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Afterstudyingthischapter,

youshouldbeableto:Outlinethestepsinthestrategicmanagementprocess.Explainandgiveexamplesofeachtypeofcompany-widestrategy.Explainwhatahighperformanceworksystemisandwhyitisimportant.ExplainthetenstepsintheHRScorecardapproachoncreatingtheHRMsystem.2?2009PearsonEducationSouthAsia.Allrightsreserved.HR’sStrategicChallengesStrategicplanAcompany’splanforhowitwillmatchitsinternalstrengthsandweaknesseswithexternalopportunitiesandthreatsinordertomaintainacompetitiveadvantage.ThreebasicquestionsinplanningCurrentbusinessposition?Futurebusinessposition?Howtoreachthefuturebusinessposition?3?2009PearsonEducationSouthAsia.Allrightsreserved.TheStrategicManagementProcessStrategicmanagementTheprocessofidentifyingandexecutingtheorganization’smissionbymatchingitscapabilitieswiththedemandsofitsenvironment.StrategyAstrategyisacourseofaction.Thecompany’slong-templanforhowitwillbalanceitsinternalstrengthsandweaknesseswithitsexternalopportunitiesandthreatstomaintainacompetitiveadvantage.4?2009PearsonEducationSouthAsia.Allrightsreserved.TheStrategicManagementProcessStrategicmanagementtasksStep1:DefinetheBusinessandItsMissionStep2:PerformExternalandInternalAuditsStep3:FormulatenewbusinessandmissionstatementsStep4:TranslatetheMissionintoStrategicGoalsStep5:FormulateaStrategytoAchievetheStrategicGoalsStep6:ImplementtheStrategyStep7:EvaluatePerformance5?2009PearsonEducationSouthAsia.Allrightsreserved.OverviewofStrategicManagementFigure3.1TheStrategicManagementProcess6?2009PearsonEducationSouthAsia.Allrightsreserved.Step1:DefinetheCurrent

BusinessDecisionson:ProductsandservicestoprovideWheretosellthemProduct/ServicesdifferencesfromcompetitorsExample:Rolexsellshigh-pricedqualitywatchesvs.Seikosellsinexpensivebutinnovativewatches7?2009PearsonEducationSouthAsia.Allrightsreserved.Step2:PerformInternaland

ExternalAuditsAnalyzeexternalandinternalsituationsUsageofSWOT(Strengths,Weaknesses,OpportunitiesandThreats)analysisthroughtheusageofaSWOTchart8?2009PearsonEducationSouthAsia.Allrightsreserved.Step2:PerformInternaland

ExternalAuditsFigure3.2ASWOTChart9?2009PearsonEducationSouthAsia.Allrightsreserved.Step3:FormulateaNewBusinessMissionandItsVisionVisionAgeneralstatementofitsintendeddirectionthatevokesemotionalfeelingsinorganizationmembers.MissionSpellsoutwhothecompanyis,whatitdoes,andwhereitisheaded.10?2009PearsonEducationSouthAsia.Allrightsreserved.Step4:TranslateMissionintoStrategicGoalsIfthecompany’smissionis“tomakequalityproducts”,whatdoesthismissionmean,foreachdepartment,intermsofhowtoimprovequality?11?2009PearsonEducationSouthAsia.Allrightsreserved.Step5:FormulateStrategiestoAchieveStrategicGoalsStrategy:AcourseofactionShowshowcompanywillmovefromthepresentbusinesstothenewbusinessSimpletounderstand12?2009PearsonEducationSouthAsia.Allrightsreserved.Step6:ImplementtheStrategiesImplementation=puttingintoactionHiringpeopleBuildingplantsaddingnewproductlinesInvolvesmanagementfunctions:PlanOrganizeStaffLeadControl13?2009PearsonEducationSouthAsia.Allrightsreserved.Step7:EvaluatePerformanceSuccessofstrategiesdependentonchangesinexternalfactorsE.g.NewtrendsmayreducedemandinoneproductandincreasethedemandforanotherStrategicControlnecessaryProcessofaccessingprogresstowardsstrategicgoalsandtakingcorrectiveactionsManagersstudynewsituationsandmakeadjustments14?2009PearsonEducationSouthAsia.Allrightsreserved.StrategiesinBriefCompany StrategicPrinciple

