Strategic Management

Course Introduction

• A strategy can be defined as a set of decision-

making procedures to be followed by an
organisation to accomplish its goals and
objectives.

• HR of an organisation that ensures the

successful formulation and implementation of
strategies of the organisation.
 Course Introduction

• Strategic human resource management ensures a positive work environment that is capable of
utilising the individual capacity of employees, which creates a competitive advantage for the
organisation.

• John Bratton, author of ‘Human Resource Management: Theory and Practice’ (1999), SHRM is the
process of linking HR function with the strategic objectives of the organisation in order to improve
performance.
Chapter 1: Introduction to
Strategy and Strategic
Management
• Explain the concept of strategy
• Discuss various types of strategies
• Explain the concept of strategic HRM
• Discuss the role of SHRM in strategic management process
• Explain the role of HR in the formulation and implementation of strategy
 Concept of Strategy

• Plan of actions to achieve a set of pre-determined and specific goals is called Strategy
• A strategy furnishes a platform for an organisation to perform in a better manner and achieve a
competitive edge.

Video: https://www.youtube.com/watch?v=0yHwUp87xcI
 Objectives of strategy

Providing direction and stability to the Determining goals of the organisation

organisation
 Objectives of strategy
Helps prioritise its targets on the basis of Facilitating the planning and execution of long-term,
organisational resources medium-term, short-term & day-to-day plans
1. Types of Strategies
1. Types of Strategies
Corporate-level Strategy

• At the highest level, corporate strategy involves high-level strategic decisions that
will help a company sustain a competitive advantage and remain profitable in the
foreseeable future.
• Corporate-level decisions are all-encompassing of a company.
 Corporate-level Strategy

• Diversification
• Forward or backward integration
• Horizontal integration
• Profit
• Turnaround
• Divestment
• Market penetration
• Liquidation
• Concentration
• Investigation
• No change
 Corporate-level Strategy Diversification

ITC Ltd. has diversified into hotels, papers, agri-business packaging, and priming from its original
cigarette business in response to national objectives and priorities.
Corporate-level Strategy Forward Integration

Apple Business Integration

Apple has its own selling
distribution channel. As well as
it has its own manufacturing
process. In this case, Apple
uses both the backwards and
forwards integration strategies.

Apple has its own software,

hardware and retail stores.
Also, have their own services
company. Apple is the only
company who uses all
techniques and we can say
that it is vertically integrated
into everything.
 Corporate-level Strategy Forward and Backward Integration

Netflix Strategy
It is also well known for its vertically integrated into both sides. Undoubtedly, the
forward and backwards strategy.

Netflix started as a DVD rental organization but now it started its own movie or
series making production house. Who started creating Netflix original content
series. In this case, it is also vertically integrated by both sides. While on the one
hand, they start creating the series on their own so they don’t depend on tv or
outsource. On the other hand, they vertically integrated into the distribution
system. So it can capture the overall market and industry.
Corporate-level Strategy Forward and Backward Integration

Most mergers and acquisitions that occur between companies in the same
industry are considered horizontal integrations.Some well-known recent examples
of horizontal integration include Walt Disney Company's acquisition of 21st
Century Fox, Marriott International's acquisition of Starwood Hotels & Resorts and
the Facebook (Meta) acquisition of Instagram.
 Corporate-level Strategy Turnaround

FedEx was founded in 1971 by Frederick Smith with $4 million of inheritance

money and $80 million in loans and investments.

Smith first proposed the idea behind FedEx in a writing assignment for one of his
classes at Yale University, for which he earned a C.

During the first two years in business, the company accumulated enormous
amounts of debt due to rising fuel prices and was at the edge of bankruptcy.

When funds dwindled down to just $5,000, Smith decided to fly to Las Vegas and
gamble with the last of the money in an attempt to double it.

Incredibly, Smith managed to turn $5,000 into $27,000 and was able to save the
company by raising another $11 million.

By 1976 FedEx had produced its first profit of $3.6 million.

Seven years later FedEx became the first U.S. company to reach revenues of $1
billion within 10 years of the startup with no merger or acquisition and has been
thriving ever since.
Corporate-level Strategy
Corporate-level Strategy
Corporate-level Strategy
 Business-level Strategy

• At the median level of strategy are business-level decisions.

