STRATEGIC

MANAGEME
NT:

Import
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extern
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diagno
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strateg Prepared by :

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PHD Wahabi
Rachid
The importance of strategic groups in external
diagnosis:
The first works, marking the 70s, initiated by Hunt (1972) and
impelled by The contributions of Caves & Porter (1977), are
based on an economic conception of The analysis of the
competitive structure.
The essential theoretical argument is attributed to Porter
(1979): strategic groups Because there are barriers to mobility,
the generalization of the concept of Barriers to entry, which
prevent imitation within the group. Groups and Would explain
the differences in performance. This trend is Partially
incorporating the idea that groups are formed on the basis of
resources Communities (Rumelt, 1995). By the end of the
1980s, Of cognitivist inspiration develops (Porac, Thomas &
Emme, 1987 - Reger & Huff, 1993), arguing that it is the
representation of Their competitors that nurtures the process of
grouping companies. More Recently, a fourth approach
proposes a reading in terms of partnerships and Networks
(Duysters & Hagedoorn, 1995).
In parallel with these currents, numerous empirical studies have
been developed in Limiting the definition of groups to the
similarities of behavior. In this way, In general, the concept of
strategic groups is defined in terms of Companies pursuing
similar strategies with the same resources (See for example
Harrigan, 1985). This criterion is generalized by defining a
group As a group of firms whose competitors, stocks and
Results are relevant to each other (Hatten & Hatten, 1987). This
Generalization of definitions, as well as its empirical
counterpoint (Kotha & Vadlamani, 1995) lead some authors to
criticize the concept and to conclude The absence of any real
foundation (Barney & Hoskisson, 1990).
Less radically, this debate calls for a discussion of the Formation
of strategic groups. An initial analysis makes it possible to group
them Four categories: barriers to mobility, control of resources,
perception of Competitors' behavior and business networks.
Simplification Invites us to consider two main theoretical trends:
an economic and An institutionalist approach. The first
considers only objective factors which Conditions of profit and
of equilibrium and presupposes a strong rationality Actors. The
second gives considerable weight to belief systems and
Regulations. In one case, the groups are a product of the
activity Which over-determines behavior. In the other, they are
Social constructions in which economic decisions are included.

The importance of the diagnosis of supply and demand

in the strategic diagnosis:
Market analysis is essential to match supply and demand. The
product must be in balance with the nature of consumer needs.
This will minimize the risk of product launch failure, for
example.
Its ultimate goal is to maximize the profit of your company. You
will deduce the habits related to your market and the solutions
to propose to him while avoiding possible risks.
It is important to be able to check the coherence between your
project and the needs of the consumers. You must have a
concrete idea about the current economic trends and trends of
your sector. You will determine various opportunities.
You will be able to plan your marketing strategy, business
approach and the development of your business.
The quality of your market analysis depends on several factors,
including:
Accurate collection of your data
Interpretation and use of this data
Suitability for your target population
Market research helps to deduce a diagnosis that will help in the
development and implementation of your marketing strategy.
This is one of the key elements that contribute to the success of
your project, in the short, medium and long term.
You need to understand the environment of your business. What
is your existing and potential competition?
Competitive pricing can be direct and indirect as some
companies do not produce the same products as you, but meet
the same needs. They target the same target but they provide
different solutions.

The interest of five factors of Michael Porter:

The model of the "five forces of Porter" was elaborated in 1979
by the professor of strategy Michael Porter. It considers that the
concept of competition must be broadened. Within an industry,
a "competitor" refers to any economic stakeholder who may
reduce the ability of the firms involved to generate profit.
According to Porter, five forces determine the competitive
structure of an industry of goods or services:
The bargaining power of clients,
The bargaining power of suppliers,
The threat of substitute products or services,
The threat of potential entrants to the market,
The intensity of rivalry between competitors.
The configuration, hierarchy and dynamics of these forces make
it possible to identify the key factors of success, ie the strategic
elements that must be controlled in order to prevent profit from
being captured by these five Forces to the detriment of the
firms involved; Mastery of these key factors enables companies
to gain a competitive edge. By definition, Porter's five strengths
model is characterized by a competitive environment and not
by a firm in particular: for all competitors, the analysis is the
same and the key success factors are the same. What differs is
the ability of firms to control them.
Michael Porter recommends studying the configuration and
weight of these "five forces": if the forces are intense, the
degree of freedom and room for maneuver of the firms in
question are low and their profit is generally limited; So few
forces are active, the degree of freedom and the room for
maneuver of the firms involved are high and their profit is
generally significant.
In practice, the key point is to identify and prioritize these
forces and then determine the strategic elements to control
them (these are the key success factors), thereby building the
most decisive, sustainable and the most defensible; For the
same industry, the differential in the performance of firms
results from their different control of the key factors of success,
and hence their difference in control of the forces of
competition.

The importance of financial structure in the external

diagnosis:
The financial analysis of a company cannot be separated from a
strategic diagnosis concerning it. Indeed the environment in
which the company is located (market, competition ...) as well
as its own characteristics (strengths and weaknesses) will make
it possible to specify the analysis that will be made from the
accounts. Sometimes even the strategic diagnosis will explain
some information on the balance sheet or income statement.
This diagnosis can also be used in terms of foresight. Indeed, in
the context of the valuation of companies, strategic analysis will
make it possible to better appreciate the evolutions of the
market on which the company evolves as well as the best
choices in terms of financing, diversification ....
The most difficult part of strategic diagnosis remains the
synthesis of information obtained during research. The
information obtained must be classified according to the study
grid that has been set up (SWOT matrix for example) and then
sort the ideas to be retained within each part of the table. One
can, for example, keep in mind why this diagnosis was drawn up
(long-term strategic plan, search for partners, sales ...) in order
to classify the information according to its own objectives.
If this diagnosis is made in order to prepare the company's
financial analysis, it is not necessary to push this diagnosis too
far. But it must be borne in mind that it will always be useful in
order to predict, for example, the evolution of the company's
sales, the potential buyers of the company, the measures to be
taken to solve a debt problem ...
If we take the example of a firm that has little control over its
production process, stocks are likely to represent too large an
amount in the company's balance sheet. This will be seen in the
financial analysis of the company, but it is the strategic
diagnosis that will explain why this has happened (and possibly
propose solutions for improvement).
As part of the analyzes done in investment banks, it is often a
question of finding the partners of the companies, the potential
investors ... Those will not commit only on figures, even if they
are very good. They must have a good knowledge of the
company's prospects, its operating methods and also its
handicaps. These elements can sometimes be taken into
account in the valuation of the securities of a company, but not
always. In this case, the strategic diagnosis brings new and
complementary light to the figures.
The importance of key success factors in the strategic
diagnosis :
Key success factors are studied and evaluated during strategic
approaches through SWOT (Strength-Weaknesses /
Opportunities-Threats) analysis. They are also valuable for
business portfolio diagnoses. As a reminder, a strategic activity
area, also known as DAS, is composed of a set of activities that
have close FCS and requires well-identified know-how and
resources.

During strategic segmentation work to build SARs, the SFCs are

used to build the segments. How to proceed ? By grouping
microactivities that share similar FCS and separating the
opposites.

That is, the DAS retains a strategic scope on which the

management team applies generic strategies (external growth,
alliances, vertical integration, etc.). For more operational
actions, marketing takes over.

Conclusion
The analysis of all these elements will thus make it possible to:
- determine the attractiveness or non-attractiveness of the
sector.
- make an investment decision.
- and see how the competitors act.