3e - Chapter 3.ppt - STRATEGIC MANAGEMENT Strategic Strategic Management Management \u2022\u2022 Strategic StrategicHuman HumanResource ResourceManagement

3e - Chapter 3.ppt - STRATEGIC MANAGEMENT Strategic...

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Unformatted text preview: STRATEGIC MANAGEMENT Strategic Strategic Management Management •• Strategic StrategicHuman HumanResource ResourceManagement Management –– Involves Involves aligning aligning initiatives initiatives involving involving how how people people are are managed managed with with organizational organizational mission mission & & objectives objectives •• Strategic StrategicManagement ManagementProcess Process –– Determining Determining what what needs needs to to be be done done to to achieve achieve corporate corporate objectives objectives over over 33 -- 55 years years –– Examining Examining organization organization & & competitive competitive environment environment –– Establishing Establishing optimal optimal fit fit between between organization organization & & its its environment environment –– Reviewing Reviewing & & revising revising strategic strategic plan plan Models Models of of Strategy Strategy •• Industrial Industrial Organization Organization (O/I) (O/I) Model Model –– External External environment environment is is primary primary determinant determinant of of organizational organizational strategy strategy rather rather than than internal internal decisions decisions of of managers managers –– Environment Environment presents presents threats threats & & opportunities opportunities –– All All competing competing organizations organizations control control or or have have equal equal access access to to resources resources –– Resources Resources are are highly highly mobile mobile between between firms firms –– Organizational Organizational success success is is achieved achieved by 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 An organization’s organization’s resources resources & & capabilities, capabilities, not not external external environmental environmental conditions, conditions, should should be be basis basis for for strategic strategic decisions decisions ––Competitive Competitive advantage advantage is is gained gained through through acquisition acquisition & & value value of of organizational organizational resources resources ––Organizations Organizations can can identify, identify, locate locate & & acquire acquire key key valuable valuable resources resources ––Resources Resources are are not not highly highly mobile mobile across across organizations organizations & & once once acquired acquired are are retained retained ––Valuable Valuable resources resources are are costly costly to to imitate 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 External considerations considerations –– RBV: RBV: Internal Internal considerations 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 Establishing goals goals & &objectives objectives •• Setting Setting Strategy Strategy Identify IdentifyAssumptions Assumptions Exhibit Exhibit3.1 3.1 Process Process of of Strategic Strategic Management Management 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 ““Our Our mission mission isis to to provide provide worldwide worldwide responsiveness responsiveness to to our our customers customers by by offering offering the the highest highest quality, quality, lowest lowest total total cost, cost, customized, customized, integrated, integrated, design, design, supply-chain supply-chain and and manufacturing manufacturing solutions solutions through through long-term long-term partnerships partnerships based based on on integrity integrity and and ethical ethical business business practices.” practices.” Analysis Analysis of of Environment Environment •• Critical Critical components components of of external external environment environment –– Competition Competition –– Industry Industry structure structure –– Government Government regulations regulations –– Technology Technology –– Market Market trends trends –– Economic Economic tends tends Organization Organization Self-Assessment Self-Assessment •• Identify Identify primary primary strengths strengths & & weaknesses weaknesses •• Find Find ways ways to to capitalize capitalize on on strengths strengths •• Find Find ways ways to to improve improve or or minimize minimize weaknesses weaknesses •• Examine Examine resources resources –– Physical Physical –– Human Human –– Technological Technological –– Capital Capital Organization Organization Self-Assessment Self-Assessment •• Examine Examine internal internal management management systems systems ––Culture Culture ––Organization Organization structure structure ––Power Power dynamics dynamics & & policy policy ––Decision-making Decision-making processes processes ––Past Past strategy strategy & & performance performance ––Work Work systems systems Establishing Establishing Goals Goals & & Objectives Objectives •• Goals Goals should should be: be: ––Specific Specific ––Measurable Measurable ––Flexible Flexible Corporate Corporate Strategies: Strategies: Growth Growth ••Benefits Benefits ––Gaining Gainingeconomies economiesof ofscale scale in inoperations operations&&functions functions ––Enhancing Enhancingcompetitive competitive position positionvis-à-vis vis-à-visindustry industry competitors 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 performancestandards standardsare are maintained maintained ••Internal InternalMethods Methods ––Penetration Penetrationof ofexisting existing markets markets ––Developing Developingnew newmarkets markets ––Developing Developingnew newproducts products or services for existing or services for existingor or new newmarkets markets ••External ExternalMethods Methods ––Acquiring Acquiringother other organizations organizations ––Vertical Verticalintegration integration ••HR HRIssues IssuesininM&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 brand loyal loyal •• HR HR strategy strategy focuses focuses on on short-term short-term performance performance measures measures of of results results & & promoting promoting efficiency efficiency through through job 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 Attempting to to distinguish distinguish organizational organizational products products or or services services from from other other competitors competitors or or –– Creating Creating perception perception of of difference 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 hiring of of unique unique individuals individuals & & on on retaining retaining creative creativeemployees 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 narrowmarket market segment segment •• Strategic Strategic intent intent isis to to gain gain consumer consumer loyalty loyalty of of neglected neglected groups groups of of consumers consumers •• Strategic Strategic HR HRissue issue isis ensuring ensuring employee employee awareness awareness of of uniqueness uniqueness of of market market segment segment –– Thorough Thorough employee employee