Jeffrey a mello 4e chapter 3 strategic management

STRATEGIC MANAGEMENT Strategic Strategic Management Management •• Strategic Strategic Human Human Resource Resource Management Management –– Involves Involvesaligning aligninginitiatives initiativesinvolving involvinghow howpeople peopleare are managed managedwith withorganizational organizationalmission mission&&objectives objectives •• Strategic Strategic Management ManagementProcess Process –– Determining Determiningwhat whatneeds needstotobe bedone donetotoachieve achievecorporate corporate objectives objectivesover over33 55years years –– Examining Examiningorganization organization&&competitive competitiveenvironment environment –– Establishing Establishingoptimal optimalfitfitbetween betweenorganization organization&&its its environment environment –– Reviewing Reviewing&&revising revisingstrategic strategicplan plan Models Models of of Strategy Strategy •• Industrial Industrial Organization Organization (O/I) (O/I) Model Model –– External Externalenvironment environmentisisprimary primarydeterminant determinantofof organizational organizationalstrategy strategyrather ratherthan thaninternal internaldecisions decisionsofof managers managers –– Environment Environmentpresents presentsthreats threats&&opportunities opportunities –– All Allcompeting competingorganizations organizationscontrol controlororhave haveequal equalaccess accesstoto resources resources –– Resources Resourcesare arehighly highlymobile mobilebetween betweenfirms firms –– Organizational Organizationalsuccess successisisachieved achievedby by •• Offering Offeringgoods goods&&services servicesatatlower lowercosts coststhan thancompetitors competitors •• Differentiating Differentiatingproducts productstotobring bringpremium premiumprices prices Models Models of of Strategy Strategy •• Resource-Based Resource-BasedView View (RBV) (RBV) ––An Anorganization’s organization’sresources resources&&capabilities, capabilities,not notexternal external environmental environmentalconditions, conditions,should shouldbe bebasis basisfor forstrategic strategic decisions decisions ––Competitive Competitiveadvantage advantageisisgained gainedthrough throughacquisition acquisition&&value value ofoforganizational organizationalresources resources ––Organizations Organizationscan canidentify, identify,locate locate&&acquire acquirekey keyvaluable valuable resources resources ––Resources Resourcesare arenot nothighly highlymobile mobileacross acrossorganizations organizations&&once once acquired acquiredare areretained retained ––Valuable Valuableresources resourcesare arecostly costlytotoimitate imitate&&non-substitutable non-substitutable Contrasting Contrasting the the Two Two Approaches Approaches •• Research Research provides provides support support for for both both positions positions •• What What drives drives strategy? strategy? –– I/O: I/O:External Externalconsiderations considerations –– RBV: RBV:Internal Internalconsiderations considerations •• I/O: I/O: Strategy Strategy drives drives resource resource acquisition acquisition •• RBV: RBV: Strategy Strategy determined determined by by resources resources The The Process Process of of Strategic Strategic Management Management •• Mission Mission statement statement •• Environmental Environmental analysis analysis •• Organizational Organizational self-assessment self-assessment •• Establishing Establishinggoals goals & & objectives objectives •• Setting Setting Strategy Strategy Identify IdentifyAssumptions Assumptions Mission Mission Statement Statement •• Explains Explains purpose purpose & & reason reason for for existence existence •• Usually Usually very very broad broad •• No No more more than than aa couple couple of of sentences sentences •• Serves Serves as as foundation foundation for for everything everything organization organization does does Solectron Solectron Mission Mission Statement Statement (contrast (contrast to to Microsoft Microsoft mission mission statement) statement) Microsoft Microsoft Mission Mission Statement Statement Corporate Corporate Strategies: Strategies: Growth Growth ••Benefits Benefits ––Gaining Gainingeconomies economiesofofscale scaleinin operations operations&&functions functions ––Enhancing Enhancingcompetitive competitiveposition position vis-à-vis vis-à-visindustry industrycompetitors competitors ––Providing Providingopportunities opportunitiesfor for employee employeeprofessional professional development development&&advancement advancement ••HR HRIssues Issues ––Planning Planningfor fornew newhiring hiring ––Alerting Alertingcurrent currentemployees employees ––Ensuring Ensuringquality quality&&performance performance standards standardsare aremaintained maintained ••Internal InternalMethods Methods ––Penetration Penetrationofofexisting existingmarkets markets ––Developing Developingnew newmarkets markets ––Developing Developingnew newproducts productsoror services servicesfor forexisting existingorornew new markets markets ••External ExternalMethods Methods ––Acquiring Acquiringother otherorganizations organizations ––Vertical Verticalintegration integration ••HR HRIssues Issuesin inM&A M&A ––Merging Mergingorganizations organizations ––Dismissing Dismissingredundant redundant employees employees Corporate Corporate Strategies: Strategies: Stability Stability •• Maintaining Maintaining status status quo quo due due to to limited limited environmental environmental opportunities opportunities for for gaining gaining competitive competitive advantage advantage •• Few Few employees employees will will have have opportunities opportunities for for advancement advancement •• Critical Critical that that management management