Educational explanation

1. EXECUTING BUSINESS STRATEGIES
THROUGH HUMAN RESOURCE
MANAGEMENT PRACTICES
Bahadır Beadin

2. INRODUCTION
 Each business begins and evolves with a strategy that is
based on its customers.
 At its heart, strategy is a coherent set of integrated
choices about what an organization will do in order to
accomplish its goals and objectives.
 Effectiveness of human resources management at
company's critical organization and strategys in process,
leaders and its people.
 Processes; how company it will create value to serve
them.
 Leaders; their priorities, focus, dedication to the
business
 And its people; who it hires, develops, retains.

3. FORCES OF CHANGE
 Regardless of the product or service offered, every
organization must adapt to its environment.
 Customer needs, revised product designs,
technological breakthroughs, new process
improvements, and competitors’ actions represent
just a few of the major forces in the business
environment.
 As an industry evolves, customer expectations tend
to become clearer (more known), and the
environmental landscape becomes more stable, as
shown along the vertical axis.

4.  The choice of strategies that suit one particular
business well may not translate into competitive
advantage or success for another business or across
industries.

5.  All so we can say that in the worst situations, an
organization’s entire vision, strategy and business
model can become completely irrelevant almost
overnight.

6.  All so effect Customer Expectations.
 It becomes an uphill battle for firms to distinguish
themselves from their rivals, since products become
more similar and customers demand more features
or performance for what they pay.

7. DESIGNING EFFECTIVE BUSINESS
STRATEGIES
 In their book Demystifying Your Business Strategy,
David Lei and John Slocum developed four archetypical
business strategies that correspond to the industry
environments captured in Fig.
 Four distinct business strategies represent the dominant
modes for crafting the strategic disciplines and
organization designs to create and sustain advantage.
 These four strategies are called Pioneers, Trendsetters,
Consolidators, and Reinventors.
 Consequently, each strategy will shape the kinds of
management processes and human resource practices
necessary to support strategy execution.

9. PIONEERS
 Pioneers are the lifeblood of every industry in every
economy.
 Industries depend on pioneers to create new
products and technological breakthroughs that seed
entirely new ways of doing things.
 Pioneers thrive in highly uncertain, dynamic
environments.
 The barriers to entry and exit are often quite low.
One of the most daunting uncertainties confronting
Pioneers is how best do they measure their
customers’ expectations and then develop a
method to serve them.

10.  The source of Pioneers’ competitive advantage is to
capitalize on its first-mover advantage.
 This occurs when a firm has the opportunity to
introduce a new product in an existing market, to
create a new market, or to create value in a new
way for its customers.
 Pioneers tend to be firms that often have founders
with great vision and passion for doing something
that most people think impossible.

11.  Example Netflix
 Netflix uses a unique and coherent set of HR
practices to shape its culture. Getting the right
people on board and sustaining high performance
across the company are essential.
 Netflix, originally conceived as an on-line
subscription-based DVD rental service, quickly
became the top video rental company through its
proprietary.
 Now, Netflix is pioneering the shift to offering
television and other content programming via the
Internet and has developed sophisticated
technology to make this transition happen.

12. TRENDSETTERS
 Those pursuing a Trendsetter strategy continually
tailor and shape their products and services to fit an
increasingly precise definition of what the customer
wants
 They typically look at the customer’s long-term value
to the business.
 Trendsetters live and breathe customer intimacy and
innovation.
 Trendsetters constantly experiment with new product
and service concepts to see which ones work best.

13.  Changing customer expectations require
Trendsetters to stay agile and nimble so that they
can respond quickly to new market segments,
changing customer needs, and shifting technological
trajectories.
 Trendsetters build brand equity by isolating and
meeting customer needs that are on the leading
edge, or where exceptional personal attention is
synonymous with customer satisfaction.

14.  Example Whole Food
 The leading retailer of natural and organic foods,
with more than 311 locations.
 Americans would increasingly care for not only what
they eat and how they eat, but also their impact on
the larger environment of the planet.
 Whole Foods’ purpose is helping people eat well,
improving the quality of their lives, and increasing
their lifespan.
 It achieves this purpose through selling organic
foods and promoting environmental benefits to
organic farmers, ranchers, and others who practice
sustainable agricultural practices

15. CONSOLIDATORS
 As industry growth rates slow down and innovations
become more incremental, a new strategic imperative
kicks in, it's called consolidation.
 Industry’s slow growth, Consolidators’ gains in market
share are almost impossible to attain without bruising
battles with other firms, most often through price
wars.
 Central to the Consolidators’ sustainable competitive
advantage is the pursuit of cost-efficiency in every
aspect of their operations.
 This search for cost-efficiency cannot come at the
expense of product quality, however.