Dell Bedirect

eBay Focusontradingcommunities

GeneralElectric Benumberoneornumbertwoinevery

industryinwhichwecompete,orgetout

SouthwestAirlines Meetcustomers’short-haultravelneeds

atfarescompetitivewiththecostof automobiletravel

Vanguard Unmatchablevaluefortheinvestor-owner

Wal-Mart Lowprices,everydaySource:AritGadieshandJamesGilbert,“FrontlineAction,”HarvardBusinessReview,May2001,p.74.15?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningThreetypesofstrategies:CorporatestrategyCompetitivestrategyFunctionalstrategy16?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.3RelationshipsAmongStrategiesinMulti-BusinessFirms17?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningCorporatestrategyCompany-wideIdentifiestheportfolioofbusinessesthat,intotal,comprisethecompanyandthewaysinwhichthesebusinessesrelatetoeachother.18?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFourpossiblecorporatestrategies:Diversificationstrategyimpliesthatthefirmwillexpandbyaddingnewproductlines.Verticalintegrationstrategymeansthefirmexpandsby,perhaps,producingitsownrawmaterials,orsellingitsproductsdirect.Consolidationstrategyreducesthecompany’ssizeGeographicexpansionstrategytakesthecompanyabroad.19?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.4CorporateStrategies–Company-wide20?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningBusiness-level/competitivestrategyIdentifieshowtobuildandstrengthenthebusiness’slong-termcompetitivepositioninthemarketplace.21?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningThreepossiblecompetitivestrategies:Costleadership:theenterpriseaimstobecomethelow-costleaderinanindustry.Differentiation:afirmseekstobeuniqueinitsindustryalongdimensionsthatarewidelyvaluedbybuyers.Focus:afirmseeksto

carveoutamarketniche,andcompetebyprovidingaproductorservicecustomerscangetinnootherway.22?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFigure3.5CorporateStrategies–Businesslevel23?2009PearsonEducationSouthAsia.Allrightsreserved.TypesofStrategicPlanningFunctionalstrategiesIdentifythebasiccoursesofactionthateachdepartmentwillpursueinordertohelpthebusinessattainitscompetitivegoals.24?2009PearsonEducationSouthAsia.Allrightsreserved.HRandCompetitive

AdvantageCompetitiveadvantageAnyfactorthatallowsanorganizationtodifferentiateitsproductorservicefromthoseofitscompetitorstoincreasemarketshare.SuperiorhumanresourcesareanimportantsourceofcompetitiveadvantageE.g.Toyota’sself-managedteams25?2009PearsonEducationSouthAsia.Allrightsreserved.StrategicHumanResourceManagementStrategicHumanResourceManagementThelinkingofHRMwithstrategicgoalsandobjectivesinordertoimprovebusinessperformanceanddeveloporganizationalculturesthatfosterinnovationandflexibility.FormulatingandexecutingHRsystems—HRpoliciesandactivities—thatproducetheemployeecompetenciesandbehaviorsthecompanyneedstoachieveitsstrategicaims.26?2009PearsonEducationSouthAsia.Allrightsreserved.LinkingCorporateandHRStrategiesFigure3.6LinkingCompany-WideandHRStrategiesSource:?2003,GaryDessler,Ph.D.27?2009PearsonEducationSouthAsia.Allrightsreserved.HRM’sStrategicRolesEffectiveHRmanagersareableto:HandlealargerportfolioWorkcloselywithtopmanagementtoformulateandimplementcompany’sstrategicplansTwobasicplanningroles:StrategyExecutionStrategyFormulation28?2009PearsonEducationSouthAsia.Allrightsreserved.StrategyExecutionRoleTheHRdepartment’sstrategies,policies,andactivitiesmustmakesenseintermsofthecompany’scorporateandcompetitivestrategies,andtheymustsupportthosestrategies.29?2009PearsonEducationSouthAsia.Allrightsreserved.StrategyFormulationRoleHRhelpstopmanagementformulatestrategyinavarietyofwaysby:Supplyingcompetitiveintelligencethatmaybeusefulinthestrategicplanningprocess.Supplyinginformationregardingthecompany’sinternalhumanstrengthsandweaknesses.Buildapersuasivecasethatshowshow—inspecificandmeasurableterms—thefirm’sHRactivitiescananddocontributetocreatingvalueforthecompany.30?2009PearsonEducationSouthAsia.Allrightsreserved.CreatingAStrategic

