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StrategicHuman Resourcee
ManagementSajjad Ahmad
Minhaj Univ
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Concept of Strategy
Strategy was originally a military term, defined in theOxford English Dictionary as:
The art of a commander-in-chief; the artof projecting and directing the largermilitary movements and operations of acampaign.
strategy is the ultimate responsibility of the head of theorganization, is an art and is concerned with projectingand directing large movements.
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Peter Drucker
It was Peter Drucker who long ago (1955) pointed
out in The Practice of Management the importance
of strategic decisions, which he defined as
all decisions on business objectives and on the
means to reach them.
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three outstanding pioneers
three outstanding pioneers, made their mark
Kenneth Andrews (1987),
Igor Ansoff (1987) and
Alfred Chandler (1962)
They were followed by
Michael Porter (1985), Henry Mintzberg (1987),
Hamel and Prahalad (1989) and many more who furtherdeveloped the concepts and adapted them tocontemporary conditions.
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Purpose of the Chapter-02
One of the purposes of the chapter is to counter the
belief that business strategy is a highly rational affair that
provides a firm basis for HR strategy.
Business strategy is in fact a far more intuitive,evolutionary and reactive process than most people
believe. This is the reality of strategic HRM that must beborne in mind when dealing with this compelling but
often elusive concept.
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.
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Defining the strategy
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Strategy defined
A long term plan of an organization, for how it will balance itsinternal strengths and weaknesses with external opportunities andthreats to maintain its competitive advantage. (Fred R. David)
Strategy has two fundamental meanings.
First, it is forward looking., A good strategy is one that enablesorganizations to adapt by mastering the present and pre-empting the
future.(Abell 1993)Second, Strategic Fit; A critical aspect of top managements worktoday involves matching organizational competences (internal resourcesand skills) with the opportunities and risks created by environmentalchange in ways that will be both effective and efficient over the timesuch resources will be deployed.(Hofer and Schendel 1986),Sajjad Ahmad Qadri Minhaj University, Lahore.
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Strategy defined
Strategy has been defined in other ways by the many writers on this subject.
For example:
Strategy is the determination of the basic long-term goals and objectives
of an enterprise, and the adoption of courses of action and the allocation
of resources necessary for carrying out these goals. (Chandler, 1962)
Strategy is a set of fundamental or critical choices about the ends and
means of a business. (Child, 1972)
[Strategy involves] the constant search for ways in which the firms unique
resources can be redeployed in changing circumstances. (Rumelt, 1984)
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Strategy defined cont.
Strategy should be understood as a framework of critical ends and means.(Boxall, 1996)
Business strategy is concerned with the match between the internal
capabilities of the company and its external environment. (Kay, 1999)
The emphasis (in strategy) is on focused actions that differentiate the firmfrom its competitors. (Purcell, 1999)
Strategy, then, is a set of strategic choices, some of which may be formally
planned. It is inevitable that much, if not most, of a firms strategy emergesin a stream of action over time. (Boxall and Purcell, 2003)
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.
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The concept of strategy
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The concept of strategy
The concept of strategy is based on a number of associated concepts:
Sajjad Ahmad Qadri Minhaj University, Lahore.
strategycompetitiveadvantage,
distinctivecapabilities
strategicmanagement
strategicgoals
strategiccapability
resource-based
strategy
strategicplan
StrategicIntent
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i. Competitive Advantage (C.A.)
Concept of CA formulated by Michael Porter (1985).
CA arises out of a firm creating value for its customers.
To achieve it, firms select markets in which they can excel andpresent a moving target to their competitors by continuallyimproving their position.
Differentiation: offering a product or service that is perceivedindustry-wise as being unique,
Focus: seeing a particular buyer group or product market moreeffectively or efficiently than competitors who compete morebroadly.
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i. Competitive Advantage (C.A.) Cont.
Framework of three generic strategies, innovation, quality, and
cost leadership, that organizations can use to gain competitiveadvantage.
A distinction has been made by Barney (1991) between
the competitive advantage that a firm presently enjoys but others
will be able to copy, and sustained competitive advantage, which competitors cannot imitate.
This leads to the concept of distinctive capabilities.
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Distinctive capabilities
A distinctive capability (DC, or Competence)is The opportunity for companies to s
competitive advantage is determined by their capabilities. Kay (1999), it confers on the organization (Quinn 1980)
distinctive capabilities and reproducible capabilities:
Distinctive capabilities are those characteristics that cannot be replicated by competitor
only be imitated with great difficulty.
Reproducible capabilities are those that can be bought or created by any company with re
management skills, diligence and financial resources.
Most technical capabilities are reproducible. (Kay 1999).
Prahalad and Hamel (1990) argue that competitive advantage stems in the long termfirm builds core competences that are superior to those of its rivals and when it le
faster and applies its learning more effectively than its competitors.
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Strategic intent
The strategic intent sequence has been defined by Miller
and Dess (1996) as:
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>> a broad vision of what the organization should be
>> the organizations mission;
>> specific goals, which are operationalized as:
>> strategic objectives
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The resource-based view
the strategic capability of a firm depends on its resource capability.