training training & & focus focus on on customer customer satisfaction satisfaction are are critical critical factors factors –– Hiring Hiring members members of of target target segment segment who who are are empathetic empathetic to to customer customer in in target target segment segment Exhibit Exhibit3.3 3.3 Dyer Dyer & & Holder’s Holder’s Typology Typology of of Strategies Strategies Exhibit Exhibit3.3 3.3(cont.) (cont.) Dyer Dyer & & Holder’s Holder’s Typology Typology of of Strategies Strategies 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 Human Human Resources Resources & & Resource Resource Based Based View View •• People People management management systems systems construct construct ––Not Not all all competitive competitive advantage advantage begins begins with with people people management management systems systems ––These These systems systems create create value value to to extent extent that that they they impact impact stock, stock, flow, flow, & & change change of of intellectual intellectual capital/knowledge capital/knowledge ––Basis Basis of of core core competencies competencies Reading Reading3.1 3.1 Human Human Resources Resources & & Resource Resource Based Based View View •• ““Skill” Skill” concept concept expanded expanded to to consider consider stock stock of of intellectual intellectual capital capital in in firm firm •• ““Behavior” Behavior” concept concept reconceptualized reconceptualized as as flow flow of of knowledge knowledge within within firm firm through through its its creation, creation, transfer, transfer, & &integration integration •• Core Core competence competence arises arises from from combination combination of of firm’s firm’s stock stock of of knowledge knowledge & & flow flow of of knowledge knowledge through through creation, creation, transfer, transfer, & & integration integration in in aa way way that that isis valuable, valuable, rare, rare, inimitable, inimitable, & & organized organized Reading Reading3.1 3.1 Human Human Resources Resources & & Resource Resource Based Based View View •• Dynamic Dynamic capability capability construct construct illustrates illustrates interdependent interdependent interplay interplay between between workforce workforce & & core core competence competence as as itit changes changes over over time time Reading Reading3.2 3.2 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 howwill will we wewin win in in the the marketplace? marketplace? (differentiators) (differentiators) 4) 4) what what will will be beour our speed speed and and sequence sequence of of moves? moves? (staging) (staging) 5) 5) how howwill will be be obtain obtain our our returns? returns? (economic (economic logic) logic) Reading Reading 3.2 3.2 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading 3.2 3.2 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading 3.2 3.2 Are Are You You Sure Sure You You Have Have aa Strategy? Strategy? Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage Two Two drivers drivers of ofindustry industry evolution: evolution: •• lifecycle lifecycle stage stage •• rate rate of of technological technological change change An An industry industry lifecycle lifecycle can can be be in in growth growth or or maturity maturity while while the the rate rate of of technological technological change change can can be be low low or or high. high. Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage Four Fourdifferent differenttypes typesof ofindustry industryenvironments environmentsor orecosystems ecosystems •• Fast FastGrowth Growth––lifecycle lifecyclegrowth growthand andlow lowrate rateof oftechnological technologicalchange change •• Wild, Wild,Wild WildWest West--lifecycle lifecyclegrowth growthand andhigh highrate rateof oftechnological technological change change •• Steady SteadyEvolution Evolution––mature maturelifecycle lifecycleand andlow lowrate rateof oftechnological technological change change •• Creative CreativeDestruction Destruction––mature maturelifecycle lifecycleand andhigh highrate rateof oftechnological technological change change Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage The Theappropriate appropriatearchetypes archetypesand andstrategies strategiesfor foreach eachstage stageare: are: •• Fast FastGrowth Growth––Concept ConceptDrives Drives •• Wild, Wild,Wild WildWest West––Pioneers Pioneers •• Steady SteadyEvolution Evolution––Consolidators Consolidators •• Creative CreativeDestruction Destruction––Concept ConceptLearners Learners Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage Each Eachofofthese thesestrategic strategicarchetypes archetypeshas hasits itsown ownstrengths strengthsand andweaknesses. weaknesses. Concept Conceptdrivers driversneed needtotofocus focuson onthe thedevelopment developmentofofaaunique uniqueproduct productofofservice servicewhich whichenables enablesthem them expand the range of markets they serve. They should focus on creating of acquiring small, expand the range of markets they serve. They should focus on creating of acquiring small, autonomous autonomousunits unitswhich whichtest testmarket marketboundaries boundariestotocapture capturenew newcustomers. customers. Pioneers Pioneersneed needaadeep deepknowledge knowledgeofoftechnology, technology,strong strongfinancial financialbacking backingand andaadesire desiretototake takerisk. risk. These These organizations need organic management systems to facilitate responsiveness and allow them to organizations need organic management systems to facilitate responsiveness and allow them to“hit “hit aamoving target.” moving target.” Consolidators Consolidatorsneed needtotofocus focuson onrefining refiningkey keyvalue-adding value-addingactivities activitiessuch suchasasmanufacturing manufacturingand andlogistics logistics totoprovide a competitive edge. They can obtain large market shares by simply creating a product provide a competitive edge. They can obtain large market shares by simply creating a product which whichisis“good “goodenough” enough”for forthe themajority majorityofofusers. users. They Theycan canalso alsochange changedistribution distributionchannels channelstoto lower lowercosts coststotomatch matchtheir theirlow-cost low-costoperations. operations. Concept Conceptlearners learnersmust mustdevelop developentirely entirelynew newcompetencies competenciesininorder ordertotosurvive. survive. They Theyneed needtotocarefully carefully monitor their external environment and simultaneously wean themselves of highly mature monitor their external environment and simultaneously wean themselves of highly matureproduct product lines. In the longer term, concept learners need to recast themselves as either concept drivers lines. In the longer term, concept learners need to recast themselves as either concept driversoror consolidators. consolidators. Reading Reading3.3 3.3--Strategic Strategic and and Organizational Organizational Requirements Requirements for for Competitive Competitive Advantage Advantage ...
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