doi: 10.62486/agma202440

 

ORIGINAL

 

Strategic thinking as a potential factor in the growth of companies in the dairy sector

 

Pensamiento estratégico como factor potencial en el crecimiento de empresas del sector lácteo

 

Carlos Vera Pirela1 *, Aneleth Olmedo Platam1 *, German Lozano Hernandez1 *

 

1Universidad Popular del Cesar. Colombia.

 

Cite as: Vera Pirela C, Olmedo Plata A, Lozano Hernandez G. Strategic thinking as a potential factor in the growth of companies in the dairy sector. Management (Montevideo). 2024; 2:40. https://doi.org/10.62486/agma202440

 

Submitted: 05-12-2023                   Revised: 13-03-2024                   Accepted: 29-07-2024                 Published: 30-07-2024

 

Editor: Misael Ron

 

ABSTRACT

 

The article refers to how in a competitive and changing environment, dairy companies need to implement effective strategies to ensure their growth and sustainability, emerging as a crucial factor for the business success of the sector. In this same scenario, strategic thinking implies the ability to analyze the environment, identify opportunities and threats, and formulate action plans to achieve long-term objectives. This research focused on a quantitative, field, non-experimental methodology. Descriptive statistics were used to tabulate the information; the results of the study reveal a strong commitment of the company to identify market opportunities and reinforce its competitive strengths. The indicators associated with these areas showed a high level of presence within the organization, which shows a solid foundation for future growth.

 

Keywords: Strategic Thinking; Growth; Dairy Sector Companies.

 

RESUMEN

 

El extenso refiere como en un entorno competitivo y cambiante, las empresas lácteas necesitan implementar estrategias efectivas para asegurar su crecimiento y sostenibilidad, emergiendo este como un factor crucial para el éxito empresarial del sector. En este mismo escenario, el pensamiento estratégico implica la capacidad de analizar el entorno, identificar oportunidades y amenazas, y formular planes de acción para alcanzar objetivos a largo plazo. Esta investigación se focalizó en una metodología de corte cuantitativa, de campo, no experimental. Pata la tabulación de la información se utilizó la estadística descriptiva, los resultados del estudio revelan un fuerte compromiso de la empresa por identificar oportunidades de mercado y reforzar sus fortalezas competitivas. Los indicadores asociados a estas áreas mostraron un alto nivel de presencia dentro de la organización, lo que evidencia una base sólida para el crecimiento futuro.

 

Palabras claves: Pensamiento Estratégico; Crecimiento; Empresas del Sector Lácteo.

 

 

 

INTRODUCTION

Strategic thinking is a dynamic, flexible process that allows modifications in the plans to respond to changing circumstances; this allows the company to face the main problems of the organization, the change in the environment, and see the opportunities and detect threats. The development of strategic planning produces benefits related to the capacity to carry out more efficient management, freeing human and material resources, which productive efficiency and a better quality of life and work for all members (CEUPE, 2020).

In this regard, Morrisey (1996) considers that strategic thinking is focused on the most intuitive factors of the process, which will allow the execution of the organization’s mission, vision, and strategy. This phase of the process is designed to create the future perspective of the organization while establishing the foundations through which all essential planning decisions will be made.

In the same vein, he points out that the organizational planning process involves three main stages: (a) The strategic plan, in which the long-term action and work plans, as well as the required budget, are established; (b) The tactical plan, in which emphasis is placed on the analysis of critical issues, objectives and action plans, also for one year; (c) The long-term plan, in which emphasis is placed on the analysis of critical issues, objectives and action plans, also for one year. (c) The long-term plan, where the components of the previous plans are merged: the analysis of critical issues, long-term objectives, and strategic action plans covering 3 to 5 years, in which strategic thinking is immersed, where shared values, mission, vision, and strategy are established; this stage constitutes what is known today as strategic planning.

