Activity 2. The strategic route

Instructions:

1. Review in the core content the topics suggested in the first column

1. Checkthe page of the

Anahuac Center for Research and Tourism Competitiveness and the DATATUR page for information

1. Returnto the Holiday Inn company to determine the ideal strategic route for the company you researched or one of its CENs

1. Elaborate the PEST analysis (Political, Economic, Social and Technological)

1. Make the Guide to determine the degree of maturity of an industry found in the supporting material

1. Adda conclusionhow we can use the data from the decision guide

1. Integrate the information into a Word document that contains:

• Cover page with the data indicated in the way of working
• Introduction Describes the purpose of indicators for SP design
• The PEST analysis:

1. Politician
2. Economic
3. Social
4. Technological

• Guide to determine the maturity of an industry:

1. Embryonic
2. Growth
3. Maturity
4. Aging

• Interpretation of results
• Conclusion
• References

1. Save your Word document with the APET_U3_A1_XXYZ nomenclatureand upload it to the corresponding space within the classroom

Help

Maturity of the tourism industry

Once the structure of the system has been defined, we have to perform the external analysis of the business environment for each CEN. The first thing we must do is provide an overview of the environment where the CEN is developed, we must make by principle of accounts the description of a CEN including information on the competition, degree of maturity and data that influence the industry, such as: the political, economic and social environment. In other words, it is to make a description of the game, the rules, the field, the players, the opponent, the referee, the ball, the fans, etc.

It is important to compile sufficient information about:

There is a methodology that some companies use, the so-calledGeneral Environment Analysis (PEST)that consists of examining the impact of those external factors that are beyond the control of the company, but that may affect its future development, in the following scheme refers to these factors

Economic Factors

GDP/Business Cycle

Demand

Employment

Inflation

Energy costs

Special events

Technological Factors

Innovations

Technological

Internet

Incentives

Public

Political Factors

• Tax legislation
• Environmental legislation
• Consumer protection
• Political changes
• Public incentives

Social Factors

• Population ageing
• Prolongation of the
• Youth at home
• Level of wealth
• Migratory movements
• New lifestyles

Macroeconomic indicators

These indicators are data that mark some trend in the economies of the countries, represent important quantitative tools for decision-making since they provide scientific and technical information that allows an analysis of the economic and social reality, thus being fundamental to evaluate and predict trends in the situation of the country as a whole or of some specific industrial branch.

References

Review the following materials to deepen and remember what macroeconomic indicators are

and how they influence when determining the maturity of an industry.

• The Economic Commission for Latin America and the Caribbean (ECLAC), in the Statistics Division,
• publishes economic indicators of tourism, checkthe data in the following link, es
• It is important that you keep yourself updated, since they are data that are modified periodically:
• http://www.cepal.org/publicaciones/xml/4/29734/LCG2329e _2conceptos.pdf
• The National Tourism Business Center, follows up on the analysis of the main
• macroeconomic indicators currently available in Mexico to describe the
• Evolution of tourism. Check them on their official website and stay updated:
• http://www.cnet.org.mx/panorama/marzo-2011/indicadores-economicos-de-coyuntura-delsector-
• Private
• More general aspects, are the Macroeconomic Indicators of the Public Sector offer
• information from the Production Accounts of the General Government at its three levels: Federal,
• State, Municipal and Social Security Institutions, plus public companies and
• decentralized and decentralized agencies, including the number of jobs

Determining the maturity stage of the industry

One of the most important and essential parts of the whole system is to determine the degree of maturity of the industry, based on external analysis and with the support of macroeconomic indicators.

