1. The document discusses how organizations respond strategically to changes in their external environment through changes to their portfolio, processes, and structure. 2. It provides examples of portfolio responses like mergers and acquisitions as well as process responses like quality strategies and benchmarking. 3. Structure related strategic responses include adopting an SBU structure or matrix structure to improve coordination and responsiveness to markets.

1. Changing Environment of
Organizations

2. • Agricultural revolutions – First wave
• Industrial revolutions – Second wave
• Information revolution – Third wave

3. Changing Business Environment
• Globalization
• Liberalization
• Technological Changes
– Pace of technological change
– Decreasing product life cycle
– Changing contours of technology
– New information technology, biotechnology
– Advanced materials
• Market changes
– Changing market competition, market shares & sizes
– Growing consumerism, product proliferation
– Entry of new players.

4. Strategic Responses of Organizations
to Changing Environment
• Any change in portfolio, process or structure
introduced by organizations as strategic move in
an organization.
• Classification:
– Portfolio related strategic response
– Process related strategic response
– Structure related strategic response

5. Portfolio Related Strategic Response
By changing the portfolios of businesses, markets, products,
capital,….
1. Mergers, Acquisitions & takeovers:
Acquisition – Company unilaterally relinquishes its
independence & adapts to another firms plans.
Mergers – All combining firms relinquish their independence &
cooperate, resulting in the establishment of a common
corporation.

6. • Hostile takeover
• Parameters for M&A:
– Promoter’s stake
– Holding pattern
– Market capitalization

7. Theories explaining Y M&A take place:
• Efficiency Theory
• Differential Efficiency Theory
• Related Inefficient Management Theory
• Operating Synergy Theory
• Financial Synergy Theory
• Undervaluation Theory
• Theory of Strategic Alignment to Changing
Environment

8. 2. Demerger:
• Spinning of a business in a diversified
company into a stand alone new company
along with distribution of shares to the
existing share holders of the original company.
3. Diversification:
• Process whereby a corporation moves into
additional businesses.

9. Advantages of Diversification:
• Reduces risk by stabilizing profits
• Exploiting an organizations strategy in competence
• Way to achieve growth
Types:
• Related Diversification
• Unrelated Diversification

10. 4. Share Buyback:
• Indian companies act, 1956
• Allowed in 1997
• By tender or by a private negotiation
• Reasons:
– To invest excess cash at higher rate of return
– Change the capital structure
– Increase earnings per share & book value
– Use as an acquisition currency
– Offset the dilution of issuer plans
– Eliminate smaller shareholding (servicing costs)

11. 5. Divestiture:
• Sale of a segment of a company to a third party.
• Assets, product lines or divisions are sold for cash
• Reasons:
– Elimination of low-return business
– Streamlining the corporation
– Avoidance of exposure of assets to political risk
6. Disinvestment:
–Sale of only a part of the equity holdings held by the govt to
pvt investors.
–Dilution of ownership & not transfer
–Objective: improve performance of public enterprises.
–Disinvestment Commission(1996) – G.V.Ramakrishnan

12. 7. Joint Ventures:
• Creation of a new organizational entity by two or more
partner organizations.
• Reasons:
– To expand overseas
– Deal with world market integration
– Face international competition
– Use technology
– Leverage the resources
– Reduce manufacturing cost
– Diffusing new technologies

13. 8. Strategic Alliances / Collaborations:
• Two or more independent firms involving shared
control and continuing contributions by all partners.
• Types:
– Collaborative advertising
– R & D partnership
– Shared distribution
– Technology transfer
– Resource venturing

14. Process Related Strategic Response
• Responses to improve quality, cost
management, asset utilization,…..
1. Quality Strategies:
• Anything that can be improved
• Four core concepts
– Delighting the customer
– Management by fact
– People based management
– Continuous improvement
–Two Dimensions: Manufacturing & Services

15. 2. International Quality Certification Pgms:
• International series of quality standards
• ISO series
• Developed by ISO Technical Committee in 1987
• Not a legal requirement but a compliance
3. JIT Inventory:
• In a flow-process, the right parts needed reach the assembly
line at the time they are needed & only in the amount
needed
• ZIPS, MAN, NOT

