Strategic Management

Overall Goal of Strategic Management for an Organization

Deploy & allocate resources ==> competitive advantage

Exhibit 3-1

Process of Strategic Management

What is Strategic Management?

analyze competitive situation

develop strategic goals devise plan of action allocate resources implement plan evaluate results

Two Contrasting Approaches

Industrial Organization Model vs. Resource-Based View 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

Corporate Strategies

Corporate Strategies: Growth

1–9

Corporate Strategies: Growth

Benefits Gaining economies of scale in operations & functions Enhancing competitive position vis-à-vis industry competitors

Providing opportunities for employee professional development & advancement

1–10

Corporate Strategies: Growth - Internal

1–11


Internal Methods Penetration of existing markets Developing new markets Developing new products or services for existing or new markets

1–12


Internal Methods Penetration of existing markets Developing new markets Developing new products or services for existing or new markets

HR Issues Planning for new hiring Alerting current employees Ensuring quality & performance standards are maintained

1–13

Corporate Strategies: Growth - External

1–14


External Methods Acquiring other organizations Vertical integration

1–15


External Methods Acquiring other organizations Vertical integration

HR Issues Merging organizations Dismissing redundant employees

1–16

Corporate Strategies: Stability


Maintaining status quo due to limited environmental opportunities for gaining competitive advantage


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 & develop specific HR retention strategies to keep them

Corporate Strategies:Turnaround or Retrenchment


Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive environment

Few opportunities & many environmental threats


Downsizing or streamlining organization in cost-cutting attempt to adjust to competitive environment

Few opportunities & many environmental threats

Important to develop HR practices to manage “survivors”

Business Unit Strategies

Business Unit Strategies: Cost Leadership


Increases in efficiency & 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


Increases in efficiency & 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 & promoting efficiency through job specialization & cross-training

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 &

compensation for creativity


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 &

compensation for creativity HR strategy focuses on external hiring of

unique individuals & on retaining creative employees

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


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 & focus on

customer satisfaction are critical factors Hiring members of target segment who are

empathetic to customer in target segment

Strategic Human Resource Management: Linking the People with

the Strategic Needs of the Business

Reading 3.3Randall Schuler

Text pages 144-155

Schuler’s 5-P Model

Strategic Choice

Human Resource Needs

Skills

Behaviors

Culture

Firm Performance

Productivity

Quality

Productivity

Human Resource Actions

Behaviors

Results (Productivity, Absenteeism, Turnover)

Human Resource Capability

Skills

Abilities

Knowledge

Strategy Formulation

Strategy Implementation

HR Practices

Recruiting

Training

Performance Management

Job Analysis

Labor Relations

Employee Relations

Mission

Goals

Job DesignSelectionDevelopmentPay StructureIncentivesBenefits

Strategy Evaluation

SWO

T

Emergent Strategies

Strategic Management

Documents

Transcript of Strategic Management