Topic 3

THE COMPETITIVE
ENVIRONMENT

Copyright © 2012 by Cengage Learning. All rights reserved.

Learning Objectives
1. Describe the strategic context of human resource
management.
2. Identify three types of strategies and relate each to
human resource management.
3. Discuss human resource strategy formulation and
relevant organizational factors.
4. Discuss the processes through which human resource
strategy is implemented.
5. Discuss how the human resource function in
organizations can be evaluated.

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• What is an organization’s purpose?
• It is the organization’s basic reason for
existence.
• What is an organization’s mission?
• It is the organization’s statement of how it
intends to fulfill its purpose.
• Both its purpose and its mission affect an
organization’s HR practices.

The Influence of Organizational

Purpose and Mission
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• Corporate Strategy deals with determining what
businesses the corporation will operate.

• Growth Strategy focuses on growing and

expanding the business, which can be pursued
through joint ventures, or acquisitions.

Corporate Strategy and HRM

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Corporate Strategies and HRM
(con’t)

• Retrenchment strategy occurs when an

organization operations are not effective and
changes are required.

• Stability strategy maintains the status quo.

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Diversification Strategy

• Diversification strategy: occurs when an

organization adds new products and services.
• Related diversification: occurs when a firm
believes it can achieve synergy among the
various businesses it owns.
• Unrelated diversification is used when a firm
attempts to operate several unique businesses
in different unrelated markets.

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 Defender Strategy
• This strategy works best
in an environment with
relatively little
uncertainty and risk and a
high degree of stability.
• A defender should
identify a narrow niche in
the market and direct a
limited set of products or
services to that niche.

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 • This strategy works best
when the environment is
dynamic and growing and
has considerable
uncertainly and risk.
• Prospectors need to be on
constant alert to discover
and capitalize on new
ideas and opportunities.

Prospector Strategy
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• This strategy is most appropriate in relatively
stable conditions with a moderate degree of
uncertainly and risk.
• An analyzer tires to identity and take advantage
of new markets and produces while maintaining
core products and customers.

Analyzer Strategy
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Differentiation Strategy
• This strategy attempts to develop an image or
reputation for its product or service that sets
the company apart from its competitors.

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Cost Leadership Strategy

• This strategy focuses

on minimizing the
costs as much as
possible.

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Focus Strategy

• This strategy is
undertaken when an
organization tries to
target a specific segment
of the marketplace for its
products or services.

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 represents “unitary”

represents “holding company”

represents “multidivisional”

Organizational Designs
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The Impact of Unionization and Collective
Bargaining

• Labor relations is the

process of dealing with
employees who are
represented by an
employee association.

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 Motivation
• Motivation is the set of forces that causes
people to behave in certain ways, is also a
major determinant of individual performance.

• Motivation is at the heart of

what causes an employee
to choose to expend the effort
that will support any
organizational activity.
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 Understanding Stress
• Stress is a person’s adaptive
response to a stimulus that
places excessive
psychological or physical
demands on that person.
• It is important for HR
managers to include an
understanding of the
causes of stress, how stress
affects individuals, and how
organizations and individuals
can better cope with stress.

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