EXECUTING BUSINESS STRATEGIES THROUGH HUMAN RESOURCE MANAGEMENT PRACTICES

Bahadır Beadin

İNRODUCTİON

Each business begins and evolves with a strategy that is based on its customers.

At its heart, strategy is a coherent set of integrated choices about what an organization will do in order to accomplish its goals and objectives.

Effectiveness of human resources management at company's critical organization and strategys in process, leaders and its people.

Processes; how company it will create value to serve them.

Leaders; their priorities, focus, dedication to the business

And its people; who it hires, develops, retains.

FORCES OF CHANGE

Regardless of the product or service offered, every organization must adapt to its environment.

Customer needs, revised product designs, technological breakthroughs, new process improvements, and competitors’ actions represent just a few of the major forces in the business environment.

As an industry evolves, customer expectations tend to become clearer (more known), and the environmental landscape becomes more stable, as shown along the vertical axis.

The choice of strategies that suit one particular business well may not translate into competitive advantage or success for another business or across industries.

All so we can say that in the worst situations, an organization’s entire vision, strategy and business model can become completely irrelevant almost overnight.

All so effect Customer Expectations. It becomes an uphill battle for firms to

distinguish themselves from their rivals, since products become more similar and customers demand more features or performance for what they pay.

DESIGNING EFFECTIVE BUSINESS STRATEGIES

In their book Demystifying Your Business Strategy, David Lei and John Slocum developed four archetypical business strategies that correspond to the industry environments captured in Fig.

Four distinct business strategies represent the dominant modes for crafting the strategic disciplines and organization designs to create and sustain advantage.

These four strategies are called Pioneers, Trendsetters, Consolidators, and Reinventors.

Consequently, each strategy will shape the kinds of management processes and human resource practices necessary to support strategy execution.

PİONEERS Pioneers are the lifeblood of every industry in

every economy. Industries depend on pioneers to create new

products and technological breakthroughs that seed entirely new ways of doing things.

Pioneers thrive in highly uncertain, dynamic environments.

The barriers to entry and exit are often quite low. One of the most daunting uncertainties confronting Pioneers is how best do they measure their customers’ expectations and then develop a method to serve them.

The source of Pioneers’ competitive advantage is to capitalize on its first-mover advantage.

This occurs when a firm has the opportunity to introduce a new product in an existing market, to create a new market, or to create value in a new way for its customers.

Pioneers tend to be firms that often have founders with great vision and passion for doing something that most people think impossible.

Example Netflix Netflix uses a unique and coherent set of HR

practices to shape its culture. Getting the right people on board and sustaining high performance across the company are essential.

Netflix, originally conceived as an on-line subscription-based DVD rental service, quickly became the top video rental company through its proprietary.

Now, Netflix is pioneering the shift to offering television and other content programming via the Internet and has developed sophisticated technology to make this transition happen.

TRENDSETTERS Those pursuing a Trendsetter strategy

continually tailor and shape their products and services to fit an increasingly precise definition of what the customer wants

They typically look at the customer’s long-term value to the business.

Trendsetters live and breathe customer intimacy and innovation.

Trendsetters constantly experiment with new product and service concepts to see which ones work best.

Changing customer expectations require Trendsetters to stay agile and nimble so that they can respond quickly to new market segments, changing customer needs, and shifting technological trajectories.

Trendsetters build brand equity by isolating and meeting customer needs that are on the leading edge, or where exceptional personal attention is synonymous with customer satisfaction.

Example Whole Food The leading retailer of natural and organic

foods, with more than 311 locations. Americans would increasingly care for not only

what they eat and how they eat, but also their impact on the larger environment of the planet.

Whole Foods’ purpose is helping people eat well, improving the quality of their lives, and increasing their lifespan.

It achieves this purpose through selling organic foods and promoting environmental benefits to organic farmers, ranchers, and others who practice sustainable agricultural practices

CONSOLİDATORS As industry growth rates slow down and

innovations become more incremental, a new strategic imperative kicks in, it's called consolidation.

Industry’s slow growth, Consolidators’ gains in market share are almost impossible to attain without bruising battles with other firms, most often through price wars.