Framed in the business context, Chiavenato, in his book Strategic Planning (2016), argues that the strategic planning process is a proposal for medium and long-term competitive development to define objectives, develop strategies, and determine actions that result in increased competitiveness, all to face the challenges of an intensely dynamic and changing business environment, to achieve competitiveness and sustainability over time.

Focusing on the dairy industry, milk, and its leading derivatives are among the main elements in the household food basket, which is why they are in high demand in the market. India is the world’s largest milk producer, with 22 percent of total production, followed by the United States of America, China, Pakistan, and Brazil. The countries with the most significant surpluses of milk are New Zealand, the United States of America, Germany, France, Germany, France, Germany, Italy, Italy, Italy, Italy, Italy, Italy, Spain and the United States of America.

The countries with the most significant milk surpluses are New Zealand, the United States of America, Germany, France, Australia, and Ireland, and the countries with the largest milk deficits are China, Italy, the Russian Federation, Mexico, Algeria, and Indonesia. It is worth noting that, in the last three decades, world milk production has increased by more than 59 percent, from 530 million tons in 1988 to 843 million tons in 2018. (FAO 2020)

Likewise, dairy sector development is a sustainable, equitable, and powerful tool for achieving economic growth, food security, and poverty reduction because dairy farming is a regular source of income, provides nutritious food, diversifies risks, improves resource use, generates on-farm and off-farm employment; creates opportunities for women (e.g., cash derived from milk); provides financial stability and social standing (e.g., savings deposit, asset building). (FAO 2020)

Based on what Pinto (2017) raised, it is pertinent to note that the factors that drive the development of the dairy sector are variations in demand, advances in production, transportation, and communications technology, improved productivity at the farm level, and increased efficiency of dairy chains. In order to achieve sustainable development of the small-scale dairy sector, it is essential to create active producer associations and establish reliable dairy chains since it is crucial to create value in each activity of the dairy chain, and this is a critical point in a good action plan since this is one of the main advantages of strategic thinking because it helps the company to perform well and unite. The success of dairy sector development programs in developing countries depends to a large extent on traditional dairy consumption habits.

In Colombia, this sector currently represents 2,3 % of the national GDP and 24,3 % of the agricultural GDP, i.e., milk consumption in Colombia is also a relevant figure, being the third largest dairy sales market in Latin America and generating more than 700,000 direct jobs. However, the sector’s current situation is surprising due to the conditions and capacities of the country since Colombia has an enormous potential that would allow it to become the third largest dairy market in Latin America.

Colombia has an enormous potential to compete with the world’s major dairy powers, such as New Zealand and the United States, highlighting that Colombia is the fourth largest milk producer in Latin America behind Mexico, Brazil, and Argentina. In addition, the quality of Colombian milk is exceptionally high compared to the world’s major producers. (Pinto 2017).

It is essential to mention that Colombia is also an exporting country, and its main destination markets for Colombian supply are Venezuela, which participates with 40,3 %, Ecuador with 19 %, and the United States with 21,2 %. The exportable capacity of the dairy chain is concentrated in powdered milk, a product with a longer shelf life and more excellent value added. Exports of the cheese link were directed mainly to Venezuela (77,1 %) and the United States (12,1 %) (Gómez, 2011), without forgetting that there are factors that could lead us to compete with the power countries in this sector, one of the most important being the volume of production, which in Colombia has increased steadily over the years; while in 1980, 2,000 million liters were produced annually, today almost 7,000 million liters are produced, with an average growth rate of 3,5 %. However, the problem in the country is not centered on production but on milk processing. Only 50 % of the milk produced is estimated to be processed, so the remaining 50 % is sold at meager prices in informal markets.