identify identify key key employees employees & & develop develop specific specific HR HR retention retention strategies strategies to to keep keep them them Corporate Corporate Strategies: Strategies: Turnaround Turnaround or or Retrenchment Retrenchment •• Downsizing Downsizing or or streamlining streamlining organization organization in in cost-cutting cost-cutting attempt attempt to to adjust adjust to to competitive competitive environment environment •• Few Few opportunities opportunities & & many many environmental environmental threats threats •• Important Important to to develop develop HR HR practices practices to to manage manage “survivors” “survivors” Business Business Unit Unit Strategies: Strategies: Cost Cost Leadership Leadership •• Increases Increases in in efficiency efficiency & & cutting cutting of of costs, costs, then then passing passing savings savings to to consumer consumer •• Assumes Assumes price price elasticity elasticity in in demand demand for for products products or or services services isis high high •• Assumes Assumes that that customers customers are are more more price price sensitive sensitive than than brand brandloyal loyal •• HR HR strategy strategy focuses focuses on on short-term short-term performance performance measures measures of of results results & & promoting promotingefficiency efficiency through throughjob job specialization specialization & & cross-training cross-training Business Business Unit Unit Strategies: Strategies: Differentiation Differentiation •• In In order order to to demand demand aa premium premium price price from from consumers consumers –– Attempting Attemptingtotodistinguish distinguishorganizational organizationalproducts productsororservices services from fromother othercompetitors competitorsoror –– Creating Creatingperception perceptionofofdifference difference •• Organization Organization offers offers employees employees incentives incentives & & compensation compensation for for creativity creativity •• HR HR strategy strategy focuses focuses on on external external hiring hiringof of unique unique individuals individuals & & on on retaining retaining creative creative employees employees Business Business Unit Unit Strategies: Strategies: Focus Focus •• Business Business attempts attempts to to satisfy satisfy needs needs of of only only aa particular particular group group or or narrow narrow market market segment segment •• Strategic Strategic intent intent isis to to gain gain consumer consumer loyalty loyalty of of neglected neglectedgroups groups of of consumers consumers •• Strategic Strategic HR HR issue issue isis ensuring ensuringemployee employee awareness awareness of of uniqueness uniqueness of of market market segment segment –– Thorough Thoroughemployee employeetraining training&&focus focuson oncustomer customer satisfaction satisfactionare arecritical criticalfactors factors –– Hiring Hiringmembers membersofoftarget targetsegment segmentwho whoare areempathetic empathetictoto customer customerinintarget targetsegment segment Benefits Benefits of of aa Strategic Strategic Approach Approach to to HR HR •• Facilitates Facilitates development development of of high-quality high-quality workforce workforce through through focus focus on on types types of of people people & & skills skills needed needed •• Facilitates Facilitates cost-effective cost-effective utilization utilization of of labor, labor, particularly particularly in in service service industries industries where where labor labor isis generally generally greatest greatest cost cost •• Facilitates Facilitates planning planning & & assessment assessment of of environmental environmental uncertainty uncertainty & & adaptation adaptation of of organization organization to to external external forces forces Reading Reading3.1 3.1 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Strategy Strategy has has five five components, components, which which provide provide answers answers to to five five specific specific questions: questions: 1) 1)where where will will we we be be active? active? (arenas) (arenas) 2) 2)how how will will we we get get there? there? (vehicles) (vehicles) 3) 3) how how will will we we win winin in the themarketplace? marketplace? (differentiators) (differentiators) 4) 4) what whatwill will be beour our speed speed and and sequence sequence of of moves? moves? (staging) (staging) 5) 5) how how will will be be obtain obtain our ourreturns? returns? (economic (economic logic) logic) Reading Reading 3.1 3.1 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading 3.1 3.1 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading 3.1 3.1 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading3.2 3.2 Bringing Bringing Human Human Resources Resources Back Back into into Strategic Strategic Planning Planning HR HRcan canplay playcritical criticalrole roleduring duringeach eachstage stageof ofthe theplanning planningprocess process Stage Stage11- -Understand Understandthe thePlanning PlanningLegacyLegacy-the theplanning planningprocess processneeds needstotobe beinformed informedby bywhat’s what’sbeen been done before; What was the result of any previous work?; Where were the successes and failures?; done before; What was the result of any previous work?; Where were the successes and failures?; How Howhave haveemployees employeesbeen beenaffected?; affected?;and andWhat Whatisisthe theorganizational organizationalattitude, attitude,atatall alllevels, levels,toward towardthe the strategic planning process and the resulting plans? strategic planning process and the resulting plans? HR can HR canconduct conductthis thistype typeofofresearch researchatatall alllevels