D. Directional Strategies—Five types follow: Concentration strategies focus a company on what it does best in its established markets. Internal growth strategies include market development, product development, innovation, or joint ventures. 17
Mergers and Acquisitions include consolidation within industries and mergers across industries. External growth strategies include vertical and horizontal integration as well as diversification. Downsizing most often requires reducing the size of the work force. Table 2.4 lists some of the major company downsizings, while Table 2.5 contains the results of a survey that indicates that only about one-third of the companies that went through downsizings actually achieved their goal to increase productivity. Downsizing presents a number of challenges and opportunities for HRM: careful reduction of the work force, boosting the morale of employees who remain, increasing fresh ideas, and changing the company’s culture. 1. Implications for Human Resources—Each strategy necessitates different HR practices. For example, companies with concentration strategies require the maintenance of current skills. Compensation must therefore focus on retaining skilled employees. Competing through Globalization: Upjohn and Pharmacia Merger Upjohn and Pharmacia were both pharmaceutical companies that merged in 1995. Both companies were relatively the same size with similar business interests. The merger was supposed to bring size and synergy but ended up bringing heat and headache. Major culture clashes arose because Upjohn is an American company and Pharmacia is a Sweden based company. The merger is not yet a total failure but costs of the merger have exceeded projections by $200 million. E. Strategy Evaluation and Control —This is the final component of the strategic management process that includes the monitoring of the effectiveness of strategic choice and implementation. F. The Role of Human Resources in Providing Strategic Competitive Advantage 1. Emergent Strategies —Those that evolve from the grass roots of the organization: that is, what actually is done versus what is planned (see text Figure 2.1). HR plays an important role in facilitating the communication of emergent strategies between levels in the hierarchy. 2. Enhancing Firm Competitiveness —By developing a rich pool of talent, HR can assure the company’s ability to adapt to a dynamic environment. Example: When Compaq Computer was founded, building compact computers that were free of defects was its intended strategy. In 1992, after a difficult period 18
of price competition, Compaq’s strategy was changed to being a low-cost producer. Related readings from Dushkin’s Annual Editions: Human Resources 99/00 are: ♦ “HR Comes of Age” by Michael Losey ♦ “A New Mandate for Human Resources” by Dave Ulrich Competing through High-Performance Work Teams: Motorola’s Strategy Uses All Its Resources Motorola’s use of high-performance work systems (teamwork, empowerment, training, and education) to move its strategy forward can be seen in the example of its new Harvard, Illinois, location. This site was chosen for a new $100 million plant because of the
You've reached the end of your free preview.
Want to read all 14 pages?
- Spring '12
- Human Resource Management, Strategic Management Strategic Human Resource Management Strategy Formulation