Systematic understanding and critical evaluation of KEY ASPECTS OF STRATEGIC

MANAGEMENT:

The fundamentals of what is understood as Strategic Management establish

the concept of strategy corporate, business and functional. The different
phases of the process are also analyzed using a strictly rational approach to
decision-making. The problem of the identification of business objectives is
studied. The first question raised is in regard to who fixes the objectives, in
reference to the existence of other special interest groups or stakeholders,
especially managers, different from the owners, and the possibilities of the
latter to control them, a problem known as corporate governance. Especially
relevant in this section are the mission, vision and strategic objectives for the
identification of general plans for business performance. This section
concludes with a consideration of the managerial values manifested by the
assumption of the principles of corporate social responsibility and ethical
behavior. Strategic Analysis contains another two blocks: external and
internal analysis. External analysis investigates the environmental factors
that affect business performance. At the same time, within external analysis,
a distinction is usually made between the general and specific environment.
The former studies the factors that, from a generic point of view, influence
managerial behavior. The latter refers to the competitive environment; that
is, in accordance with the industry, that is, the type of activity the business
carries out. This conceptual separation arises from the different methodology
of the analysis behind each one: a study of the general environment requires
techniques such as a strategic profile of the environment, Porters
diamond and the industrial districts, while the specific environment uses
Porter's five forces analysis, industrial segmentation in strategic groups and
the analysis of competitors.

The objective of this first part is to identify the environmental opportunities

and threats for business performance as well as the strengths and

weaknesses. In this way the foundations are laid for the establishment of
different strategies.
The second part deals with Strategy Formulation. The diversity of qualifying
criteria with regard to strategic alternatives is significant. For this reason, we
have opted for the use of differentiation by levels of decision, distinguishing
between corporate levels, strategies at the level of the business and
functional strategies.
It is important to conceptually distinguish these levels since they imply
different decisional situations. At the corporate level, general questions,
referring fundamentally to the definition of the scope of activity and to the
different types of development, are raised. At this level, a global vision of the
business is therefore necessary as a starting point for the possible
identification of business opportunities and consequent decision-making.
At the business level, the main problem is how to be more competitive and
successful in concrete businesses, once they are defined. At this point,
decision-making is related to the type of activity carried out and the
identification of the best options to compete in these activities. Lastly, at a
functional level, the decisions to be made are related to the functional areas
of the business, that is: production and technology, financing, marketing,
purchasing and human resources.
In the section on Strategy Formulation, only corporate and business
strategies are taken into consideration, although a brief reference is made to
strategic implementation. Strategies at the business level are included in the
block where competitive strategies, strategies based on industrial
characteristics and strategies for technology-based industries are examined.
All these strategies attempt to identify the possibilities of business

performance in order to better compete on the marketplace, in search of

competitive advantages that allow the business to isolate itself from
competitors and consequently obtain higher returns. Chapter 8 deals with
the important question of obtaining sustained competitive advantages in
order to obtain higher profitability. After an introduction dealing with the
creation and maintenance of competitive advantage, an in-depth inquiry into
the two classic advantages proposed by Porter is made: cost leadership and
product differentiation. The analysis is completed by expanding the original
model in order to identify hybrid situations to compete.

organizational change are introduced, highlighting four main aspects:

organizational design, managerial systems and leadership, human resource
management and corporate culture.
These four aspects are dealt with the first aspect which refers to how the
organizational structure facilitates or harms the implementation of a
particular strategy, at both the corporate and business level. The second one
deals with the skills and characteristics that management requires to carry
out implementation. The third aspect analyzes the role of the human factor
in the success of the strategy and the related need to define a specific policy
in that respect. The fourth underlines the role of culture as an accelerating or
delaying factor of change that implies putting the strategy into practice.
Planning and control systems that complete the process of Strategic
Management. Planning is precisely the system through which this process is
formalized and which allows for the elaboration of the strategic business
plan. As a part of strategic planning, a brief analysis of functional strategies
is carried out, including production, financial, commercial and supply
strategies, since the rest have been taken into consideration in other parts of
the books.

The design of the strategic control system, necessary for the evaluation and
follow-up of the entire process, completes the model. In this respect,
characteristics, methods and informative needs to put strategic control into
practice are studied, as well as the specific problems in this context such as
the measurement of business results, the control of organizational units and
the information system for strategic control.
Understanding and use of Bench Marking:

Benchmarking is a way of discovering what is the best performance being

achieved whether in a particular company, by a competitor or by an entirely
different industry. This information can then be used to identify gaps in an
organizations processes in order to achieve a competitive advantage. Thus it
is important for Six Sigma practitioners to:
Understand fully the purpose and use of benchmarking.
Understand the difference between benchmarking and competitor research.
Gain insight to ensure that benchmarking is in alignment with the companys
management objectives.
Benchmarking as a Tool
Benchmarking is a process for obtaining a measure a benchmark. Simply
stated, benchmarks are the what, and benchmarking is the how. But
benchmarking is not a quick or simple process tool. Before undertaking a
benchmarking opportunity, it is important to have a thorough understanding
of the companys guidelines. Some companies have strict guidelines as to
what information can be gathered, and whom practitioners can contact to
get that information. Depending on the size of the company, practitioners
may be surprised at what is readily available in-house.

