Strategic

Strategic Management
Management

•• Strategic
Strategic Human
Human Resource
Resource Management
Management
–– Involves
Involvesaligning
aligninginitiatives
initiativesinvolving
involvinghow
howpeople
peopleare
are
managed
managedwith
withorganizational
organizationalmission
missionand
andobjectives
objectives

•• Strategic
Strategic Management
Management Process
Process
–– Determining
Determiningwhat
whatneeds
needstotobe bedone
donetotoachieve
achievecorporate
corporate
objectives,
objectives,often
oftenover
over33--55years
years
–– Examining
Examiningorganization
organizationand andcompetitive
competitiveenvironment
environment
–– Establishing
Establishingoptimal
optimalfitfitbetween
betweenorganization
organizationand
andits
its
environment
environment
–– Reviewing
Reviewingand
andrevising
revisingstrategic
strategicplan
plan
1–1
 Models
Models of
of Strategy
Strategy

•• Industrial
Industrial Organization
Organization (I/O)
(I/O) Model
Model
–– External
Externalenvironment
environmentisisprimary
primarydeterminant
determinantofoforganizational
organizational
strategy
strategyrather
ratherthan
thaninternal
internaldecisions
decisionsofof managers
managers
–– Environment
Environmentpresents
presentsthreats
threatsand
andopportunities
opportunities
–– All
Allcompeting
competingorganizations
organizationscontrol
controlororhave
haveequal
equalaccess
accesstoto
resources
resources
–– Resources
Resourcesarearehighly
highlymobile
mobilebetween
betweenfirms
firms
–– Organizational
Organizationalsuccess
successisisachieved
achievedby:
by:
•• Offering
Offeringgoods
goodsand
andservices
servicesatatlower
lowercosts
coststhan
than
competitors
competitors
•• Differentiating
Differentiatingproducts
productsto tobring
bringpremium
premiumprices
prices
1–2
 Models
Models of
of Strategy
Strategy

•• Resource-Based
Resource-Based View
View (RBV)
(RBV)
––AnAnorganization’s
organization’sresources
resourcesand andcapabilities,
capabilities,not
notexternal
external
environmental
environmentalconditions,
conditions,should
shouldbe bebasis
basisfor
forstrategic
strategicdecisions
decisions
––Competitive
Competitiveadvantage
advantageisisgained
gainedthrough
throughacquisition
acquisitionand
andvalue
value
ofoforganizational
organizationalresources
resources
––Organizations
Organizationscan
canidentify,
identify,locate
locateandandacquire
acquirekey
keyvaluable
valuable
resources
resources
––Resources
Resourcesarearenot
nothighly
highlymobile
mobileacross
acrossorganizations,
organizations,and
and
once
onceacquired
acquiredare
areretained
retained
––Valuable
Valuableresources
resourcesare arecostly
costlytotoimitate
imitateand
andnon-substitutable
non-substitutable

1–3
 Contrasting
Contrasting the
the Two
Two Approaches
Approaches

•• Research
Research provides
provides support
support for
for both
both
positions
positions
•• What
What drives
drives strategy?
strategy?
–– I/O:
I/O:External
Externalconsiderations
considerations
–– RBV:
RBV:Internal
Internalconsiderations
considerations
•• I/O:
I/O: Strategy
Strategy drives
drives resource
resource acquisition
acquisition
•• RBV:
RBV: Strategy
Strategy determined
determined byby resources
resources

1–4
 The
The Process
Process of
of Strategic
Strategic Management
Management

•• Mission
Mission statement
statement
•• Environmental
Environmental analysis
analysis
•• Organizational
Organizational self-assessment
self-assessment
•• Establishing
Establishing goals
goals and
and objectives
objectives

1–5
 Exhibit
Exhibit3-1
3-1
Process
Process of
of Strategic
Strategic Management
Management

1–6
 Mission
Mission Statement
Statement

•• Explains
Explains purpose
purpose and
and reason
reason for
for existence
existence
•• Usually
Usually very
very broad
broad
•• No
No more
more than
than aa couple
couple of
of sentences
sentences
•• Serves
Serves as
as foundation
foundation for
for everything
everything
organization
organization does
does

1–7
 Analysis
Analysis of
of Environment
Environment

•• Critical
Critical components
components of
of external
external
environment
environment
–– Competition
Competition
–– Industry
Industrystructure
structure
–– Government
Governmentregulations
regulations
–– Technology
Technology
–– Market
Markettrends
trends
–– Economic
Economictends
tends