Central to the Consolidators’ sustainable competitive advantage is the pursuit of cost-efficiency in every aspect of their operations.

This search for cost-efficiency cannot come at the expense of product quality, however.

Consolidators must preserve their brand equity while simultaneously looking for every possible way to streamline, standardize, and render operations consistent across the organization

The Consolidators’ source of competitive advantage is the attainment of operational excellence in all of its activities.

Consolidators will devote more resources to making their offerings more consistent, slicing the number of steps to provide them, and striving for a low-cost leadership position in the marketplace.

Example Costco Wholesale Costco’s limited product line allows the

company to be focused on acquiring and selling a mix of products that generate high sales volume and inventory turnover.

Costco drives volume with its low price, high quality merchandize mix by following the ‘‘14 Percent Rule’’–—‘‘no Costco product will be marked up more than 14 percent above wholesale, regardless of how well it is selling or what the competitors are doing.

In addition, the warehouse model means that operations are less complex, and the company can reduce or eliminate certain costs associated with inventorying, transporting, handling, and displaying products.

REİNVENTORS

When a pre-existing business begins to hinder a firm’s ability to compete, it must reinvent itself to survive.

Reinventors are typically large businesses, many of which are part of multi-product diversified firms.

Most often, Reinventors will face technological breakthroughs that completely redefine how a product/service is created, or how a customer uses its product/service.

In practice, however, reinvention efforts are enormously difficult and complex endeavors.

Reinventors have lost their sources of competitive advant-age in a core business line.

Successful reinvention means that businesses must acknowledge and measure the shifting industry landscape’s impact on their competitive advantage.

Undertaking reinvention is not without its risks in fact, the entire reinvention process is all about managing risks on multiple dimensions: sorting through customers changing needs; understanding new technologies; learning and cultivating new organizational processes; and instilling new skills, cultures, and mindsets throughout the firm.

ALIGNING PEOPLE AND CULTURE WITH STRATEGY FOR COMPETITIVE ADVANTAGE

Possible sources of competitive advantage include advantages due to products, pricing, technology, finances, physical plant, location and operations.

These sources of advantage are mostly tangible and quantifiable. There is increasing recognition that a company’s people and culture, largely intangible resources, are also important sources of competitive advantage.

By generating, reinforcing, and sustaining employees’ cap-abilities and actions in line with strategic goals, the HR function makes an important contribution to the firm’s com-petitive position.

As shown in Figure it is simply not enough to create human resource practices that are aligned with strategy. The real challenge for executives is to implement HR practices in such a way that these actions enable a firm’s strategy to be implemented.

The line of sight concept implies that every company should have a different configuration of HR practices for its unique strategy in its efforts to attain a competitive advantage.

While companies pursuing a particular strategy type - Pioneers, Trendsetters, Consolidators, or Reinventors - may use similar human resource management activities to support that strategy.

HR practices should be tailored specifically to develop human and social capital directly linked to the firm’s strategic priorities.

CORE HRM PRACTICES UNDERPINNING STRATEGY EXECUTION: SUMMARY

Successful strategy execution depends heavily on attaining co-alignment with the HRM practices that each firm cultivates according to its own unique set of values, priorities, mission, and long-term planning.

HRM practices forms the basis for a larger ‘‘people process’’ that should reinforce the firm’s core strategic discipline.

This ‘‘people process’’ represents an essential investment in the firm’s future as vital as developing new products and processes, or discovering new markets and customers to serve.

Figure highlights our general conclusions regarding the HR requirements to support each strategy.

For Pioneers, break-through innovations are essential to create new technologies and markets.

Trendsetters, like Whole Foods, Sewell Automotive and Andrews Distributing Company, focus on customer intimacy as their strategic discipline.

Consolidators exist in a mature environment with known customer expectations; operational excellence is the key strategic discipline.

Reinventors focus on the core discipline of resource allo-cation.

In summary, the relationships among environmental con-text, strategy, and HR practices shown in Figure provide a general conceptual framework.

Each of the four strategy types assumes a core strategic discipline that is required for successful execution.

In the end, effectively managing the ongoing fit and flexibility among these relationships may be the key to a sustainable competitive advantage.

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