Benchmarking is not just a matter of making inquiries to other companies or

touring and documenting another companys facilities or processes. When
making use of benchmarking, a company should not limit the scope to its
own industry, nor should benchmarking be a one-time event.

Benchmarking Versus Competitor Research:

While competitor research is neither a better nor a worse practice than

benchmarking, the important thing is to understand that there is a difference
between the two. Available time and resources will help decide which tool
will add the most value. The following table represents experience in dealing
with the two practices:

Benchmarking

Focuses on best practices

Strives for continuous improvement

Partnering to share information

some

Needed to maintain a competitive edge

Adapting based on customer needs after examination of the best

Attempting to mirror another company/process

Competitor Research

Focuses on performance measures

Bandage or quick fix
Considered corporate spying by
Simply a nice to have

Three Primary Classifications of Benchmarking

Although there are many forms of benchmarking, they can be classified into
three categories internal, competitive and strategic.
Strategic Benchmarking:

Going outside ones own industry is often challenging for a company. Keep in
mind, however, that customer satisfaction is driven by critical-to-quality
measures that are similar regardless of the industry.
For example, when considering the metric, wait times, it does not matter
whether waiting for a car repair at a body shop, or to make a deposit in a
bank lobby, customers do not want to wait in long lines. Similarly, whether
using a telephone help line of a cable company or of a favorite department
store, customers do not want to remain on hold. They want their concerns

addressed quickly and efficiently.

In 2004, a leading company identified customer satisfaction to have a
benchmark of 92 percent. A key dissatisfier was wait time. The gap between
an organizations current customer satisfaction score and the benchmark of
92 percent represents the ultimate goal to strive for in a multigenerational
plan
Bottom line: A lot can be learned from going outside ones own industry
because many customer concerns are the same.
Internal benchmarking is used when a company already has established and
proven best practices and they simply need to share them. Again, depending
on the size of the company, it may be large enough to represent a broad
range of performance (i.e., cycle time for opening new accounts in branches
coast to coast). Internal benchmarking also may be necessary if comparable
industries are not readily available.
Competitive benchmarking is used when a company wants to evaluate its
position within its industry. In addition, competitive benchmarking is used
when a company needs to identify industry leadership performance targets.
Strategic benchmarking is used when identifying and analyzing world-class
performance. This form of benchmarking is used most when a company
needs to go outside of its own industry. Six Sigma often uses Hoshin to
ensure that all employees are knowledgeable about the strategic direction
for the company. Within a companys Hoshin plan, goals are established
relative to benchmarks set by world-class organizations. Often, these
benchmarks are obtained from outside industries.

Steps Involved in Benchmarking

It is important that Six Sigma practitioners have a thorough understanding of
their own companys guidelines before undertaking a benchmarking
opportunity. The following is a list of the vital few steps involved in
benchmarking. These steps should be tailored based on company policies,
resource availability and the project or process one is dealing with:
1. Understand the companys current process performance gaps. This will
help decide what needs benchmarking.
2. Obtain support and approval from the executive leadership team. That
approval and support will assist with eliminating roadblocks, providing
adequate resources and expediting the benchmark-gathering process.
3. Document benchmarking objectives and scope. This is a necessity for any
project.
4. Document the current process. Without up-to-date knowledge of the
current process:
5. Agree on the primary metrics. Benchmarking measurements are used as
the basis of many comparisons:
6. The metrics should be put in writing. In particular:
7. Agree on what to benchmark. Everyone must be in agreement on what to
benchmark prior to any benchmark gathering initiative in order to:
8. Develop a data collection plan.
9. Identify research sources and initiate data gathering.
10. Design a screening survey to assist with partner selection.
Characteristics of the survey are important:
11. Determine how to contact and screen companies.
12. Design a detailed survey to gather information.
13. Decide if gathered information meets original objectives.
14. Conduct a site visit.
15. Apply the learning to performance gaps.