Another critical point for the Colombian dairy sector is domestic consumption. Colombians consumed more than 1,050 million liters of milk and 85,000 tons of cheese and powdered milk in 2016. In addition, Colombia has the third largest consumption in Latin America, behind Brazil and Mexico, with sales exceeding USD 3,5 billion. However, in recent years, dairy consumption has mostly stayed the same with the production growth as imports of these products have increased exponentially due to the Free Trade Agreements that the Government signed with the United States and the European Union. According to Asoleche, the country is increasingly exposed to imports of dairy products from these two markets. (PORTFOLIO, 2019)

These companies have reached their level due to an exemplary implementation of the factors of strategic thinking since they have been able to provide excellent quality and innovation in their products, thus achieving customer satisfaction, which in turn produces a bond of customer loyalty with the company, thus being efficient brands with clear objectives since “strategies represent a pattern of objectives or goals, presenting them in such a way that they can define the activity to which the company is dedicated, who it is and who it will be” (Andrews, 1962). In this way, it will also be easier for the company to define the type of strategy most favorable to its needs or purposes, i.e., if it wants to reorganize, attack, grow, or create survival strategies if it is in trouble.

 

Conceptual theoretical framework

Strategic Thinking

The world is in a constant dynamism and above all taking actions of innovation, including also the commercial area, that is why if you want to survive in this area you have to keep up with the progress, because of this companies have to find ways to stay in the fight, thinking strategically, offering quality products and above all having great innovation and originality.

Throughout the years, several authors have taken the trouble to define strategic thinking, the first of which is Leidtka (1998), who defines strategic thinking as always being in search of emerging opportunities both in service of the current strategic intent or in the reconstruction of a more appropriate one, for this, organizations must know who they are and where they want to go in order to propose concrete strategies for what they want to achieve.

According to the above, this is a crucial point because it is necessary to know what organizations are facing to think of possible solutions and establish strategies that help to improve and optimize the brand. In this regard, Rico (2005) expresses that strategic thinking is to understand how the human brain is the tool used in the process; it is not based on linear thinking.

The author recommends taking advantage of the imbalance of the environment to propitiate strategic positions for the radical change of the business. This is of great importance since, as mentioned, the market is very dynamic, so companies must be flexible and be able to adapt in the same way to get the best out of each new stage.

 

Stages of Strategic Thinking

Having clear the concept of strategic thinking concerning the authors cited above, it is vital to mention its dimensions and their respective indicators. This variable, like any process, has its stages in order to prepare, exercise, and obtain results, these being the first dimension, which was proposed by Morrisey (1996), who divides strategic thinking into three stages:

1.   At this stage, the strategic plan is necessary to establish the action and work plans and the required long-term budget.

2.   In this phase, the tactical plan emphasizes analyzing critical issues, objectives, and action plans for one year.

3.   The long-term plan, here the components of the previous plans are merged: the analysis of critical issues, long-term objectives, and strategic action plans covering 3 to 5 years, in which strategic thinking is immersed, where shared values, mission, vision, and strategy are established; this stage constitutes what is known today as strategic planning.

From another perspective, Vijay Govindarajan (2005) visualizes strategic planning in three stages, which he calls “boxes”:

1.   The first box is related to managing the present, and according to the author, it is in this stage where today’s executives work the most; at the same time, he considers that it alone does not guarantee the success of the plan, given its intimate relationship with the short-term objectives.

2.   Box 2 selectively implies abandoning the past “unlearning”; it is in this process of “unlearning” that the relationship between the long term and the short term must be established; in other words, it is in this process of “unlearning” that the relationship between the long term and the short term must be established the short term, in other words, to review whether the strategic objectives are being achieved in addition to the tactical objectives.

3.   Box 3, where additional value is materialized through the use of disruptive innovations and the redesign of processes and competencies. This additional value is achieved by breaking existing paradigms and imposing a new order among the business competition. This implies monitoring the non-linear and dynamic behavior of the competitive environment.

 

Factors that Position Strategic Thinking

In the same sequence is the second dimension corresponding to the factors that position strategic thinking as a growth tool for companies since studies have shown that organizations that use this action tend to reflect favorable results, maintaining and improving day by day; within these factors are:

1.   Achievement of objectives: This is the main reason for using strategies: to fulfill a goal, to create strategic ways of working that yield good results for companies, and to solve problems best.