1–8
 Organization
Organization Self-Assessment
Self-Assessment

•• Identify
Identify primary
primary strengths
strengths and
and weaknesses
weaknesses
•• Find
Find ways
ways toto capitalize
capitalize on
on strengths
strengths
•• Find
Find ways
ways toto improve
improve or
or minimize
minimize
weaknesses
weaknesses
•• Examine
Examine resources
resources
–– Physical
Physical
–– Human
Human
–– Technological
Technological
–– Capital
Capital
1–9
 Organization
Organization Self-Assessment
Self-Assessment

•• Examine
Examine internal
internal management
management systems
systems
–– Culture
Culture
–– Organization
Organization structure
structure
–– Power
Power dynamics
dynamics and
and policy
policy
–– Decision-making
Decision-making processes
processes
–– Past
Past strategy
strategy and
and performance
performance
–– Work
Work systems
systems

1–10
 Establishing
Establishing Goals
Goals && Objectives
Objectives

•• Goals
Goals should
should be:
be:
–– Specific
Specific
–– Measurable
Measurable
–– Flexible
Flexible

1–11
 Corporate
Corporate Strategies:
Strategies: Growth
Growth
••Benefits
Benefits ••Internal
InternalMethods
Methods
––Gaining
Gainingeconomies
economiesofofscale
scaleinin ––Penetration
Penetrationofofexisting
existingmarkets
markets
operations
operationsandandfunctions ––Developing
functions Developingnew
newmarkets
markets
––Enhancing
Enhancingcompetitive
competitiveposition ––Developing
position Developingnew
newproducts
productsoror
vis-à-vis
vis-à-visindustry
industrycompetitors services
competitors servicesfor
forexisting
existingorornew
new
––Providing
Providingopportunities
opportunitiesfor
for markets
markets
employee
employeeprofessional
professional ••External
development ExternalMethods
Methods
developmentand andadvancement
advancement ––Acquiring
Acquiringother
otherorganizations
organizations
••HR
HRIssues
Issues ––Vertical
Verticalintegration
integration
––Planning
Planningfor
fornew
newhiring
hiring ••HR
HRIssues
Issues
––Alerting
Alertingcurrent
currentemployees
employees ––Merging
Mergingorganizations
organizations
––Ensuring
Ensuringquality
quality&&performance
performance
standards ––Dismissing
Dismissingredundant
redundantemployees
employees
standardsare
aremaintained
maintained

1–12
 Corporate
Corporate Strategies:
Strategies: Stability
Stability

•• Maintaining
Maintaining status
status quo
quo due
due to
to limited
limited
environmental
environmental opportunities
opportunities for
for gaining
gaining
competitive
competitive advantage
advantage
•• Few
Few employees
employees will will have
have opportunities
opportunities for
for
advancement
advancement
•• Critical
Critical that
that management
management identify
identify key
key
employees
employees and and develop
develop specific
specific HRHR
retention
retention strategies
strategies to
to keep
keep them
them

1–13
 Corporate
Corporate Strategies:
Strategies:
Turnaround
Turnaround or
or Retrenchment
Retrenchment
•• Downsizing
Downsizing or or streamlining
streamlining organization
organization in
in
cost-cutting
cost-cutting attempt
attempt toto adjust
adjust to
to competitive
competitive
environment
environment
•• Few
Few opportunities
opportunities and
and many
many environmental
environmental
threats
threats
•• Important
Important to
to develop
develop HRHR practices
practices to
to
manage
manage “survivors”
“survivors”

1–14
 Business
Business Unit
Unit Strategies:
Strategies: Cost
Cost Leadership
Leadership

•• Increases
Increasesin inefficiency
efficiencyand
andcutting
cuttingof
ofcosts,
costs,then
thenpassing
passing
savings
savingsto toconsumer
consumer
•• Assumes
Assumespricepriceelasticity
elasticityin
indemand
demandforforproducts
productsororservices
services
isishigh
high
•• Assumes
Assumesthat thatcustomers
customersarearemore
moreprice
pricesensitive
sensitivethan
than
brand
brandloyal
loyal
•• HR
HRstrategy
strategyfocuses
focusesononshort-term
short-termperformance
performancemeasures
measures
of
ofresults
resultsand
andpromoting
promotingefficiency
efficiencythrough
throughjob
job
specialization
specializationandandcross-training
cross-training

1–15
 Business
Business Unit
Unit Strategies:
Strategies: Differentiation
Differentiation

•• In
Inorder
orderto
todemand
demandaapremium
premiumprice
pricefrom
fromconsumers
consumers
–– Attempting
Attemptingtotodistinguish
distinguishorganizational
organizationalproducts
productsororservices
servicesfrom
fromother
other
competitors
competitorsoror
–– Creating
Creatingperception
perceptionofofdifference
difference
•• Organization
Organizationoffers
offersemployees
employeesincentives
incentivesand
and
compensation
compensationforforcreativity
creativity
•• HR
HRstrategy
strategyfocuses
focuseson onexternal
externalhiring
hiringof
ofunique
unique
individuals,
individuals,and
andon
onretaining
retainingcreative
creativeemployees
employees