16. 4. Benchmarking:
• Systematic process of searching for best practices,
innovative ideas,.. that lead to superior performance.
• Types:
– Internal Benchmarking
– External Benchmarking
– Competitive Benchmarking
– Industry Benchmarking
– Generic Benchmarking
– Functional Benchmarking
– Strategic Benchmarking

17. 5. Core Competence:
• Intangible assets
• Powerful competitive weapons
6. Setting Vision, Mission & Objectives:
• Vision – aspirations for the future
• Mission – Purpose of the legitimate existence of the firm
• Objectives – what is to be accomplished (quantified)
7. Cost Strategies:
• Maximum utilization of resources at minimum cost.
• Planned campaign aimed at cutting costs

18. 8. Asset Utilization Strategy:
9. Technological Up gradation
10. Indigenisation:
• Reduce cost
• Ensure control over supplies
• Technology Policy Statement (1983)
• To attain self-reliance,
• Reduce vulnerability.

19. 11. Information Technology:
• Changing the ways the company operate
12. R & D:
• Translation of research findings or other
knowledge into plan / design for new
products.
• Reasons:

20. 13. Marketing Strategies:
• To differentiate itself from competitors, to
better satisfy the customer needs.
14. Project Management:
• Managing & directing time, material,
personnel & costs to complete a project
• To meet established objectives in time, money

21. Structure Related Strategic Response
1. SBU Organizational Structure:
• Introduced by GE (1971)
• Grouping of business subsidiaries based on some
important strategic elements common to all.
Principles:
• Diversified business – managed as a portfolio of businesses, with each
one serving a separate product market segment
• Separate strategy for SBUs

22. 2. Matrix Structure:
• Structure with two channels of command,
• Two lines of budget authority
• Two sources of performance & reward.
• Combine the advantages of functional & divisional
structures.
• Reasons:
– Highly responsive to two sectors simultaneously (market &
tech)
– Face uncertainties – very high information processing
requirements

23. 3. Delayering / Flat organizational Structure:
• Few levels with relatively large work groups at
each level.
• Remove dysfunctional effects of hierarchy
• Remove barriers off communication
• Make the decision process faster
• Faster response to competitive & market changes

24. HRD – A Strategic Perspective
Changing Environment
Strategic Responses
Strategic HRD

25. Models of HRD
• Hard Variant
• Soft Variant
• 5 – P Model
– Philosophy
– Policies
– Practices
– Programs
– Processes

26. Significance of HRD
• Rapid rate of business change
• Raising costs, competitive pressures
• Technological change
• Complex organization
• Flatter, flexible organizations
• Changing demographics
• External forces

27. Business Strategy & HRD
Models:
1. Reactive Model
2. Proactive Model
3. Match Model
Theories:
1. Portfolio theory
2. Competitive strategy & value chain
3. Life cycle analysis
4. Competencies

28. HR & Business Policy Linkages
Four level Model:
1. Administrative linkages
2. One – way linkage
3. Two – way linkages
4. Integrative linkages

29. Business planning steps HR planning steps
Starting point mission statement Statement of business thrust
Macro environment analysis HR environment analysis
Key business assumptions HR assumptions
Business Implications HR implications
Critical business issues Critical HR issues
Strategy development & evaluationHR strategies & evaluation for
inclusion in strategic business plan
Approval

30. HRD & Life Cycle of Organizations
Life Cycle Stages of an Organization:
1. Embryonic stage may not perceive the need for HRD
2. Growth stage initiating activities, inducing new
recruits, development of teams,
deals with ambiguity
3. Maturity stage well established HRD function
lack of career opportunities
4. Decline stage management of change
organizing problem – centered
project.

31. Organizational stages of development:
1. Start Up recruiting to find key people,…
2. Growth advanced recruiting capability, training &
socialization – to adapt new employees
3. Control cost control of HR programs, controlled
investment
4. Integration integrating HR components & OD
capabilities
5. Flexibility highly developed monitoring, flexibility to
to adjust to market & environment.

32. Strategic HRP
&
Development
Future
Organizational
Plans
Environment
Current
Organizational
Policies
Competitive
Strategy

33. HRD & Organizational Performance
• Individual HR practices can indeed directly
influence organizational performance.
• Way the firm manages the people – affects
profitability & stock price of an organization.