2.   Another factor is to enter competition; being an innovative entity and, above all, offering good quality, the brand maintains a good level of customer satisfaction, which gives way to entering competition with other brands that are dedicated to the same thing, when you reach this point, you have to keep that position through innovation strategies to capture customer attention and continue to offer quality.

3.   The last factor refers to the growth and expansion of the brand, another point that is based on key strategies to enter the big leagues of the market, such as chain stores and exports, for example, having good relations with the government. Each of these factors can be achieved by creating a coherent and effective strategic plan, which must be applied in each area of the company to achieve objectives and optimize the performance of organizations.

Along the same lines, Olay (2014) states that thinking strategically allows companies to carry out a self-study to know where they are in order to move forward and reach their objectives and to be able to reach the objective, in addition to the fact that along the way; it is possible to monitor the processes to correct the course of the organization.

 

SWOT Tool as a fundamental piece for Strategic Thinking

The last dimension is the SWOT tool as a fundamental piece for strategic thinking; this part is of great help to define what kind of strategies the company needs since this is a study of the state of both the entity and its environment; in this way are analyzed:

1.   Weaknesses are all those things in which the company does not have good performance or results.

2.   Opportunities refer to the conditions external to the organization concerning competitiveness, which are essential to reach the goal.

3.   Strengths are all the good aspects that help to obtain results and achieve objectives.

4.   Threats, which are also external to the organizations, are obstacles presented in the market that put the well-being of the organizations at risk. Once each of these has been identified, strategies for improvement or maximization of the parties begin to be considered.

According to Ponce (2006), SWOT analysis consists of an evaluation of the solid and weak factors that together diagnose the internal situation of an organization, as well as its external evaluation, i.e., opportunities and threats. It is also a tool that can be considered simple and provides an overview of the strategic situation of a given organization.

 

METHOD

This research, was directed within the descriptive type of research which under the thinking of Sampieri (2014 p. 92), as its name suggests:

“The aim is to specify the properties, characteristics, and profiles of persons, groups, communities, processes, objects, or any other phenomenon subjected to analysis. In other words, they only seek to measure or collect information independently or jointly on the concepts or variables to which they refer, i.e., their objective is not to indicate how these are related.”

Due to its focus on companies in the dairy sector, this research takes a non-experimental field design of a transectional nature. Sanca (2011) states that field research “relies on information from the object of study or those involved in it” and can also be carried out through two means; on the one hand, the census, using “demonstrable studies on the entire population” and the other hand the case study “with surveys, observations, interviews, and questionnaires.”

Due to the nature of the study, the surveys and data collection were directed to the administrative area; since this is the area responsible for the organization and planning of strategies, the surveys will be conducted through the census since this population is fully accessible. Specifically, there are sixty-one (61) people from whom information will be obtained.

 

RESULTS

After the exhaustive review of the information, its classification, organization, and ordering, the researcher proceeds to relate and compare the data obtained to interpret them and answer the questions formulated at the beginning of the research, as follows.

 

Stages of strategic thinking

 

Table 1. Stages of strategic thinking

Dimension

The stages of strategic thinking

Indicators

Strategic plan

Tactical plan

Operational plan

Average indicators

4,74

4,64

3,47

Dimension average

4,28

Average

4,00

 

In the above table, we can observe the behavior of the stages of strategic thinking as a dimension developed through indicators such as strategic, tactical, and operational plans. First, the strategic plan has an average of 4,74, representing a very high performance in relation to the scales table. Due to these results, strategic thinking is being implemented in Klaren’s dairy company.

Always highlighting the importance of this indicator, it can be said that this is the starting button for the excellent functioning of the organizations; this is supported by Morrisey (1996), who argues that “at this stage, it corresponds to establish action plans, work plans, as well as the required long-term budget” and also reinforced by Vijay Govindarajan (2005) according to the author is “at this stage where most executives work today, at the same time, considers that alone does not guarantee the success of the plan, given its intimate relationship with the short-term objectives.”

