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Definition of Business Strategy and Related Concepts
8:01 AMBusiness strategy & business model are very closely related concepts. Before undertaking your idea, it's essential to learn all the definition of business strategy, strategic management, plan of activities to make sure your company's success.
2. Threat. It is all that environmental event that if presented could negatively affect the strategic results of the organization in a significant way. The Threat is not under the control of the organization, it depends on third parties. For example the presence of foreign competitors, the devaluation, the development of substitute products that compete us, etc.
3. Competitor. It is any person or organization (present or future) that offers similar products or alternatives to our customers and markets.
4. Competitiveness. It is the capacity of an organization to increase or consolidate its presence in the market. Competitiveness has to do with quantitative results such as market share, sales, market coverage, some branches/franchises, some clients, etc. Competitiveness varies over time, and the organization must always be making a conscious effort to increase or consolidate its presence in the market. The lack of competitiveness leads the organization to a state of vulnerability.
5. Weakness. It is all that aspect or activity that the team carries out with a small degree of efficiency. Weakness is under the control of the organization itself. For example; a weak portfolio of potential customers, high turnover of administrative staff, reduced customer loyalty, a lot of old product, unreliable suppliers, etc.
6. Business strategy. It is the set of concepts and guidelines that the organization uses to survive and grow and to obtain productivity in the present and ensure its sustainability in the future. The business strategy is conformed by strategic guidelines (business definition, vision, mission, discipline, organizational values), strategic objectives (with their indicators and goals) and improvement projects (with their development activities ). Business strategy answers the question, "How am I different from competitors?
7. Strength. It is all that aspect or activity that the organization carries out with a high degree of efficiency. The Fortress is under the control of the organization. For example; We are quick to supply customer orders, we have an excellent product quality, we have the best prices on the market, we have a lot of plant capacity available, etc.
8. Indicator (KPI-Key Performance Indicator-). It is a quantitative variable that measures the performance of a target, process, area, department or person. It is written with a verb, a description, a goal, a unit of measurement and a date of compliance.
9. Strategic map. It is the graphic representation of the strategic objectives of an organization taking into account each of the four perspectives of Dr. Kaplan and Dr. Norton (Financial, Market / Clients, Processes and Human and Technological Development) that are correlated to Achieve the vision, mission and business discipline of an organization.
Usually, the financial objectives are put up to the top of the map, then the market/customer objectives, then the process goals and finally the human and technological development objectives. Arrows linking two strategic objectives indicate a direct cause and effect relationship. The arrowhead indicates which target is benefited by the target where the arrow is born. All objectives must be correlated with at least one other strategic objective. Otherwise, their contribution must be questioned.
10. External environment. It is the set of elements and factors that are outside the organization with which the team interacts continuously. Based on the Albe Group's planning watch, the items of the external environment are customers, markets, products, competitors, suppliers, society, community and political, economic and social factors.
11. Internal environment. It is the set of elements and factors that are within the organization: Based on the ALBE GROUP planning clock, the elements of the internal environment are a strategic vision, technological, human and financial resources, purchases, suppliers, acquisitions.
12. Market. It is the place where customers, vendors, and products, both current and potential, coincide.
13. Business mission. It is the reason d'être of a company or an organization that clearly identifies the needs it satisfies its customers, the Products or services it offers them and the markets to which it is directed.
14. Strategic objective. It is the most important vital quantitative outcome for which the organization needs to survive and grow. Strategic objectives are identified in strategic mapping. A strategic goal can be measured using one or more indicators. Some examples of strategic objectives are: achieving a profit level of 35% before taxes; Achieve market share of 25 points; Have an efficiency in our administrative processes of 85%; Certify the labor competence of 80% of employees; Automate 100% administrative and operational processes of the organization, etc.
The strategic objectives are derived from the strategic mapping generated by the four organizational perspectives proposed by Dr. Robert Kaplan and Dr. David Norton: (1) commercial, (2) market/customers, (3) internal processes (strategic, Support and innovation), and (4) human and technological development.
15. Opportunity. It is all that environmental event that if presented would facilitate the organization more efficiently achieve its strategic objectives. The Opportunity is not under the control of the organization, it depends on third parties. Start your wording "there" or "there." For example; There is an availability of foreign investors, there is a great availability of technological products in the market; There is a trend towards virtual training; There is skilled and cheap labor in the market, etc.
16. Strategic plan. It is the document that concentrates the strategic guidelines, the policy objectives, the improvement projects and the activities to develop in a determined time (generally a calendar year) to reach the vision, the mission, the discipline and the organizational values.
17. Support process. It is the process that has to do with the product offered to the internal customers of the organization, not external customers. For example, the human resource management process, the financial resource management process, and the technology resource management process.
18. Strategic process. It is the process that has to do directly with the product offered to the external clients of the organization and from which it generates its revenues and profits.
19. Process. It is the transformation of inputs into products. In a process, at least the 5 M's participate raw materials (substances or data), machinery and equipment, methods and procedures, labor and environment. In some cases, the processes are "black boxes" for customers.
20. Improvement project. It is the way in which a person or an organization will achieve its Strategic Objectives in a knockout way. The Improvement Project answers the question. What path (s) do I follow to achieve my strategic goal? How do I ensure compliance with the objectives and strategic goals? Improvement projects that focus directly on the achievement of policy objectives should be sought.
21. A project of defensive improvement. It is the project that is in charge of taking care of the rear of the organization. It serves to withstand competitor strikes and/or elements of the external environment. Defensive upgrade projects are generated as a shield to protect the Achilles' weaknesses and heels of the organization, as well as to minimize organizational losses.
22. A project of offensive improvement. It is the type of project that drives the team. It serves to confront competitors and/or elements of the external environment. It helps to penetrate or stop the contest of the competitor and maximize the profits of the organization. The offensive improvement projects are generated with the main strengths of the team. For example, introducing our brand in the market with aggressive advertising campaigns (strength: we have lots of money, or we can get it); Increasing our presence throughout the Mexican Republic and opening franchises every year (strength: we have many investors interested in our business), etc.
23. Control panel. It is a document that allows the Management Team to qualify at least once a month the fulfillment of the strategic objectives against the actual results. The name board control is equivalent to the control board that has an airplane or a car to indicate all the measurements that are vital (height, speed, fuel level, temperature, etc.) so that the pilot, crew, and passengers Arrive with sound to their destination.
24. Strategic Business Unit (UEN). It is a small organization that generates its own revenue, which has its own products, its own markets, its own competitors, its own structure, and could even have its own name.
25. Business vision. It is the dream that an organization aspires to reach in a few more years. The Vision answers the question Where do I want to be in the next few years? What is my dream?
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