Chapter 1A.pptx

HRM822
Chapter 1
STRATEGIC MANAGEMENT
2
COPYRIGHT © 2016 BY NELSON EDUCATION LTD.

A Need for Strategic HRM
“If you don't know where you are going, you might
wind up someplace else” (Yogi Berra)
 It is imperative for competitive advantage that policies and
practices related to human capital align with the organization’s
strategic aims
 Ensuring such alignment requires planning or creating a road
map of practice intended to support the achievement of strategy
 HR planning is a strategic activity insofar as it works to ensure
the alignment of human capital/people polices and practices with
organizational goals
COPYRIGHT © 2016 BY NELSON EDUCATION LTD. 3

What Is Strategy?
The formulation of organizational objectives, competitive
scopes, and action plans for gaining advantage

Descriptions of Strategy
Strategy:
A declaration of intent
Strategic intent:
A tangible corporate goal; a point of view about the
competitive positions a company hopes to build over a
decade
Strategic planning:
The systematic determination of goals and the plans to
achieve them

Strategy formulation:
The entire process of conceptualizing the mission of an
organization, identifying the strategy, and developing
long-range performance goals
Strategy implementation:
Those activities that employees and managers of an
organization undertake to enact the strategic plan, to
achieve the performance goals

Objectives:
The end, the goals
Plans:
The product of strategy, the means to the end
Strategic plan:
A written statement that outlines the future goals of an
organization, including long-term performance goals
Policies:
Broad guidelines to action that establish the parameters or
rules

Emergent strategy:
The plan that changes incrementally due to
environmental changes
Intended strategy:
The formulated plan
Realized strategy:
The implemented plan

The Strategic Process

Events that Stimulate Change in
Strategy
 New CEO
 Threat of a change in ownership
 External intervention
 Performance gap
 Strategic inflection point

Strategic Types
Basic strategies:
1. Corporate Strategies: Company-wide, focusing on
overall strategy for the organization and all of its
business or interests (e.g. proposed merger)
2. Business Strategies: Focused on specific line of
business and how to make it competitive

Corporate Strategies
Organizational-level decisions that focus on long-term survival
Examine questions about which competitive strategy to choose
Examples of restructuring strategies:
•Turnaround strategy: An attempt to increase the viability of an
organization
•Divestiture: The sale of a division or part of an organization
•Liquidation: The termination of a business and the sale of its
assets
•Bankruptcy: A formal procedure in which an appointed trustee in
bankruptcy takes possession of a business’s assets and disposes
of them in an orderly fashion

Corporate Strategies
Examples of growth strategies:
•Incremental growth: Can be attained by expanding the
client base, increasing products/services, changing the
distribution networks, or using technology
•International growth: Seeking new customers or markets by
expanding internationally is another growth option
•Acquisition: The purchase of one company by another
•Merger: Two organizations combine resources and become
one

The Strategic Planning Process

1. Establish the Mission, Vision,
Values
Mission statement:
An articulation of the purpose of the organization and the value it
creates for customers
Vision statement:
The basic beliefs that govern individual and group behaviour in an
organization
Values:
The basic beliefs that govern individual and group behaviour in an
organization

2. Develop Objectives
The management team develops short-term objectives to
realize its high-level mission, vision, and value
Objectives are an expression, in measurable terms, of what
an organization intends to achieve
Goals can be classified as hard or soft. Hard goals always
include numbers, usually relative to performance last year,
or to competition

3. Analyze the External
Environment
Managers must be aware of threats and opportunities in
the external environment
Important to scan the external environment and note the
actual and potential influence of:
•Technology
•Laws and regulations
•Economy
•Sociocultural factors
•Demographics

4. Identify the Competitive
Advantage
Identify the characteristics of a firm that enable it to earn
higher rates of profit than its competitors
 Resources that allow firm to perform more effectively or
efficiently than competitors fall into three categories
1. Tangible assets
2. Intangible assets
3. Capabilities

Capabilities
Core competencies: Organizational resources and
capabilities that serve as a firm’s competitive advantage
Dynamic capabilities: The ability to adapt and renew
competencies in accordance with a changing business
environment

SWOT Analysis
SWOT analysis is a tool for analyzing a company’s resource
capabilities and deficiencies:
• Strengths
• Weaknesses
• Opportunities
• Threats

Aldo Shoes Exercise
Aldo Shoes stated business vision is “to make people feel
good, through the products and the service we provide
everyday. We are dedicated to providing Total Customer
Service.” Aldo Shoes Vision & Values
The company’s business strategy is international growth
in creating high quality fashion footwear, leather goods
and accessories.
Using the Porter Model describe Aldo Shoes’ business
competitive position and likely HR Planning implications
…
21

Strengths Weaknesses
Opportunities Threats
22
Aldo Shoes: SWOT Analysis
… and PEST = Political, Economic, Social, & Technology

5. Determine the Competitive
Position
Value proposition: A statement of the fundamental beliefs
of the products or services being offered in the marketplace
Michael Porter made a major contribution to the field of
strategic management by grouping the ways organizations
can compete into five generic competitive strategies (See
video in Learning Module 1)

5. Determine the Competitive
Position: Porter’s Five Generic
Competitive Strategies
1. Low-cost provider strategy
2. Broad differentiation strategy
3. Best-cost provider strategy
4. Focused or market niche strategy based on lower cost
5. Focused or market niche strategy based on
differentiation

6. Implement the Strategy
Strategy implementation:
The process by which a strategy is put into action
Program:
Outlines the steps or activities necessary to accomplish
the goal
Procedures:
The steps required to get the job done

7. Evaluate the Performance
The successful implementation of a strategy is judged by
the ability to meet financial targets such as profits, and the
ability to meet benchmarked ratios of efficiency and
effectiveness

Benefits of Strategy Formulation
 Clarity
 Coordination
 Efficiency
 Incentives
 Adjustment Change
 Career Development

Errors in Strategic Planning
Relegating the process to official planners, and not
involving executives, managers, and employees, resulting in
no buy-in
Failing to use the plan as the guide to making decisions
and evaluating performance
Failing to align incentives and other HR policies to the
achievement of the strategy

29
Movie Time…
Summary of HR Planning

Before you leave……
What is the most important point you learned
today?
What point remains least clear to you?

Chapter 1A.pptx

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