1–16
 Business
Business Unit
Unit Strategies:
Strategies: Focus
Focus
•• Business
Businessattempts
attemptsto tosatisfy
satisfyneeds
needsof
ofonly
onlyaaparticular
particular
group
groupor
ornarrow
narrowmarket
marketsegment
segment(niche)
(niche)
•• Strategic
Strategicintent
intentisisto
togain
gainconsumer
consumerloyalty
loyaltyof
ofneglected
neglected
groups
groupsof
ofconsumers
consumers
•• Strategic
StrategicHR
HRissue
issueisisensuring
ensuringemployee
employeeawareness
awarenessof of
uniqueness
uniquenessof ofmarket
marketsegment
segment
–– Thorough
Thoroughemployee
employeetraining
trainingand
andfocus
focuson
oncustomer
customersatisfaction
satisfactionare
are
critical
criticalfactors
factors
–– Hiring
Hiringmembers
membersofoftarget
targetsegment
segmentwho
whoare
areempathetic
empathetictotocustomers
customersinin
target
targetsegment
segment

1–17
Dyer
Dyer && Holder’s
Holder’s Typology
Typology of
of Strategies
Strategies

1–18
Dyer
Dyer && Holder’s
Holder’s Typology
Typology of
of Strategies
Strategies

1–19
 Merger
Merger && acquisition
acquisition strategies
strategies

•• AA Merger
Merger isis aa combination
combination of of two
two oror more
more
businesses
businesses in in which
which one
one acquires
acquires thethe assets
assets and
and
liabilities
liabilities of
of the
the other
other in
in exchange
exchange for for stock
stock or
or
cash
cash or
or both.
both.
•• Companies
Companies are are dissolved
dissolved andand assets
assets and
and liabilities
liabilities
are
are combined
combined and and new
new stock
stock isis issued.
issued.
 Guidelines
Guidelines for
for HR
HR professionals
professionals for
for
handling
handling Mergers
Mergers && Acquisition
Acquisition
•• Insist
Insiston
onearly
earlyinvolvement
involvement
•• Document
Documenteverything
everything
•• Learn
Learnthe
theother
othercompany’s
company’spersonality
personality& &culture
culture
•• As
Asplanning
planningprogresses
progressesuseuseaa“plan
“plan,announce
,announce& &act”
act”
pattern
pattern
•• Employees
Employeesabout
aboutto
toloose
loosejobs
jobsmust
mustbebeinformed
informedwell
wellin in
advance
advancehowever
howeverthey
theyshould
shouldbe beinduced
inducedtotostay
stayas
aslong
longasas
company
companyneeds
needsthem.
them.
•• Eliminate
Eliminate“we/they”
“we/they”attitude
attitudebybymixing
mixing
•• Staff
Staffareas
areaswill
willbe
behit
hitherd
herdand
andhence
hencepay
payattention
attentionininthese
these
areas.
areas.
•• Proper
Propercommunications
communicationsto toall
allconcerned
concernedformal
formalororinformal
informal
leaders
leadersto
toenhance
enhancesecurity
securityandandreduce
reducerumours.
rumours.
 Benefits
Benefits of
of aa Strategic
Strategic Approach
Approach to
to HR
HR

•• Facilitates
Facilitates development
development of of high-quality
high-quality workforce
workforce
through
through focus
focus onon types
typesofof people
peopleandand skills
skillsneeded
needed
•• Facilitates
Facilitates cost-effective
cost-effectiveutilization
utilization of
of labor,
labor,
particularly
particularly in
in service
service industries
industries where
where labor
labor isis
generally
generally greatest
greatest cost
cost
•• Facilitates
Facilitates planning
planning andand assessment
assessment of of
environmental
environmental uncertainty,
uncertainty, and
and adaptation
adaptation ofof
organization
organization toto external
external forces
forces

1–22
Human
Human Resources
Resources && Resource
Resource Based
Based View
View

•• ““People
People management
management systems”
systems”
construct
construct
–– Not
Not all
all competitive
competitive advantage
advantage begins
begins with
with
people
people management
management systems
systems
–– These
These systems
systems create
create value
value toto the
the extent
extent that
that
they
they impact
impact stock,
stock, flow,
flow, and
and change
change ofof
intellectual
intellectual capital/knowledge
capital/knowledge
–– Basis
Basis ofof core
core competencies
competencies

