HR and business

strategy
WHERE WE ARE NOW…
LEARNING OUTCOMES
1. Outline the basic steps in the management planning
process.
2. Explain and give examples each of companywide and
competitive strategy.
3. Explain what a strategy-oriented human resource
management system is and why it is important.
The Strategic Management Process
Strategy
◦ A course of action the organization intends to pursue to achieve its strategic aims.

Strategic Plan
◦ How an organization intends to match its internal strengths and weaknesses with its external
opportunities and threats to maintain a competitive advantage over the long term.

Strategic Management
◦ The process of identifying and executing the organization’s mission by matching its capabilities with the
demands of its environment.
Business Vision and Mission
Leveraging
◦ Capitalizing on a firm’s unique competitive strength while underplaying its weaknesses.

Vision
◦ A general statement of an organization’s intended direction that evokes emotional feelings in
organization members.

Mission
◦ Spells out who the firm is, what it does, and where it’s headed.
FIGURE 3–5 The Strategic Management Process
The Strategic Management Process
Step 1: Define the Current Business
◦ Every company must choose the terrain on which it will compete –in particular, what products it will
sell, where it will sell them, and how its products and services will differ from its competitors.
◦ Rolex and Seiko
◦ Managers sometimes use vision and mission statements.
◦ Whereas visions usually lay out in very broad terms what the business should be, the mission lays out in broad terms what our
main tasks are now.
◦ ‘Saving Private Ryan’
The Strategic Management Process
Step 2: Perform External and Internal Audits
◦ Ideally, managers begin their strategic planning by methodologically analyzing their external and
internal situations.
◦ To facilitate this strategic external/internal audit, many managers use SWOT analysis.
◦ This involves a SWOT chart to compile and organize the process of identifying company Strengths, Weaknesses, Opportunities and
Threats.
FIGURE 3–7 SWOT Matrix, with Generic Examples
The Strategic Management Process
Step 3: Formulate New Business and Mission Statements
◦ Based on the situation analysis, what should our new business be?
◦ What is our new mission and vision?

Step 4: Translate the Mission into Strategic Goals

◦ Saying the mission is “to make quality job one thing; operationalizing that mission for your managers is
another.

Step 5: Formulate Strategies to Achieve the Strategic Goals

◦ The strategies bridge where the company is now, with where it wants to be tomorrow.
◦ The best strategies are concise enough for the manager to express in an easily communicated phrase
that resonates with employees.
The Strategic Management Process
The Strategic Management Process
Step 6: Implement Strategies
◦ Strategy implementation means translating strategies into actions and results –by actually hiring (or
firing) people, building (or closing) plants, and adding (or eliminating) products and product lines.

Step 7: Evaluate Performance

◦ Strategies do not always succeed.
◦ Managing strategy is an ongoing process.
◦ Strategic evaluation addresses several important questions:
◦ For example: Are all the resources of our firm contributing as planned to achieving our strategic goals?
◦ What is reason for any discrepancies?
◦ Do changes in our situation suggest that we should revise our strategic plan?
FIGURE 3–8 Type of Strategy at Each Company Level
Types of Corporate Strategies
Corporate Strategy Possibilities

Concentration Diversification Consolidation

Vertical Geographic
integration expansion
Types of Corporate Strategies
A company’s corporate level strategy identifies the portfolio of businesses that, in total,
comprise the company and the ways in which these businesses relate to each other
Concentration (single business)
◦ The firm offers one product or product line, usually in one market.

Diversification
◦ The firm will expand by adding new product lines.
◦ Related and unrelated (conglomerate)
Types of Corporate Strategies
Vertical Integration
◦ The firm expands by, perhaps, producing its own raw materials, or selling its products direct.

Consolidation
◦ Reducing a firm’s size.

Geographic Expansion
◦ Taking business abroad
Types of Competitive Strategies
Business-Level
Competitive Strategies

Cost leadership Differentiation Focus/Niche

Types of Competitive Strategies
A competitive strategy identifies how to build and strengthen the business’s long term
competitive position in the marketplace.
Cost leadership
◦ A firm is seeking to become the overall low-cost leader in an industry.
◦ Dell

Differentiation
◦ The firm seeks to be unique in their industry along competitive dimensions that are widely valued by
buyers.
◦ Volvo (safety), Mercedes- Benz (reliability and quality)

Focus
◦ The firms that attempt to compete in a narrow market segment (niche) through the provision of a
product or service that specify customers can get in no other way. (Ferrari)
Functional Strategy
A functional strategies identify the basic courses of action that each department will pursue in
order to help the business attain its competitive goals.
◦ Dell’s human resource strategies
Achieving Strategic Fit
The “Fit” Point of View (Porter)
◦ All of the firm’s activities must be tailored to or fit the chosen strategy such that the firm’s functional
strategies support its corporate and competitive strategies.
◦ Southwest Airlines’ a low-cost leader strategy

Leveraging (Hamel and Prahalad)

◦ “Stretch” in leveraging resources—supplementing what you have and doing more with what you have—
can be more important than just fitting the strategic plan to current resources.
FIGURE 3–9 Southwest Airlines’ Activity System
HRM’s Role in Creating Competitive
Advantage
◦ Competitive advantages are “factors that allow an organization to differentiate its
product or service”.
◦ To have an effective competitive strategy, the company must have one or more
competitive advantages.
◦ Southwest Airlines achieves a low-cost leader status partly through employment policies.
◦ The competitive advantage can take many forms.
◦ For a pharmaceuticals company, it may be the quality of its research team, and its patents.
◦ Ford and Toyota (same technology)
◦ Toyota’s HR strategies:
◦ A full week of employee screening testing
◦ Three weeks per year of training
◦ Team-based rewards
Strategic Human Resource Management
Strategic Human Resource Management
◦ The linking of HRM with strategic goals and objectives in order to improve business performance and
develop organizational cultures that foster innovation and flexibility.
◦ Involves formulating and executing HR systems—HR policies and activities—that produce the employee
competencies and behaviors that the company needs to achieve its strategic aims.
◦ FedEx’s strategic aims is to achieve superior levels of customer service and high profitability through
◦ A highly committed workforce, preferably in a nonunion environment.
FIGURE 3–10 Linking Company-Wide and HR Strategies
FIGURE 3–13 Strategy Map for Southwest Airlines