HRSystemComponentsoftheHRprocessHRprofessionalswhohavestrategicandotherskillsHRpoliciesandactivitiesthatcomprisetheHRsystemitself(Recruitment,Selection,TrainingandReward)Employeebehaviorsandcompetenciesthatthecompany’sstrategyrequires.31?2009PearsonEducationSouthAsia.Allrightsreserved.CreatingAStrategic

HRSystemFigure3.7ThreeMainStrategicHumanResourceSystemComponentsSource:AdaptedfromBrianBeckeretal.,TheHRScorecard:LinkingPeople,Strategy,andPerformance(Boston:HarvardBusinessSchoolPress,2001),p.12.Copyright?2001bytheHarvardBusinessSchoolPublishingCorporation;allrightsreserved.32?2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemCompaniesshouldcreateaHRsystemthatfitsitsneedsTrendtowardsinstallingHRsystemsthatbroadlysharemanycharacteristicsAimofthesesystemsistomaximizeemployees’competenciesandcommitmentEmployersexpectHRmanagerstointroduceHRactivitiesthatcreatevalueforthecompanysuchasmoreprofitandbiggermarketshare33?2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemHigh-involvementemployeepractices(suchasjobenrichmentandteam-basedorganizations)Highcommitmentworkpractices(suchasimprovedemployeedevelopment,communications,anddisciplinarypractices)FlexibleworkassignmentsOtherpracticesincludethosethatfosterskilledworkforcesandexpandedopportunitiestousethoseskills34?2009PearsonEducationSouthAsia.Allrightsreserved.TheHigh-PerformanceWorkSystemFigure3.8CharacteristicsofaHigh-PerformanceWorkOrganization35?2009PearsonEducationSouthAsia.Allrightsreserved.TranslatingStrategyintoHRPolicyandPracticeHRmanagerstotranslate:Company’sstrategyintoemployeecompetenciesandbehaviorsTheseemployeecompetenciesandbehaviorsintospecificHRpoliciesandpracticestoachievecompany’sgoals.36?2009PearsonEducationSouthAsia.Allrightsreserved.Formulatebusinessstrategy“Whatarethestrategicgoalsofthebusiness?”Identifyworkforcerequirements“WhatemployeecompetenciesandbehaviorsmustHRdelivertoenablethebusinesstoreachitsgoals?”FormulateHRstrategicpoliciesandactivities“WhichHRstrategiesandpracticeswillproducetheseemployeecompetenciesandbehaviors?”DevelopdetailedHRScorecardmeasures“HowcanHRmeasurewhetheritisexecutingwellforthebusiness,intermsofproducingtherequiredworkforcecompetenciesandbehaviors?”Figure3.9ABasicModelofHowtoAlignHRStrategyandActionswithBusinessStrategySource:AdaptedfromGarrettWalkerandJ.RandalMacDonald,“DesigningandImplementinganHRScorecard,”HumanResourcesManagement40,no.4(2001),p.370.TranslatingStrategyintoHRPolicyandPractice37?2009PearsonEducationSouthAsia.Allrightsreserved.TheHRScorecardApproachHRScorecardMeasurestheHRfunction’seffectivenessandefficiencyinproducingemployeebehaviorsneededtoachievethecompany’sstrategicgoals.TocreateanHRscorecard,you:Mustknowwhatthecompany’sstrategyis.MustunderstandthecausallinksbetweenHRactivities,employeebehaviors,organizationaloutcomes,andtheorganization’sperformance.Musthavethemetricstomeasurealltheactivitiesandresultsinvolved.38?2009PearsonEducationSouthAsia.Allrightsreserved.BasicHRScorecard

RelationshipsFigure3.10BasicHRScorecardRelationshipsHRactivitiesEmergentemployee

behaviorsStrategicallyrelevant

organizational

outcomesOrganization

performanceAchieve

strategicgoals39?2009PearsonEducationSouthAsia.Allrightsreserved.UsingtheHRScorecard

ApproachDefinetheBusinessStrategyOutlinetheCompany’sValueChainOutlineaStrategymapIdentifytheStrategicallyRequiredOrganizationalOutcomesIdentifytheRequiredWorkforceCompetenciesandBehaviors40?2009PearsonEducationSouthAsia.Allrightsreser

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