1–23
Human
Human Resources
Resources && Resource
Resource Based
Based View
View

•• ““Skill”
Skill” concept
concept expanded
expanded to to consider
consider stock
stock ofof
intellectual
intellectual capital
capital in
in firm
firm
•• ““Behavior”
Behavior” concept
concept reconceptualized
reconceptualized as as flow
flow ofof
knowledge
knowledge withinwithin firm
firm through
through itsits creation,
creation,
transfer,
transfer, and
and integration
integration
•• Core
Core competence
competence arisesarises from
from combination
combination of of
firm’s
firm’s stock
stock of of knowledge
knowledge and and flow
flow ofof knowledge
knowledge
through
through creation,
creation, transfer,
transfer, andand integration
integration in in aa
way
way that
that isis valuable,
valuable, rare,
rare, inimitable,
inimitable, andand
organized
organized

1–24
Human
Human Resources
Resources && Resource
Resource Based
Based View
View
•• Dynamic
Dynamic capability
capability construct
construct illustrates
illustrates the
the
interdependent
interdependent interplay
interplay between
between
workforce
workforce and
and core
core competence
competence as as itit
changes
changes over
over time
time

1–25
 Distinctive
Distinctive Human
Human Resources
Resources
•• ““Flexibility”
Flexibility” dimension
dimension associated
associated with
with
“prospectors”
“prospectors”
•• ““Established
Established markets”
markets” category
category linked
linked to
to
classifications
classifications like
like “defenders”
“defenders”
•• Employment
Employment practices
practices are
are difficult
difficult to
to
change
change and
and transfer
transfer
•• Claim:
Claim: core
core competencies
competencies should
should drive
drive
business
business strategy,
strategy, and
and not
not vice
vice versa
versa

. 1–26
 Distinctive
Distinctive Human
Human Resources
Resources

•• Key
Key question:
question: IfIf competencies
competencies are
are
available
available toto everyone
everyone in
in an
an open
open market,
market,
how
how can
can they
they generate
generate aa unique
unique
competency
competency and and competitive
competitive advantage
advantage for
for
any
any one
one firm?
firm?

1–27
 The
The Five
Five P’s
P’s Model
Model of
of SHRM
SHRM

•• Philosophy
Philosophy
–– Statements
Statementsofofhow
howorganization
organizationvalues
valuesand
andtreats
treats
employees;
employees;essentially
essentiallyculture
cultureofofthe
theorganization
organization
•• Policies
Policies
–– Expressions
Expressionsofofshared
sharedvalues
valuesand
andguidelines
guidelinesfor
foraction
actionon
on
employee-related
employee-relatedbusiness
businessissues
issues
•• Programs
Programs
–– Coordinated
Coordinatedand
andstrategized
strategizedapproaches
approachestotoinitiate,
initiate,
disseminate,
disseminate,and
andsustain
sustainstrategic
strategicorganizational
organizationalchange
change
efforts
effortsnecessitated
necessitatedby
bystrategic
strategicbusiness
businessneeds
needs

1–28
 Reading
Reading3.3
3.3
The
The Five
Five P’s
P’s Model
Model of
of SHRM
SHRM
•• Practices
Practices
–– HR
HR practices
practices motivate
motivate behaviors
behaviors that
that allow
allow
individuals
individuals toto assume
assume roles
roles consistent
consistent with
with
organization’s
organization’s strategic
strategic objectives
objectives
–– Three
Three categories
categories ofof roles:
roles:
•• Leadership
Leadership
•• Managerial
Managerial
•• Operational
Operational

. 1–29
 Reading
Reading3.3
3.3
The
The Five
Five P’s
P’s Model
Model of
of SHRM
SHRM
•• Processes
Processes
–– Continuum
Continuum ofof participation
participation by by all
all employees
employees
inin specific
specific activities
activities toto facilitate
facilitate formulation
formulation
and
and implementation
implementation ofof otherother activities
activities

1–30
 Reading
Reading3.3
3.3
The
The Five
Five P’s
P’s Model
Model of
of SHRM
SHRM
•• Successful
Successful SHRM
SHRMefforts
efforts begin
begin with
with
identification
identification of
of strategic
strategic needs
needs
•• Employee
Employee participation
participation isis critical
critical to
to linking
linking
strategy
strategy and
and HR
HRpractices
practices
•• Strategic
Strategic HR
HRdepends
depends onon systematic
systematic and and analytical
analytical
mindset
mindset
•• Corporate
Corporate HRHR departments
departments can can have
have impact
impact on
on
organization’s
organization’s efforts
efforts to
to launch
launch strategic
strategic
initiatives
initiatives

1–31