• The business-level strategy focuses on market position to help the company gain a competitive
advantage in its own industry or other industries.
Business-level Strategy
Functional-level Strategy

• At the lowest level are functional-level decisions.

• They focus on activities within and between different functions, aimed at improving the
efficiency of the overall business.
• These strategies are focused on particular functions and groups.
Functional-level Strategy
Concept of Strategic HRM

• The strategic human resource management (SHRM) deals with attracting, motivating,
retaining and utilising competent employees to achieve organisational efficiency and to
create a competitive advantage.

• Most of the highly competitive organisations such as General Electric, FedEx, Google and
Starbucks have been highly successful in utilising the potentiality of their employees in
delivering excellent products and services.
Concept of Strategic HRM

• Organisational efficiency primarily depends on the competency of employees and the ability
of the management to properly utilise human assets.

• Today, organisations have started emphasizing on the potentiality of their employees to

deliver high quality products and to gain a unique competitive advantage.
 L.L. Bean
Fortune’s 100 Best Companies to Work For, L.L. Bean’s dedication to customers through offerings
like lifetime warranties and free shipping is reflected in its internal culture.
1. L L Bean Magic
https://www.youtube.com/watch?v=lFurlm-_yLE&feature=emb_logo

2. Be an Outsider at Work #BeanOutsider​| L.L.Bean

https://www.youtube.com/watch?v=NBYsK571vF0&feature=youtu.be
 SHRM@ L.L. Bean
108-year-old retail company with a focus on outdoor apparel has a low turnover rate of just 3%
Employees enjoy perks:
 Discounted gym memberships
 Employee discounts
 Paid time off for volunteering
 College tuition reimbursement.
 SHRM @ L.L. Bean
The company sponsors excursions like kayaking and camping for the whole team Employees can even
borrow outdoor gear and take advantage of camping around Rangeley Lake (HQ) with their families.
 SHRM@ L.L. Bean
Management-wise:
L.L. Bean takes care of the team
by having regular one-on-one
meetings with employees to
discuss career development
and offering regular classes
and workshops.

“Bean’s Best” program praises

teammates who go the extra
mile with an annual celebration,
and teammates acknowledge
one another through peer
recognition programs.
 Role of SHRM

• Strategic management is a process of realising

organisational objectives through a set of pre-
determined activities.
• Strategic management can be understood as a
process of formulating, implementing, evaluating
and controlling the decisions that enable an
organisation to achieve its long-term objectives.
• Allocate an organisation’s scarce resources in an
efficient manner. Manage external forces that
influence the organisational environment.
• HR and Top management work together to
achieve business objectives.
 Role of SHRM

SHRM policies helps:

– Developing high-quality workforce by retaining talented people.

– Recruiting new staff with skills and abilities that organisation needs in the future.

– Reducing staff either by termination or attrition; regrouping tasks to create well-designed

jobs; and reorganising work units to be more efficient.

– Training to the newly-recruited staff to adjust to their roles and providing the existing staff

development opportunities to prepare them for future jobs in the organisation.

Role of SHRM
Role of SHRM

Analysing External Environment

 Role of SHRM
Organisational capability and
resource analysis
Analysing Internal Environment
Internal Environmen
Core competency

Competitive advantage
 Role of SHRM

Establishing Long-term Objectives

Role of SHRM

Generating, Analysing and Selecting Strategies

Role of SHRM

Implementing the Chosen Strategies

Role of SHRM

Evaluating and Controlling

 Role of HR

• Human resource is the most important source of gaining competitive advantage

through effective formulation and implementation of strategies.
• An efficient and competent workforce can help in implementing strategies that lead to
product differentiation, cost leadership and efficient supply chain.
• Therefore, the organisation should attract, appraise and retain employees for utilising
their knowledge and skills to effectively formulate and implement strategies and
improving its overall performance.
Chapter 2: Strategic Human
Resource Management: An
Overview
 Chapter Index
S. No Reference No Particulars Slide
From-To