levelsofofthe theorganization organization.Without Withoutthis thisknowledge, knowledge,strategic strategic planning teams will often repeat the same mistakes of their predecessors planning teams will often repeat the same mistakes of their predecessors Step Step22- -Create CreateaaDiverse DiversePlanning PlanningTeam Team- -the theformation formationofofan anintelligent intelligentstrategic-planning strategic-planningteam team which includes both diversity of thought and diversity of skills which includes both diversity of thought and diversity of skills HR is HR isthe therepository repositoryofofall allemployee employeedata datarelated relatedtotoknowledge, knowledge,functional functionalexpertise, expertise,skills skillsand and experiences and is in the best position to compile an optimal team experiences and is in the best position to compile an optimal team Step Step33- -Align AlignPlanning Planningwith withLeadership LeadershipGoals Goals––ensuring ensuringthat thatplanning planningefforts effortsare arebeing beingconducted conductedinin tandem tandemwith withthe theorganization’s organization’smission missionand andvision visionofofsenior seniorexecutives  executives  HR should communicate this knowledge as well as provide access HR should communicate this knowledge as well as provide accesstotosenior seniorleaders leadersand andhelp helpfacilitate facilitate effective and well-structured interviewing sessions that will aid communication effective and well-structured interviewing sessions that will aid communication Reading Reading3.2 3.2 Bringing Bringing Human Human Resources Resources Back Back into into Strategic Strategic Planning Planning Step Step44- -Analyze AnalyzeCurrent CurrentRealities Realities––examine examinethe theorganization’s organization’shistory historywith withits itscurrent current position and identify both the factors that can be leveraged to move the organization position and identify both the factors that can be leveraged to move the organization forward forwardasaswell wellasasthose thosemay mayserve serveasasobstacles obstaclesand andchallenges challengestotomoving movingforward forward HR HRcan canfacilitate facilitatethe theselection selectionofofsubject subjectmatter matterexperts expertsasaswell wellasasprovide providetechnical technical expertise regarding laws and regulations which affect existing and potential expertise regarding laws and regulations which affect existing and potentialemployees employees    Step Step55- -Develop DevelopAlternative AlternativePerformance PerformanceOptions Options––ensuring ensuringthat thatthe thestrategic strategicplan planhas has some flexibility in the form of alternative scenarios and courses of action some flexibility in the form of alternative scenarios and courses of action  HR  HRcan candetermine, determine,with withaagreat greatdegree degreeofofaccuracy, accuracy,what whatresources resources(people, (people,time, time,tools, tools,and and money) money)realistically realisticallyexist existininthe thecurrent currentorganization, organization,which whichones onescan canbe beacquired acquiredfrom from outside the organization, and which ones can be redistributed around the organization outside the organization, and which ones can be redistributed around the organizationtoto achieve achieveany anyalternative alternativeoptions options    Step Step66-Measure -MeasureProgress Progress––ensuring ensuringthat thatactual actualperformance performanceisisininline linewith withthat thatexpected expected  HR  HRensures ensuresthat thatall allassociated associatedperformance performancemeasures measuresare areclearly clearlyunderstood understoodthroughout throughoutthe the organization and ensures that the performance management system rewards appropriate organization and ensures that the performance management system rewards appropriate performance performance Reading Reading3.2 3.2 Bringing Bringing Human Human Resources Resources Back Back into into Strategic Strategic Planning Planning Step Step77- -Deploy Deploythe theStrategic StrategicPlan Plan––developing developingappropriate appropriateand andeffective effectivecommunication communication totocreate enthusiasm and commitment to the components of the plan create enthusiasm and commitment to the components of the plan  HR  HRdevelops developsplans plansand andprograms programstotoensure ensureand andmonitor monitoremployee employeeengagement engagementand and commitment commitment    Step Step88- -Develop DevelopContingency ContingencyPlans Plans––given giventhe thefact factthat thatassumptions assumptionsmade madeduring duringthe the planning process about the future may not materialize as anticipated, plans need to be planning process about the future may not materialize as anticipated, plans need to be flexible flexibletotoaddress addressthe therealities realitieswhich whichdevelop developfor forthe theorganization organization  HR  HRassists assiststhe theorganization organizationwith withany anykind kindofofchange changeinitiatives initiativeswhich whichmust mustbe beimplemented implemented asaspart partofofthis thisprocess process .. .Strategic Strategic Management Management •• Strategic Strategic Human Human Resource Resource Management Management –– Involves Involvesaligning aligninginitiatives initiativesinvolving... Physical Physical –– Human Human –– Technological Technological –– Capital Capital Organization Organization Self-Assessment Self-Assessment •• Examine Examine internal internal management management... aa Strategy? Strategy? Reading Reading 3. 1 3. 1 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading 3. 1 3. 1 Are Are You You Sure Sure You You Have Have aa Strategy?