The second indicator is the tactical plan, with an average of 4,64, which also shows a very high performance, concluding that it has a strong presence within the company. This indicator is supported by Morrisey (1996), who states, “In this phase, emphasis is placed on the analysis of critical issues, objectives, and action plans, also for one year.” The idea is to find a way to meet the goals and analyze if this is right, always considering the previously established deadline, Vijay Govindarajan (2005).

The last indicator of this dimension is the operational plan, which obtained a lower result than the previous ones, with an average of 3,47, although it remains in a high category. This allows us to finalize through actions and work practices the specific objectives of the organizations so that the activities, time, and resources of these are distributed or designated, Morrisey (1996). In addition to this, Vijay Govindarajan (2005) argues that this stage influences how a new order is imposed on the business competition. “This involves monitoring the nonlinear and dynamic behavior of the competitive environment.”

The dimension, in general, obtained an average of 4,28, remaining in a very high category, so it is concluded that this makes a good presence within the company Klaren, which gives it a good presence because this dimension is the engine of the company, where every activity to be carried out in the company is planned to be this fundamental piece for obtaining good results. Despite this, it is essential to emphasize the operational plan indicator since it tends towards a moderate category despite maintaining a high behavior, which shows that it needs to be carried out correctly. Therefore, a respective analysis should be conducted to determine the failures that may be occurring in this indicator.

 

Factors that position strategic thinking

 

Table 2. Factors that position strategic thinking

Dimension

Factors that position strategic thinking

Indicators

Achievement of Objectives

Competitiveness

Growth

Average indicators

3,93

 4,64

3,47

Dimension average

4,11

Average

4,00

 

 

This table corresponds to the data from the second dimension on the factors that position strategic thinking, having as the first indicator the achievement of objectives, which yielded an average of 3,93. However, it fits in a high category; it is a low score concerning the level of importance of the indicator since this is the main reason for the use of strategies to meet a goal, creating strategic ways of working that yield good results for companies and solving problems in the best way, Contreras (2013). It is concluded that the indicator needs to have the level of presence it deserves in the excellent performance of Klaren’s company.

The second indicator of this dimension is competitiveness, with an average of 4,64, which is a very high performance. This suggests that the company is looking for a way to enter and remain in competition within its industry, giving validity to Contreras (2013).

Being an innovative entity and, above all, offering good quality, the brand remains at a good level of customer satisfaction, which gives way to entering competition with other brands that are dedicated to the same; when you reach this point, you have to maintain that position through innovation strategies to capture customer attention and continue to offer quality.

The third indicator of this indicator refers to growth; this indicator, as well as the achievement of objectives, is in a high range concerning the scale, yielding a result of 3,47, a result that should also be studied in search of improvements since it represents the search for expansion and recognition as a brand, based on key strategies to enter the big leagues of the market, such as chain stores and exports, Olay (2014) for example, having good relations with the government. This is necessary for the company to remain stagnant, which would bring problems in the long term because the market is constantly dynamism.

In general terms, the dimension yielded good results with an average of 4,11, thus interpreting that it has a very high level of presence within the company Klaren’s, so it is understood that the company manages in a good way the points that drive the growth of the organization Olay (2014, despite presenting high values concerning the table of scales the results shown in the indicators of achievement of objectives and growth present a lower level which is reason to study them and find the possible shortcomings as they are vital points that determine the performance of the organization.

 

SWOT tool

 

Table 3. SWOT tool

Dimension

SWOT tool

Indicators

Weaknesses

Opportunities

Strengths

Threats

Average indicators

3,85

4,25

4,28

3,68

Average dimension

4,02

Average

4,00

 

The last dimension of the strategic thinking variable is the SWOT tool measured with the indicators: weaknesses, opportunities, strengths, and threats. In this sense, with the weaknesses being the first indicator, which yields an average of 3,85 result, although it falls into a high category, this should have a much higher level of presence due to the importance of this indicator in the company; it is necessary to pay attention to it since it deals with everything that internally the company is doing wrong.