1 Learning Objectives 31

2 Topic 1 Concept of HRM 32-33

3 Topic 2 Concept of Strategic HRM 34-46

4 Topic 3 Process of SHRM 47-48

5 Topic 4 Role of HR in Value Chain 49

6 Let’s Sum Up 50
• Explain the concept of HRM
• Discuss the concept of strategic HRM
• Describe the process of SHRM
• Discuss the role of HR in value chain
 1. Concept of HRM

• HRM till 1930 was known as Personnel

Management & it focused on employee-
employer relationship.
• HRM is the management of all activities
and functions related to mobilising and
developing employees, with an objective
to achieve the organisational goals.
• From the day of joining an organisation,
till the time they exit, all the activities
related to employees’ mobilisation and
development (recruitment,
compensation, training and separation)
come under the purview of HRM.
Objectives of HRM:

Helps the organisation to achieve its objectives by ensuring the availability of adequate number
of employees :
Objectives of HRM:

Making optimal utilisation of the skills and knowledge of the available employees
Objectives of HRM:

Establishing and maintaining sound organisational structure and desirable working

relationship among all the employees of the organisation
Objectives of HRM:

Forecasting the future requisition of human resource and ensuring that there is no gap between their
demand and supply
Objectives of HRM:

Creating facilities and opportunities for the individual and group development
Concept of Strategic HRM

• Strategic human resource management is the proactive management of the employee of an

organisation.
• By implementing SHRM, both the employee and employer get benefited because it handles
all issues of the organisation such as recruitment, payroll, retention, collaboration, etc.
• The SHRM resolves all organisational issues like quality, culture, structure, values, etc. in
light of the future needs of the organisation.
• With the help of the SHRM, the top-level executives realise that employees can improve their
performance and productivity if the human resource is managed strategically.
 Strategic Vs Traditional HRM

Traditional HRM Strategic HRM

Responsibility for HR Staff specialist Line managers

Partnership with internal and external

Focus Employee relations
people

Transactional, change followers Transformational, change leader and

Role of HR
and respondent initiator

Initiatives Slow, reactive and fragmented Fast, proactive and integrated

Short, medium and long depending

Time horizon Short term
upon the necessity
 Strategic Vs Traditional HRM

Traditional HRM Strategic HRM

Organic, flexible, whatever is

Control Bureaucratic roles, policies and procedures
necessary to succeed

Tight division of labour, independence, Broad, flexible, cross-training,

Job design
specialisation teams

Key environment Capital, products People, knowledge

Accountability Cost centre Investment centre

 Strategic HRM Model

• Difficulty integrating an organisational HR strategy with the corporate strategy; unless HR managers
possess the complete technical knowledge of the organisation’s products, services, competition
and markets, and know how to work with other senior managers.
• SHRM model demonstrates relationship among various organisational contributing factors &
HRM processes.
• SHRM shows linkage between corporate strategy and organisational HR strategy.
• Ensure proper formulation and implementation of a corporate strategy, some of the external and
internal factors must be considered.
 5 Elements Strategic HRM

SHRM model by Truss and Gratton (1994)

‰- The external environment: The external factors within which an organisation operates, such
as competition, market, government, political condition, etc.
– The business strategy: The overall corporate strategy that affects and affected by the SHRM
process.
– ‰‰The internal environment: The organisational context within which SHRM operates, such
as its culture, size, structure, etc.
– ‰‰HR strategy: The SHRM comprises the company’s overall HR strategy and individual
HRM practices.
– ‰‰Result: The outcomes of the process of SHRM, such as HR activities required to be
performed including staffing, training, etc.
While the ‘ideal candidate’ looks different for every role, aligning candidates against company values
is a great way to assess their culture fit and working style. King, creator of Candy Crush Saga, has
clearly defined values: ‘How we work together determines what we can achieve,’ they state on their
website. ‘Our values guide us every day in our work, in our decisions, and in our interactions with
each other and our players.’
Focus on short term growth
Challenges in Strategic HRM

