chapter 2 hr 2
TRANSCRIPT
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2. THE STRATEGIC
MANAGEMENT PROCESS
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STRATEGIC PLAN
A companys plan for how it will match its
internal strengths and weaknesses with
external opportunities and threats in order
to maintain a competitive advantage.
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Strategy & Strategic Management
Strategy :-The companys long-term plan for how
it will balance its internal strengths and
weaknesses with its external opportunities and
threats to maintain a Competitive advantage.
Strategic Management :-The process of
identifying and executing the organizations
mission by matching its capabilities with the
demands of its environment.
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Steps in Strategic Management
Process
1. Define the current business and mission.
2. Perform external and internal audits.
3. Formulate new business and mission
statements.
4. Translate the mission into goals.
5. Formulate strategies to achieve the strategic
goals.6. Implement the strategy.
7. Evaluate performance
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Vision:- A general statement of its intended
direction that evokes emotional feelings in
organisational members
Mission:- Spells out who the company is,
What it does , and where its headed.
SWOT Analysis:- The use of a swot chart
to compile and organize the process ofidentifying company Strengths, Weakness,
Opportunities and Threats.
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A SWOT CHART
STRENGTHS
Example:-strong
research group
WEAKNESS
Example:- Aging
machinery
OPPORTUNITIES
Example:- Expanding
china markets
THREATS
Example:- Merger of
two competitors to form
single strong one.
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Types of Strategies
Diversification
Strategy
Geographic
Expansion
Strategy
Vertical
Integration
Strategy
Corporate-Level
Strategies
Consolidation
Strategy
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Strategic Control:- The process of assessing
progress towards strategic goals and taking
corrective action as needed
Types of strategies:-1. Corporate strategy:-
Example:- Pepsico runs Pepsi, Frito-lay, and Pizza Hut
Diversification corporate strategy- By expandingAnd adding new product line.
A vertical integration strategy means the firmexpands by ,perhaps producing its own rawmaterials, or selling its products direct.
Consolidationreducing the companys size - and Geographic expansionfor instance, taking the
business abroadare other corporate strategypossibilities.
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Types of Strategies (contd)
Cost Leadership Focus/Niche
Business-Level/
Competitive
Strategies
Differentiation
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2. Competitive strategy:- any factor that allowsan organisation to differentiate its products or service from
those of its competitors to increase market share.
Cost leadership means the enterprise aims to become the low-
cost leader in an industry.
Example:- Dell- by selling directly.
Differentiationis a second example of a competitive strategy.
Example:- VOLVO Stresses the safety of its cars, MERCEDES-BENZ Emphasis reliability and quality.
Focusers carve out a market niche( like ferrari), and compete byproviding a product or service customers can get in no other way.
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Focusers carves out a market niche( like fierrari ) , and
compete by providing a product or service customers
can get in no other way.
3. Functional strategy:- Identify the basiccourses of action that each department will
pursue in order to help the business attain its
competitive goals.
Example:- Dells HR strategies include
putting its HR activities on the web to
support Dells low-cost competitive strategy.
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Human Resource Management
StrategyThe Meaning of Strategy A critical factor that affects Firm Performance
A factor that contributes to Competitive Advantage in
markets Having a long-term focus
Plans that involve the top executives and/or board ofdirectors of the firm
A general framework that provides a perspective forselecting specific policies and procedures
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Human Resource Management
StrategyWhy is HR critical to firm performance? 85% of all firms in the US are service firms.
Service is delivered by people.
Low quality HR leads to low quality customerservice.
In the 21st century effective knowledge managementtranslates into competitive advantage and profits.
Knowledge comes from a firms people.
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Human Resource Management
StrategyWhat is unique about Human Resource Management?
HR is multidisciplinary: It applies the disciplines ofEconomics (wages, markets, resources), Psychology(motivation, satisfaction), Sociology (organizationstructure, culture) and Law (min. wage, laborcontracts, EEOC)
HR is embedded within the work of all managers, andmost individual contributors due to the need ofmanaging people (subordinates, peers and superiors)as well as teams to get things done.
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HR Strategy: Strategic Fit
Training Rewards
Corporate Strategy
Business Strategy
HR Strategy
HR System
(Performance Mgmt.)
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HR Strategy: HR System
Internal Fit
Performance Management System
HR StrategyGoal Setting
Performance
Measurement
Coaching
Rewards
Appeal
Performance Evaluation
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HRM and its Environment
HRM
Cultural
Professional
Bodies
Economic
Strategy,Task
&LeadershipE
xternal I
nternal
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HR Strategy: Context of HR
System1. The Five Factors Influencing the HR
System
External Environment
Social: social values, roles, trends, etc.
Political: political forces, changes. Ex. Bush
presidency and its agenda for Social
Security. Legal: laws, court decisions, regulatory rules.
Economic: product, labor, capital, factor
markets.
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HR Strategy: Context of HR
System2. The Workforce
Demographics
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HR Strategy: Context of HR
System3. Organization Culture
Weak vs. Strong culture
Type of culture
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HR Strategy: Context of HR
System5. Technology of Production & Organization
of Work
Physical layout/employee proximity
Required employee skills
Ease of monitoring employees input
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HR Scorecard:- Measures the HR functions effectivenessand efficiency in producing employee behaviors needed to achieve the
companys strategic goals
The Ten steps HR Scorecard Process:-
Define the business Strategy
Outline the companys value chain activities.
Outline a strategy map. Identify the strategically required organisational outcomes.
Identify the required workforce behaviors.
Identify the strategically relevant HR systems policies & activities.
Creat HR scorecard. Design the HR Scorecard measurement system.
Summarize scorecard measures in digital dashboard
Periodically re-evaluate the measurement system.
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Achieving Strategic Fit
The Fit Point of View (Porter)
All of the firms activities must be tailored to or fit the
chosen strategy such that the firms functional
strategies support its corporate and competitive
strategies.
Leveraging (Hamel and Prahalad)
Stretch in leveraging resourcessupplementing
what you have and doing more with what you havecan be more important than just fitting the strategic
plan to current resources.
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Strategy Formulation Role
This expanded strategy formulation role reflects
the reality employer face today. Globalization
means more competition, more competition
means more performance, and most employersare pursuing improved performance by boosting
the competence and commitment level of
employees. That makes HR managements
knowledge and expertise crucial to the strategyformulation process.
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Creating the Strategic Human
ResourceManagement System
Human Resource
Professionals
Employee
Behaviors and
Competencies
Components of a
Strategic HRM System
Human Resource
Policies and
Practices
Components of a Strategic HRM
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Components of a Strategic HRMSystem
The HR Function:- HR professionals withstrategic management competencies.
The HR system:- High performance Work
System(HPWS) consisting of strategicallyaligned Hr policies, practices, and activities.
Employee behavior:- Employee competencies,
values, motivation, and behaviors required by
the companys strategic plan.