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Mello_5e_CH03_PPT.pptxChapter 3: Strategic Management
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategic Management
Strategic Human Resource Management
Involves aligning initiatives involving how people are managed with organizational mission and objectives
Strategic Management Process
Determining what needs to be done to achieve corporate objectives over 3 - 5 years
Examining organization and competitive environment
Establishing optimal fit between organization and its environment
Reviewing and revising strategic plan
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Models of Strategy (1)
Industrial Organization (I/O) Model
External environment is primary determinant of organizational strategy rather than internal decisions of managers
Environment presents threats and opportunities
All competing organizations control or have equal access to resources
Resources are highly mobile between firms
Organizational success is achieved by
Offering goods and services at lower costs than competitors
Differentiating products to bring premium prices
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Models of Strategy (2)
Resource-Based View (RBV)
An organization’s resources and capabilities, not external environmental conditions, should be basis for strategic decisions
Competitive advantage is gained through acquisition and value of organizational resources
Organizations can identify, locate and acquire key valuable resources
Resources are not highly mobile across organizations and once acquired are retained
Valuable resources are costly to imitate and non-substitutable
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Contrasting the Two Approaches
Research provides support for both positions
What drives strategy?
I/O: External considerations
RBV: Internal considerations
I/O: Strategy drives resource acquisition
RBV: Strategy determined by resources
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Process of Strategic Management
Mission statement
Environmental analysis
Organizational self-assessment
Establishing goals and objectives
Setting Strategy
Identify Assumptions
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 3.1: The Process of Strategic Management
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Mission Statement
Explains purpose and reason for existence
Usually very broad
No more than a couple of sentences
Serves as foundation for everything organization does
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Amica Mission Statement
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Microsoft Mission Statement
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Analysis of Environment
Critical components of external environment
Competition
Industry structure
Government regulations
Technology
Market trends
Economic tends
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Organization Self-Assessment (1)
Identify primary strengths and weaknesses
Find ways to capitalize on strengths
Find ways to improve or minimize weaknesses
Examine resources
Physical
Human
Technological
Capital
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Organization Self-Assessment (2)
Examine internal management systems
Culture
Organization structure
Power dynamics and policy
Decision-making processes
Past strategy and performance
Work systems
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Establishing Goals and Objectives
Goals should be:
Specific
Measurable
Flexible
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 3.4: The Stages of Strategic Planning and Corresponding Roles of HR
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate Strategies: Growth
Benefits
Gaining economies of scale in operations and functions
Enhancing competitive position vis-à-vis industry competitors
Providing opportunities for employee professional development and advancement
HR Issues
Planning for new hiring
Alerting current employees
Ensuring quality and performance standards are maintained
Internal Methods
Penetration of existing markets
Developing new markets
Developing new products or services for existing or new markets
External Methods
Acquiring other organizations
Vertical integration
HR Issues in MandA
Merging organizations
Dismissing redundant employees
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate Strategies: Stability
Maintaining status quo due to limited environmental opportunities for gaining competitive advantage
Few employees will have opportunities for advancement
Critical that management identify key employees and develop specific HR retention strategies to keep them
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate Strategies: Turnaround or Retrenchment
Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive environment
Few opportunities and many environmental threats
Important to develop HR practices to manage “survivors”
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business Unit Strategies: Cost Leadership
Increases in efficiency and cutting of costs, then passing savings to consumer
Assumes price elasticity in demand for products or services is high
Assumes that customers are more price sensitive than brand loyal
HR strategy focuses on short-term performance measures of results and promoting efficiency through job specialization and cross-training
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business Unit Strategies: Differentiation
In order to demand a premium price from consumers
Attempting to distinguish organizational products or services from other competitors or
Creating perception of difference
Organization offers employees incentives and compensation for creativity
HR strategy focuses on external hiring of unique individuals and on retaining creative employees
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business Unit Strategies: Focus
Business attempts to satisfy needs of only a particular group or narrow market segment
Strategic intent is to gain consumer loyalty of neglected groups of consumers
Strategic HR issue is ensuring employee awareness of uniqueness of market segment
Thorough employee training and focus on customer satisfaction are critical factors
Hiring members of target segment who are empathetic to customer in target segment
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Exhibit 3.5: Dyer and Holder’s Typology of Strategies
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Benefits of a Strategic Approach to HR
Facilitates development of high-quality workforce through focus on types of people and skills needed
Facilitates cost-effective utilization of labor, particularly in service industries where labor is generally greatest cost
Facilitates planning and assessment of environmental uncertainty and adaptation of organization to external forces
© 2019 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
