufacturing systems.
• - Robotics and industrial automation.
• - Manufacturing resource planning (MRP II).
• - Just in Time (JIT) production techniques.
While these innovations increase efficiency and flexibility, they also raise fixed costs and require economies of scale to be profitable.
Production strategy is influenced by the product life cycle, where companies can choose different approaches:
• - Batch flow: Integrates standardized processes with some flexibility.
• - Flexible manufacturing: Allows the production of a wide variety of items within the same system.
• - Dedicated transfer lines: Highly automated, aimed at mass production with minimal human intervention.
As a product matures and demand grows, it moves from flexible models to more efficient and automated strategies.
The intensification of competition has led companies to migrate from traditional mass production to more dynamic models such as:
• - Continuous improvement: Inspired by the Japanese model, it encourages constant optimization with the active participation of workers.
• - Modular manufacturing: It is based on the integration of pre-assembled subassemblies to speed up final assembly and reduce costs.
• - Mass customization: Seeks to adapt products to the specific requirements of each client without losing productive efficiency.
Mass customization, used by companies such as Dell, allows products to be manufactured to consumer specifications using flexible and highly coordinated systems.[5].
• - Or hire more skilled employees, with higher salaries and training in various areas to work in self-directed teams?
As jobs become more complex, the second option is more effective, especially in innovative product development projects.
• - Use of self-directed work teams:.
More and more multinational companies adopt this equipment both in their foreign subsidiaries and in local operations.
Studies indicate that teamwork improves quality, productivity and employee commitment.
• - Performance evaluations:.
Companies with quality-based differentiation strategies more frequently use evaluations with feedback from subordinates and colleagues.
The 360-degree assessment, which gathers information from multiple sources, is one of the most used tools for developing new managers in the United States.
• - Diversity in the workforce:.
Greater racial diversity, combined with growth strategies, has been shown to increase productivity.
Example: Avon managed to recover unprofitable markets in urban areas by hiring African-American and Hispanic managers specialized in these segments.
Diversity in age and nationality also brings benefits:.
DuPont uses multinational teams to expand its products globally.
McDonald's has found that older employees perform as well or better than younger ones.[5].
• - Use of technology as a competitive advantage:.
FedEx was a pioneer in offering its customers software to store addresses, print labels and track packages, which increased its sales.
UPS reacted with its own software to compete.
FedEx then used its website for shipment tracking, which again set it apart until UPS implemented the same service.
• - Investment in technology:.
Even though the technology has become common, it is still crucial: companies invest more than $2 trillion a year in this sector.
• - Global administration through intranets:.
Multinationals use advanced intranets to facilitate collaborative work across time zones.
Sun-following management allows teams from different countries to work in sequence without the need for night shifts.
Instant translation software improves communication in different languages.
Mattel has reduced its product development time by 10% by allowing international collaboration in toy design.
IBM uses its intranet for training and collaboration, reducing training and travel costs.
• - Extranets and relationship with suppliers:.
Companies like Lockheed Martin and Whirlpool have strengthened relationships with customers and suppliers through advanced extranets.
General Electric (GE) implemented the Trading Process Network, where suppliers can:.
Download GE Requests for Proposals.
See part specification diagrams.
Communicate directly with purchasing managers.
Thanks to this network, GE has managed to reduce purchase processing time by a third.[5].
These academic developments were also joined by other works and approaches from consulting firms that expanded the spectrum and gave greater pragmatism to the theories, turning them into successfully applicable tools, such as Booz & Co., Boston Consulting Group, Integra Trust, McKinsey & Company, Arthur D. Little, Shocron Benmuyal & Asoc., Accenture, Strategos, Gallen, etc.
With the arrival of the 1990s, business strategy began to have better tools and structure, the result of collaborations such as those of Henry Mintzberg, Peter Senge, Michael Hammer"), George Yip"), Jan Carlzon and Gary Hamel, among others. At the arrival of the century, a convergence of all currents in strategic management models is observed. On the other hand, business intelligence models and tools such as the balanced scorecard have also been added to it,[24] which has enhanced the results of the business strategy.[25].