16. Communicate to the executive leadership to ensure continued support.

17. Develop a recommended implementation plan with process owner.
18. Know when to update and recalibrate.
CASE STUDY: BAGGAGE BLUNDERS:

Heathrow Terminal 5 is the newest of Heathrow's terminals. It was opened in

2008 at a cost of 4 billion, and its five floors are large enough to hold 50
football pitches. It is used exclusively by British Airways and Iberia, and
provides a huge range of facilities for travelers, including restaurants, shops,
hotels, car hire services, business services, parking and bureau de change
facilities.
The design of the new terminal began in 1989, but government planning
permission was only granted in November 2001. The terminal was officially
opened by Queen Elizabeth II on the 14th March 2008 and was open to
passengers on the 27th March 2008. In 2013 29.8 million passengers flew
from Terminal 5. On the day of its operational opening, March 27th, 2008,
just two weeks after the Queen had been officially opening the Terminal and
those quotes above had been given, disaster struck. A combination of
problems led to complete chaos with passengers unable to check-in hold
baggage and 68 flights had to be cancelled. The headlines in the papers next
day were uncompromising. In a reference to T5s campaign about Making
History, the Times piece was headlined Making History? It is memorable but
for all the wrong reasons. The chaos continued into the weekend with more
flight cancellations and baggage being lost.
The problems began when staff and passengers arriving at the new terminal
at around four in the morning of 27th March had trouble locating car parks
and car parking spaces. There was a shortage of specially designated spaces
in some car parks. This was exacerbated because some staff overflow car
parks were not open early in the morning. As a result some staff were stuck

in their cars driving around seeking places to park when they should have
been going through security checks before moving to the check-in desks.
The delays in finding appropriate parking spaces were compounded when
staff reached the terminal building itself. There were problems with signage.
One BA check-in attendant who spoke to the BBC said It took an hour for
people to get to the right place. The place is so enormous, we dont know
where were going; we have been given no maps, no numbers to ring. Some
staff had difficulty finding the locations for security checkpoints which they
needed to pass through to get airside. These delays were compounded by
problems at the security checkpoints. Long queues started to build up at
these security checkpoints.
Once staff had managed to find and get through security checkpoints they
encountered other problems. Some workers in the baggage handling sorting
area, for example, reported being unable to log on to the computer system.
Others who had been provided with new hand-held equipment running the
Resource Management System (RMS) which was supposed to allocate
baggage handling staff to their duties unloading or loading specific flights
found they could not operate the systems properly. This meant workers who
had successfully managed to gain access to their work areas were unaware
of the tasks they had been allocated. This affected both outgoing and
incoming baggage.
BA staff that had managed to find parking spaces and to navigate their way
around the new building to their check-in desks were unaware of the
problems in baggage handling and continued to load more suitcases to the
baggage system. With not enough baggage handling staff to take luggage off
the underground conveyors, the system soon became completely clogged.
This led to long delays in planes taking off waiting for the baggage.

Conclusions / lessons learned:

The approach to integrate the many elements of the high-level baggage

control system components into the emulation environment gave the project
many benefits. It enabled us to deliver software to site with a much greater
level of maturity, with many software errors solved that would not have been
discovered until the advanced stage of site integration. Having a controlled
environment for which to perform a greater range of exceptional condition
testing meant improved robustness of the shipped software. Once
configured, the emulation environment provides the perfect medium for
testing of software modifications prior to implementation on production
systems. All of these benefits are helping BAA deliver a fully operational
baggage system for Terminal 5, on time and on budget.
WHAT WENT WRONG AND How Can British Airways Recover from the Terminal 5
Disaster?

Search facilities for both staff and passengers (including transfer search)
were not ready.
Staff facilities including parking were not ready.
A number of passenger and staff lifts were either not fully commissioned or
were unserviceable for use on the day.
jetties to transfer passengers on and off the planes failed to perform as
specified and caused frequent stoppages which meant maintenance crews
having to reset the operating system on each jetty before they could be reused, leading to departure and arrival delays.
Regular, fixed electrical ground power units failed necessitating the
unplanned towing of mobile power units around the apron.
Stand guidance systems were incorrectly calibrated requiring attendance by
airfield signaling marshals.
Staff accommodation areas and staff access routes were not fully completed
or fitted out.
Execution, handling and running: The automated temperature controls failed.

The detailed coordination of a complex operation involving many people,

facilities, or supplies suffered a major failure. This should not be repeated in
future.
STRONG Leadership and strong communication with passengers:
Crisis management: an organization should deal with a major event that
threatens to harm the organization, its stakeholders, or the general public as
well as the customers. The study of crisis management originated with the
large-scale industrial and environmental disasters in the 1980sIt is
considered to be the most important process in public relations.
References:
Benchmarking by Michael J. Spendolini
Manager's Guide to Crisis Management [Jonathan Bernstein]