1. CHAPTER 3: STRATEGIC PLANNING
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2. 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, often over years
Examining organization and competitive environment
Establishing optimal fit between organization and its environment
Reviewing and revising strategic plan
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3. Industrial Organization (I/O) Model
Models of Strategy
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
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4. Models of Strategy 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
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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 determined by resources
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6. The Process of Strategic Management
Mission statement
Environmental analysis
Organizational self-assessment
Establishing goals and objectives
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7. Exhibit 3-1 Process of Strategic Management
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8. Explains purpose and reason for existence Usually very broad
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
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9. Solectron Mission Statement
“Our mission is to provide worldwide responsiveness to our customers by offering the highest quality, lowest total cost, customized, integrated, design, supply-chain and manufacturing solutions through long-term partnerships based on integrity and ethical business practices.”
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10. Analysis of Environment
Critical components of external environment
Competition
Industry structure
Government regulations
Technology
Market trends
Economic tends
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11. Organization Self-Assessment
Identify primary strengths and weaknesses
Find ways to capitalize on strengths
Find ways to improve or minimize weaknesses
Examine resources
Physical
Human
Technological
Capital
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12. Organization Self-Assessment
Examine internal management systems
Culture
Organization structure
Power dynamics and policy
Decision-making processes
Past strategy and performance
Work systems
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13. Establishing Goals & Objectives
Goals should be:
Specific
Measurable
Flexible
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14. 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 & 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
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15. 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
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16. 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”
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17. 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
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18. 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
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19. Business Unit Strategies: Focus
Business attempts to satisfy needs of only a particular group or narrow market segment (niche)
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 customers in target segment
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20. Exhibit 3-3 (page 1) Dyer & Holder’s Typology of Strategies
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21. Exhibit 3-3 (page 2) Dyer & Holder’s Typology of Strategies
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22. 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
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23. “People management systems” construct
Reading 3.1 (Wright, Dunford, & Snell) Human Resources & Resource Based View
“People management systems” construct
Not all competitive advantage begins with people management systems
These systems create value to the extent that they impact stock, flow, and change of intellectual capital/knowledge
Basis of core competencies
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24. Reading 3.1 Human Resources & Resource Based View
“Skill” concept expanded to consider stock of intellectual capital in firm
“Behavior” concept reconceptualized as flow of knowledge within firm through its creation, transfer, and integration
Core competence arises from combination of firm’s stock of knowledge and flow of knowledge through creation, transfer, and integration in a way that is valuable, rare, inimitable, and organized
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25. Reading 3.1 Human Resources & Resource Based View
Dynamic capability construct illustrates the interdependent interplay between workforce and core competence as it changes over time
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26. Reading 3.2 (Capelli & Crocker-Hefter) Distinctive Human Resources
“Flexibility” dimension associated with “prospectors”
“Established markets” category linked to classifications like “defenders”
Employment practices are difficult to change and transfer
Claim: core competencies should drive business strategy, and not vice versa
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27. Reading 3.2 Distinctive Human Resources
Key question: If competencies are available to everyone in an open market, how can they generate a unique competency and competitive advantage for any one firm?
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28. Reading 3.3 (Schuler) The Five P’s Model of SHRM
Philosophy
Statements of how organization values and treats employees; essentially culture of the organization
Policies
Expressions of shared values and guidelines for action on employee-related business issues
Programs
Coordinated and strategized approaches to initiate, disseminate, and sustain strategic organizational change efforts necessitated by strategic business needs
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29. Reading 3.3 The Five P’s Model of SHRM
Practices
HR practices motivate behaviors that allow individuals to assume roles consistent with organization’s strategic objectives
Three categories of roles:
Leadership
Managerial
Operational
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30. Reading 3.3 The Five P’s Model of SHRM
Processes
Continuum of participation by all employees in specific activities to facilitate formulation and implementation of other activities
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31. Reading 3.3 The Five P’s Model of SHRM
Successful SHRM efforts begin with identification of strategic needs
Employee participation is critical to linking strategy and HR practices
Strategic HR depends on systematic and analytical mindset
Corporate HR departments can have impact on organization’s efforts to launch strategic initiatives
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