16.  Consolidators must preserve their brand equity while
simultaneously looking for every possible way to
streamline, standardize, and render operations
consistent across the organization
 The Consolidators’ source of competitive advantage
is the attainment of operational excellence in all of its
activities.
 Consolidators will devote more resources to making
their offerings more consistent, slicing the number of
steps to provide them, and striving for a low-cost
leadership position in the marketplace.

17.  Example Costco Wholesale
 Costco’s limited product line allows the company to
be focused on acquiring and selling a mix of
products that generate high sales volume and
inventory turnover.
 Costco drives volume with its low price, high quality
merchandize mix by following the ‘‘14 Percent
Rule’’–—‘‘no Costco product will be marked up more
than 14 percent above wholesale, regardless of how
well it is selling or what the competitors are doing.
 In addition, the warehouse model means that
operations are less complex, and the company can
reduce or eliminate certain costs associated with
inventorying, transporting, handling, and displaying
products.

18. REINVENTORS
 When a pre-existing business begins to hinder a
firm’s ability to compete, it must reinvent itself to
survive.
 Reinventors are typically large businesses, many of
which are part of multi-product diversified firms.
 Most often, Reinventors will face technological
breakthroughs that completely redefine how a
product/service is created, or how a customer uses
its product/service.
 In practice, however, reinvention efforts are
enormously difficult and complex endeavors.

19.  Reinventors have lost their sources of competitive
advant-age in a core business line.
 Successful reinvention means that businesses must
acknowledge and measure the shifting industry
landscape’s impact on their competitive advantage.
 Undertaking reinvention is not without its risks in
fact, the entire reinvention process is all about
managing risks on multiple dimensions: sorting
through customers changing needs; understanding
new technologies; learning and cultivating new
organizational processes; and instilling new skills,
cultures, and mindsets throughout the firm.

20. ALIGNING PEOPLE AND CULTURE WITH
STRATEGY FOR COMPETITIVE ADVANTAGE
 Possible sources of competitive advantage include
advantages due to products, pricing, technology,
finances, physical plant, location and operations.
 These sources of advantage are mostly tangible
and quantifiable. There is increasing recognition
that a company’s people and culture, largely
intangible resources, are also important sources of
competitive advantage.
 By generating, reinforcing, and sustaining
employees’ cap-abilities and actions in line with
strategic goals, the HR function makes an important
contribution to the firm’s com-petitive position.

21.  As shown in Figure it is simply not enough to create
human resource practices that are aligned with
strategy. The real challenge for executives is to
implement HR practices in such a way that these
actions enable a firm’s strategy to be implemented.

22.  The line of sight concept implies that every company
should have a different configuration of HR practices
for its unique strategy in its efforts to attain a
competitive advantage.
 While companies pursuing a particular strategy type
- Pioneers, Trendsetters, Consolidators, or
Reinventors - may use similar human resource
management activities to support that strategy.
 HR practices should be tailored specifically to
develop human and social capital directly linked to
the firm’s strategic priorities.

23. CORE HRM PRACTICES UNDERPINNING
STRATEGY EXECUTION: SUMMARY
 Successful strategy execution depends heavily on
attaining co-alignment with the HRM practices that
each firm cultivates according to its own unique set
of values, priorities, mission, and long-term
planning.
 HRM practices forms the basis for a larger ‘‘people
process’’ that should reinforce the firm’s core
strategic discipline.
 This ‘‘people process’’ represents an essential
investment in the firm’s future as vital as developing
new products and processes, or discovering new
markets and customers to serve.

24.  Figure highlights our general conclusions regarding
the HR requirements to support each strategy.
 For Pioneers, break-through innovations are
essential to create new technologies and markets.
 Trendsetters, like Whole Foods, Sewell Automotive
and Andrews Distributing Company, focus on
customer intimacy as their strategic discipline.
 Consolidators exist in a mature environment with
known customer expectations; operational
excellence is the key strategic discipline.
 Reinventors focus on the core discipline of resource
allo-cation.

26.  In summary, the relationships among environmental
con-text, strategy, and HR practices shown in
Figure provide a general conceptual framework.
 Each of the four strategy types assumes a core
strategic discipline that is required for successful
execution.
 In the end, effectively managing the ongoing fit and
flexibility among these relationships may be the key
to a sustainable competitive advantage.

27. THANK YOU