Due to the importance of this indicator in the company, it is necessary to pay attention to it since it deals with everything that the company needs to do better internally that does not have good performance or good results.

On the other hand, the opportunities are given. As a result, an average of 4,25, showing a very high behavior, thus demonstrating that the company Klaren’s is concerned about studying its environment and seeking ways to maintain and especially seek improvements in what they do and giving validity to what Ponce (2006) stated “referring to the external conditions to the organization, about competitiveness which is important to reaching the goal.”

The strengths are in a very high category, with an average of 4,28, which suggests that the company has the necessary resources to maintain itself, giving it the strength to stand out from its competitors. This confirms Serna’s thinking (2011) since he states that strengths “are all the good aspects it has that help to obtain results and achieve objectives.”

The last indicator of the dimension and the variable are the threats, which, unlike the strengths, show a high behavior with a moderate tendency, resulting in an average score of 3,68, which should be taken into account for further analysis since it suggests that the company presents risks caused by the environment and, although they are not related to the company, they put its welfare at risk. Ponce (2006)

The dimension of the SWOT tool maintained a very high behavior in general terms with an average of 4,00, concluding that it has a high level of presence within the company, thus sustaining that a proper analysis of the external and internal character of the company is performed, reinforcing what Ponce (2006) stated: “it is also a tool that can be considered simple and allows obtaining a general perspective of the strategic situation of a given organization.” Despite this, it is essential to pay more attention to the indicators of threats and weaknesses because they have a lower level of presence, which should be analyzed to find faults with the intention of improvement.

 Referring to the level of presence of the strategic thinking variable within the company, a result of 4,11 is found, which is in a very high category. In this sense, it is inferred that Klare implements this variable to develop its activities to support the study and analysis of its processes, in addition to seeking ways and means to achieve each proposed objective.

 

CONCLUSIONS

Once the applied survey results have been obtained and analyzed, the following conclusions can be inferred.

About the first objective, it is found that the stages of strategic thinking are identified and subsequently applied in a good way concerning the statistical results, which shows that there is proper strategic planning directed by the company’s management, highlighting the very high level of presence of the strategic plan and the tactical plan. In contrast, although the operational plan obtained a high score, it tends to moderate, which is a sign that it is not being done correctly.

The second objective refers to the factors that position strategic thinking; according to its very high statistical result, it is assumed that these factors have been adequately characterized and, therefore, that Klaren’s dairy company is concerned about maintaining and strengthening them, with the competitiveness indicator standing out among them with a very high presence in the company, On the contrary, indicators such as the achievement of objectives and growth show a lower behavior. However, even though they are in the high category, they should be studied because they are factors of great importance in the company, representing the results of the organization’s performance to a great extent.

The last objective of the research refers to the usefulness of the SWOT tool as a means of internal and external study of the company; in this sense, due to the very high result obtained in the statistical studies, it can be seen that the company keeps a proper follow-up of its activities and also of those that happen in its environment. In this way, the company’s efforts to identify opportunities and reinforce and maintain its strengths are highlighted since these indicators showed a very high level of presence within the company. On the contrary, the indicators referring to weaknesses and threats show a high behavior with a tendency to moderate. It is necessary to be alert since they could jeopardize the organization’s stability.

 

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FINANCING

The authors did not receive funding for the development of this research.

 

CONFLICT OF INTEREST

The authors declare that there is no conflict of interest.

 

AUTHORSHIP CONTRIBUTION

Conceptualization: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Data curation: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Formal analysis: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Research: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Methodology: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Project management: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Resources: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Software: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Supervision: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Validation: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Visualization: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Writing - original draft: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.

Writing - revision and editing: Carlos Vera Pirela, Aneleth Olmedo Platam, German Lozano Hernandez.