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]​.

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:

1. • 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.

2. • 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]​.

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:

1. • General management of the company, covering decision-making regarding growth, stability or reduction of operations (directional strategy).

2. • Definition of the sectors and industries in which the company participates, through its products and business units (portfolio strategy).

3. • 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:

1. • 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.

2. • 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.

3. • 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).

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:

1. • Strategies are generic positions, specifically common and identifiable in the market.

2. • The market, as a context for strategies, is economic and competitive.

3. • The process of formulating a strategy is a matter of selecting a generic position based on calculation and analysis.

4. • Analysts play an essential role in the process of providing the results of calculations and analysis to company managers, who officially control strategic options.

5. • 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.

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]​.

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:

1. • 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.

2. • 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]​.

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:

1. • General management of the company, covering decision-making regarding growth, stability or reduction of operations (directional strategy).

2. • Definition of the sectors and industries in which the company participates, through its products and business units (portfolio strategy).

3. • 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:

1. • 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.

2. • 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.

3. • 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).

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:

1. • Strategies are generic positions, specifically common and identifiable in the market.

2. • The market, as a context for strategies, is economic and competitive.

3. • The process of formulating a strategy is a matter of selecting a generic position based on calculation and analysis.

4. • Analysts play an essential role in the process of providing the results of calculations and analysis to company managers, who officially control strategic options.

5. • 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.