Inability to think strategically

Lack of encouragement to employees

Lack of alignment in roles of HR and general manager

Non-tangible nature of HR activities

 HR Professional as a Strategic Partner

• HR is the most important asset of an organisation. By considering HR professionals as strategic

partners, a long-term relationship is built with the organisation.
• SHRM, all the human resource activities are orientated towards achieving organisational financial
objectives.
• As Strategic partner, employees feel motivated and work as a team with full cooperation towards each
other for achieving the organisational objectives.
Samsung – Employee Health

Employment health
The Device Solutions Business of Samsung Electronics endeavors to improve
the health of employees through operation of facilities such as fitness centers, in-
house affiliated clinics, and by having various programs including regular health
check-ups, infectious disease prevention/management program, and
musculoskeletal disorder prevention program.
On-site clinics offer various medical services ranting from internal medicine, dermatology, dental services
to oriental medicine. In addition, the first-aid team is ready 24/7 for emergency care and transportation of
patients to hospitals, if needed. Also, regular medical checkups are offered to timely detect disease
symptoms, prevent diseases, and improve health of employees and their spouses
Samsung's Device Solutions Business has an infectious disease prevention system to control such diseases
in workplaces through monitoring, quarantine and disinfection. We also monitor outbreaks of any
contagious diseases in countries that our employees may visit or transfer through, and prohibit business trips
to countries that present an unacceptable risk.
We provide personal emergency cards containing vital information, such as blood type, emergency
contacts and safety instructions health instructions for employees on overseas business trips to ensure that
they receive help in the event of an emergency.
Employees returning from overseas business trips receive mandatory health check-ups before they go back
to the workplace, thus preventing the spread of any infectious disease.
As part of the initiative to improve employee health, we also carry out ergonomic risk assessments that help
prevent muscle and bone diseases by identifying potential problems in production lines and workplaces.

Multiple number of prevention centers for musculoskeletal disorders are available to our employees within
the facilities of our company.
Benefits of HR Professional as a Strategic Partner

– Increases profitability of the organisation by increasing productivity of the labour

forces
– Enhances the proficiency and talent management
– Uses IT and knowledge in the course of the activities of organisations
– Facilitates the change in business environment
– Provides support to the effects of globalisation
Importance of HR Professional as a Strategic Partner

• An organisation can use the human resource information system effectively by

making human resource a strategic partner.

• To become a strategic partner, human resource requires knowledge and

information to formulate, implement and review corporate as well as HR

strategies.
Importance of HR Professional as a Strategic Partner

There are a few requirements for HR to become strategic partner, which are as

follows:

– Recruitment of right employees by aligning corporate values to the

recruitment strategy

– Effective use of communication technology

People as Strategic Assets

• In SHRM approach, when an organisation considers its human resources as its strategic assets,
employees feel motivated and their belongingness towards that organisation increases.
• The strategic assets term is used by an organisation for its human resources in order to define
the strategic behaviour of its manpower.
• The HR manager and the line managers must think strategically about the employees’
performance while combining the HR system and other organisational functions.
•Video : A day Training life in Infosys Mysore
https://www.youtube.com/watch?v=g8Wsu4N1zi4
Process of SHRM

• SHRM is defined as a management process, where various HR strategies are formed by

considering multiple strategic approaches.
• These HR strategies are formed after their integration with the overall business strategy.
• The planning under SHRM is based on the following three ideologies:
– Human resources are considered as the main source of providing competitive advantage
to the organisations.
– Strategic plans are implemented by employees, i.e. the human resources of the
organisation.
– A systematic approach needs to be adopted to define where the organisation wants to go
and how it should get there.
2. Process of SHRM
The Formulation Stage The Implementation Stage

The Evaluation Stage

 Role of HR in Value Chain

• A business must first understand the

concept of value chain in order to conduct
value chain analysis. A value chain with
respect to the HR department of an
organisation comprises of several activities
including recruitment, selection and
appointment and retention of employees.
• Michael Porter - 1985, proposed value
chain that helps the organisation in
identifying areas of problem, specifically in
manufacturing and distribution industries.
• Main assumption behind the theories of
Porter’s value chain model is nature of
interrelation among various HRM functions
can add the value to the organisation and
hence, the organisation can gain a
competitive position.
Role of HR in Value Chain