When we talk about of strategic decision making in an organization, we must take consider many factors that must be studied within the company. For that, there are several useful tools such as SWOT analysis, which is meant (strengths, Weaknesses, opportunities, and Threats), this method is the simplest and effective way to analyze the present and see how will be the future of the company.
The main purpose of this analysis is to support the organization to locate the strategic aspects, both favorable and unfavorable, for this, locate the strengths, reduce the weaknesses, take advantage of the opportunities and minimizing or eliminating the threats that may present. This analysis is based on two very clear terms: the internal and external analysis of the organization. Internal Analysis: At this point we consider several aspects such as (people, leadership, strategy, alliances / resources and processes). •Strengths: They become the strong points that the company has.
Are the resources, capabilities, skills or positions achieved that result corporate advantages and improvements that can serve as opportunities from competition or the external environment. •Weakness: Come be the weak points the company has. Are limitations that affect the proper development strategies are threats that must be controlled and overcome. It must take into consideration the analysis of resources, activities and risks. External Analysis: At this point we consider several aspects such as (the market, the sector and competition).
•Opportunities: These are all aspects that are considered corporate benefits, are all those improvements that can support growth and profitability. •Threats: Come be all those external forces that could endanger the implementation of strategies or survival of the company. If these threats are identified early can be converted into opportunities for business. PEST ANALYSIS PEST analysis is one of the most used and helpful when identify the organization’s strategic position as well as to identify the growth or decline of a market, and in this way to know the position, potential and direction a business.
With it analyzes factors or market environment such as: Political, Economic, Socio-cultural and Technological. •Political Factor: As indicated by their name, are the factors that can identify the activity of the company. Like for example: government policies, fiscal policies of the country, changes in trade agreements, among others. •Economic Factors: At this point we are going to analyze the government’s economic policy, business cycles, interest rates, macroeconomic factors in each country, the exchange rate or the inflation rate in each country.
All these factors are analyzed to define and identify the goals and financial objectives of the business. •Socio-Cultural Factors: Here, we will analyze those social factors that may affect the company. Potential factors that can be developed at this point are: Possible change in fashion or consumer interest, changes in the level or income capacity in society and consumers, population level variation, educational, cultural patterns , among others. •Technological Factor: At this point we analyze the technological factors that may affect positively or negatively to the company.
This allows the company to offer better quality products, be constantly updated and promote product innovation and advanced technology. The factors to be taken into consideration in this regard are: Public expenditure on research, government concern and industry to improve technology, degree of obsolescence, maturity of conventional technologies, among others. PEST analysis helps the corporation to identify external environmental factors, and measures the potential of a market situation from the point of view of growth or decline, and in this way develop strategies to make the business more attractive on the market.
PORTER’S FIVE FORCES MODEL
This model is another tool used by corporations for strategic planning. It was created by economist and professor Michael Porter in 1979. For Porter there are five forces that determine the profitability of a market for an industry. Should ideally the company to evaluate its objectives and resources taken into consideration these five forces are governed especially by industrial competition. These five forces are: 1. Power business buyers or customers: At this point, treated many aspects of the market or industry, consumers or buyers and products.
We note that there are a variety of companies offering the same product at low cost, as well as many buyers or consumers for that product. Thus there may be the possibility of negotiation between the industry. For the low cost and competitiveness the customer can easily vary by a substitute product. 2. Negotiation power of suppliers or vendors: This negotiation power they may have the suppliers or vendors would become a threat to the industry, their organization, strong resources and can impose their price and size of orders.
This could get worse if the materials or supplies that they produce are vital to the industry or have no substitutes or not there are many or high cost. 3. Three. Threat of entrance of new competitors: The threat begins when the input channels to market are easy or not there are many barriers to entry. Furthermore, there are no new participants arriving with new funds, skills and abilities to adapt and take control of market share. 4. Threat of substitute products: We are a market or sector is not attractive when there are many substitutes. This could result, which are low-profit markets, buyers can easily find substitutes for the same cost.
5. Rivalry between the competitors: The less competitive the market is present or sector, it will usually be more profitable and vice versa. Furthermore to a company will be more difficult to compete in a market where competitors are well positioned and they are many, the very high costs and compete with each other for the prices, aggressive advertising and new products and promotion. This model of the five forces of Porter evaluates the value and future projection of business that operates in a given sector or industry, adopting strategic reflections to determine the profitability of an environment, market, industry or sector specific.
MISSION AND VISION STATEMENTS This is another method used to assist in the implementation of a strategic plan within an organization. These strategic plans almost always mean changes in the organizational structure. This can be organized through the mission and vision statement of the company. The mission and vision statement will help the company communicate the objectives of the plan to employees and the public, as well as, help employees to feel a commitment and motivation to the process is to be carried out. •Mission Statement: This statement defines the company as it is, what it does and who it serves.
This statement fulfills an leading role in regard to the direction, goals, values and purpose of the organization. For many managers, it fulfills an very important role in the effort to motivate, sense of belonging and commitment to the company. •Vision Statement: As the mission statement, the vision statement helps to describe the purpose and values of the organization and how you want to be seen in a future for employees, customers, suppliers, owners, shareholders, and others. These two statements help managers to lead the strategic plans for success toward fulfilling the objectives, which are an essential part of the mission and vision.
When you implement in good shape these strategic plans and these statements the employees will be involved in organizational change, will be motivated, committed and consequently have a higher level of productivity.
Reference
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