The diagnosis to determine degree of maturity, is carried out within the industry in which the CEN participates, not to the company, nor to the CEN, but to the industry as a whole, for example if we referred to the automotive industry, we would talk about the

shipowners, dealers, auto parts manufacturers, etc.,

Every industry goes through different stages according to its degree of maturity and is a scheme very similar to the life cycle, the stages or degree are classified into: embryonic, growth, maturity and aging:

It is important to consider that these cycles can be reversible through the manipulation of various market factors, and although complicated, industry participants are looking for different strategies to maintain levels of

Growth

Description	Embryonic	Growth	Maturity	Aging
Degree of growth	Accelerated. You can't be calculated because the base is very small	Greater than GDP but constant or reduction.	Equal to or less than cyclical GDP.	Industry Equal Cyclic. Long Decline term
Potential of growth	Generally difficult to determine.	Exceeds the average of the industry, but it is Subject to contingencies	Well known framed primary approaches the volume saturation.	Saturation is reached. There is no potential for growth.
Line of products	The basic line is established.	Proliferation of Products & Extensions of line.	Product rotation with Low change in concept basic.	Shrinkage of products.
Number of Participants	Immediate increment	It reaches a peak and is Consolidate positions	Stable	Declines. There is appearance of Small suppliers Regional.
Stability in the participation	Volatile	Few signatures, high margins, places changing, the small do not become Large	Firms with the highest Participation they entrench themselves.	Increases the participation. Small Salen and regional get representation local.
Loyalty of the Customer	Little or none	Some buyers Aggressive	Customs are established at purchase	Strong loyalty. Decrease Alternatives
Ease of Entrance	Usually easy but with opportunities not Apparent	Usually easy presence of new, the difficulty of the First	Difficult. Competitors entrenched and the Growth Dismi	Difficult. Few incentives.
Technology	Development concept and research	Line refinement and/or line extensions	Process refinement and materials. New products	Minimum

The information in the guide will support the diagnosis to identify more clearly, what is the degree of maturity in the industry where the CEN participates.

Notes

NECs are not necessarily businesses that generate large profits for

CU, sometimes some NECs only generate enough income to survive,

in othersthey are even managed at a loss and their contribution to the CU is "strategic" for

that another of the CENs has the necessary conditions to generate the maximum

usefulness.

The essential thing in a strategic planning system is to form a portfolio of

varied businesses and implement others that fulfill specific functions.

It is also important to point out the strategic mindset since a CEN that

Traditionally we have occupied as a support, it can become at the time in

one that generates profits for the business, this depends on the economic dynamics and

social that alters the degree of maturity of the industry and the market in which

Participate.

Strategic direction

The final part of the strategic planning process is precisely to direct efforts towards the established objectives. The PE system, leads us to determine the strategic route to follow, this is where leadership and direction come into action, their responsibility is to take the company to the proposed place, implementing the support strategies that facilitate the process.

Support

To remember the definition and importance of the strategy, you can consult the following

video:

• Axon Logistics (2012) What is strategy, interview Michel Porter.[Archive of
• Video] Available in:http://www.youtube.com/watch?v=Knwk15Q2OJ4

Concepts

Remember that strategic management refers to making decisions about the most important problems that arise in an organization, but also has to try to formulate a strategy and put it into practice, review other concepts of the experts

"The strategic direction of the company is a highly complex phenomenon to have as an object ofstudy the way in which an organization seeks adaptation to its environment, in competition with other organizations, in a continuous process over time. In this way, the business strategy faces uncertainty about

the possible actions and reactions of the other companies with whom it competes, both in factor and product markets" (Arano, R. M; Espinosa, F; Arroyo, G. 2011)

Strategic management according to lvarez H. (2000) is composed of three main branches or columns: strategic planning (competitive strategic and portfolio analysis); organizational culture (shared values and management development) and organizational architecture (structure and systems). The basic postulate consists of the harmony between strategy, structure, system and culture.

For S. Harrison Jeffrey and St. John CaronH (2002) "strategic direction is the procedure throughwhich organizations analyze and learn from their internal and external environments, dictate strategic direction, create strategies aimed at achieving established objectives and execute those strategies, all

This is intended to meet the demands of a key part of the organization: the stakeholders or alsocalled interest group

G. Dess and G.T. Lumpkin (2003, cited by Arano, R. M; Espinosa, F; Arroyo, G. 2011), on the other hand, mention that strategic management has four major attributes in the first placeit is directed to the global goals and objectives of the organization. Secondly, strategic direction involves the inclusion in decision-making of multiple stakeholders of the company. Managers must incorporate the demands of

many interest groups when they decide. Third, strategic direction requires incorporating both the short-term and long-term perspectives. Peter Senge (1996), an important author on the strategic direction of the Massachusetts Institute of Technology, qualifies this need as creative tension. Fourth, strategic direction involves the recognition of the interrelationships between effectiveness and efficiency.