Penrose (1959), wrote that the firm is an administrative organization and a collectproductive resources.
Wernerfelt (1984), explained that strategyis a balance between the exploitation oresources and the development of new ones.
Barney (1991) argue that sustained competitive advantage stems from the acquisiteffective use of bundles of distinctive resources that competitors cannot imitate.
Competitive success does not come simply from making choices in the present; it sbuilding up distinctive capabilities over significant periods of time. (Boxall 1996)
dynamic capabilities: The capacity of a firm to renew, augment and adapt its corecompetencesover time.(Teece, Pisano and Shuen 1997)
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Strategic management
'the set of decisions and actions resulting in the formulation and
implementation of strategies designed to achieve the objectives of an
organization. 'Pearce and Robinson (1988)
Art and science of formulating, implementing, and evaluating cross-
functional decisions that enable an organization to achieve its objectiv
(Fred R David)
Boxall and Purcell (2003) believe that strategic management is a mixe
impure, interactive process, fraught with difficulties, both intellectua
and politically.
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Strategic management
Strategic management has been described by Burns (1992) as being primarily concernedwith:
the full scope of an organizations activities, including corporate objectives andorganizational boundaries;
matching the activities of an organization to the environment in which it operates;
ensuring that the internal structures, practices and procedures enable the organizationto achieve its objectives;
matching the activities of an organization to its resource capability, assessing the
extent to which sufficient resources can be provided to take advantage ofopportunities or to avoid threats in the organizations environment;
acquiring, divesting and reallocating resources;
translating the complex and dynamic set of external and internal variables that anorganization faces into a structured set of clear future objectives that can then beimplemented on a day-to-day basis.
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Strategic management
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The process of strategic management is
modelled in the Figure
It involves defining the organizations
mission, analyzing the internal and
external environment, exercising strategic
choice (there is always choice),
formulating corporate and functional
strategies and goals, implementing
strategies and monitoring and evaluatingprogress in achieving goals.
But in practice it is not as simple and
linear as that.
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Strategic goals
Strategic goals define where the organization wants to
be. They may be specified in terms of actions, quantified
in terms of growth, or expressed in general terms as
aspirations rather than specifics.
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Strategic plans
Strategic plans are formal expressions of how an organizati
intends to attain its strategic goals.
Boxall and Purcell (2003) make the point that
We should not make the mistake of equating the strategie
a firm with formal strategic plans It is better if weunderstand the strategies of firms as sets of strategic choi
some of which may stem from planning exercises and set p
debates in senior management, and some of which emerge
stream of action.Sajjad Ahmad Qadri Minhaj University, Lahore.
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.
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Strategy Formulation
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The formulation of strategy:Approaches tostrategy formulation
Whittington (1993) has identified four approaches to the formulation of strategy:
1. Classical strategy formulation as a rational process of deliberate calculation. The
process of strategy formulation is seen as being separate from the process of
implementation.
2. Evolutionary strategy formulation as an evolutionary process that is a product of
market forces in which the most efficient and productive organizations win through.
3. Processual strategy formulation as an incremental process that evolves through
discussion and disagreement. It may be impossible to specify what the strategy is untilafter the event.
4. Systemic strategy is shaped by the social system in which it is embedded. Choices
are constrained by the cultural and institutional interests of a broader society rather
than the limitations of those attempting to formulate corporate strategy.
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Approaches to strategy formulation Cont
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strategy formulation as a rational process of deliberate cprocess of strategy formulation is seen as being separate
implementation.
1. Classical
strategy formulation as an evolutionary process that is aforces in which the most efficient and productive organi2. Evolutionary
strategy formulation as an incremental process that evoand disagreement. It may be impossible to specify what after the event.3. Processual
strategy is shaped by the social system in which it is embconstrained by the cultural and institutional interests ofrather than the limitations of those attempting to formustrategy.
4. Systemic
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The classical approach to formulating
strategy
Conceptually, the classical approach as described by Whittington involvesfollowing 10 steps (implementation and monitoring steps have been adde
Whittington model):
1. Define the mission.
2. Set objectives.
3. Conduct SWOT analysis.
4. Conduct gap analysis (*)
5. Define in the light of this analysis the distinctive capabilities of the
organization.
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The classical approach to formulating
strategy
6. Define the key strategic issues emerging from the previous
analysis.
7. Determine corporate and functional strategies for achieving
goals and competitive advantage, taking into account the key
strategic issues.(**)
8. Prepare integrated strategic plans for implementingstrategies.
9. Implement the strategies.
10. Monitor implementation and revise existing strategies or
develop newSajjad Ahmad Qadri Minhaj University, Lahore.
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The reality of strategic management
The reality of strategic management is that managers attempt to
behave strategically in conditions of uncertainty, change and
turbulence, even chaos.
The phenomenon of bounded rationality as described by Miller et al
(1999) applies while people by their own lights are reasoned intheir own behaviour, the reasoning behind their behaviour is
influenced by human frailties and demands from both within and
outside the organization.
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Sajjad Ahmad Qadri Minhaj University, Lahore.
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