1. CHAPTER 3:
STRATEGIC PLANNING

2. Strategic Management Strategic Human Resource Management
Involves aligning initiatives involving how people are managed with organizational mission & objectives

3. Models of Strategy Industrial Organization (O/I) Model
External environment is primary determinant of organizational strategy rather than internal decisions of managers
Environment presents threats & opportunities
All competing organizations control or have equal access to resources
Resources are highly mobile between firms
Organizational success is achieved by
Offering goods & services at lower costs than competitors
Differentiating products to bring premium prices

4. Models of Strategy Resource-Based View (RBV)
An organization’s resources & capabilities, not external environmental conditions, should be basis for strategic decisions
Competitive advantage is gained through acquisition & value of organizational resources
Organizations can identify, locate & acquire key valuable resources
Resources are not highly mobile across organizations & once acquired are retained
Valuable resources are costly to imitate & non-substitutable

5. 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 is determined by resources

6. The Process of Strategic Management
Mission statement
Environmental analysis
Organizational self-assessment
Establishing goals & objectives

7. Exhibit 3-1 Process of Strategic Management

8. Mission Statement
Explains purpose & reason for existence
Usually very broad
No more than a couple of sentences
Serves as foundation for everything organization does

9. American Express Mission Statement
“The mission of our program is to bring to life the
American Express value of good corporate citizenship by supporting diverse communities in ways that enhance the company’s reputation with employees, customers, business partners and other stakeholders.”

10. Analysis of Environment
Critical components of external environment
Competition
Industry structure
Government regulations
Technology
Market trends
Economic tends

11. Organization Self-Assessment
Identify primary strengths & weaknesses
Find ways to capitalize on strengths
Find ways to improve or minimize weaknesses
Examine resources
Physical
Human
Technological
Capital

12. Organization Self-Assessment
Examine internal management systems
Culture
Organization structure
Power dynamics & policy
Decision-making processes
Past strategy & performance
Work systems

13. Establishing Goals & Objectives
Goals should be SMART
Specific
Measurable
Attainable
Relevant
Time bound
Goals should be flexible as well.

14. Levels of Strategy Corporate Level Strategy Completive Strategy
Business 1
Business 1 Functional Strategy
Marketing Dept.
HR Dept.
Competitive Strategy
Business 2
Business 2 Functional Strategy

15. 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
HR Issues
Planning for new hiring
Alerting current employees
Ensuring quality & 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
Merging organizations
Dismissing redundant employees

16. 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 & develop specific HR retention strategies to keep them

17. Corporate Strategies: Turnaround or Retrenchment
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”

18. 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
HR strategy focuses on short-term performance measures of results & promoting efficiency through job specialization & cross-training

19. 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
HR strategy focuses on external hiring of unique individuals & on retaining creative employees

20. 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 & focus on customer satisfaction are critical factors
Hiring members of target segment who are empathetic to customer in target segment

21. Thank you!