Strategic route

From the diagnosis and external and internal analysis, we have the essential elements to consider the "strategic route", that is, the actions to be carried out are determined. For the purposes of the study of this unit, we will talk aboutfour basic routes that mark the strategic guideline that each CEN must follow: growth, maintenance, consech and reduction (adapted, from Thompson A., Strickland, J., Gamble, E., 2012).

Growthimplies an aggressive and risky stance since the conditions of a nascent industry lend themselves to it, this position implies making innovative entries to the market, seeks to establish a generic market, take risks, develop technology, you must have the ability to respond quickly and the great objective lies in obtaining

quickly the best position in the market.

Maintenanceproposes a more conservative stance, decisions must be taken with caution, this route involves seeking or consolidating market leadership taking advantage of the growth of the sector, establishing technology,

integrate manufacturing and invest for the future; One must be willing to sustain a constant struggle for a predominant position.

Harvesting, strategic route that works for complex conditions and is appropriate for mature industries with little growth, in this route must be implemented mechanisms to reduce costs, improve efficiency, strive for

Maintain your stake, rationalize the product line, seek profit margins and properly manage cash flow. The central objective of this route is the search for competitive advantages.

The reduction operates in aging industries and zero growth, it is a path that implies the risk of disappearance of the CEN, in this route it is necessary to manage the investment and maximize the cash flow that implies the gradual reduction of the weak links of the CEN, trying to maintain those areas that could have potential ofdevelopment in an eventual investment, that is, in the event that the industry initiates a growth derived from the manipulation of market factors

To determine which route to follow, it is necessary to put on the table, the information of the internal and external analysis that has been made of the organization. Many strategists rely on matrices such as those tools to help decision-making, one of the best known in the business field is the Boston Consulting Group Matrix,also known asthe BCGinvestment matrix or the growth and participation matrix.

Taking into account the characteristics of the BCG matrix as well as in the Life Cycle Theory of the product, thefollowing "Strategic Direction Matrix" is proposed that will give you guidelines to specify the strategic route, on an axis (y), the

competitive position and in the other (and), the degree of maturity of the industry that coincides with the strategic routes, here the important thing is to identify through the traffic lights of the matrix, the strategic possibilities of the business and the possibility of jumping to a more comfortable competitive position depending on the strategies and / or changes in the industry

Red Danger concentrate to a niche of a market or withdraw

Yellow Caution careful selection of the strategists

Green Large Number of Strategic Options

Strategic Management Matrix

Towards the elaboration of the strategic plan

Having very clear what is the strategic route for an industry with a certain stage of maturity and competitive position of the CEN, it is time to design the plan, for this, there are a series of support strategies that have priority of application,

Considering the limitation they have: resources, time and money, are a series of strategies that minimize risk and seek to improve the competitive position, remember that they must be selected in a manner consistent with the strategic route.

A strategic plan for the organization encourages the participation of the different departments and the business to know the future you want to build, for example:

• It encourages the link between the different working groups.

• Increased knowledge of the entity itself, which allows detecting areas for improvement.
• It allows you to detect opportunities, classify them in order of priority and exploit them.
• It prepares the organization to keep up with changes, and prepares it to better manage those that are
• Adverse.
• It allows to improve the decision-making process.
• It decreases the amount of resources and time spent correcting improvised decisions.

• Encourages reasoning by anticipating facts.
• It helps prioritize issues based on their importance and impact on the organization.
• A key requirement for effective strategy formulation is coherence between strategic action programmes and
• The previous results: as are the establishment of the philosophical platform, the opportunities and threats theyen

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