Strategy in Strategic HRM Part 2
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This is part 2 in a 2 part foundational portion for the course Strategic HRM. The course is aimed at working professionals pursuing an Executive MBA. This part is intended to provide a grounding in Strategy to enable a smooth segue to the second part of the Strategic HRM program. It does not therefore dive into the HR aspect specifically but focuses on establishing the foundation of Strategy and its linkage to HR
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Strategy in Strategic HRM Part 2
- 1. STRATEGY IN STRATEGIC HRM: PART 2 Anilesh Seth Ideator, Co Founder & CEO, KROW www.krow.in Ex-CEO/MD: LGSI, Qatalys & Supervalu India www.slideshare.net/anilesh http://In.linkedin.com/in/anileshseth anileshseth@hotmail.com
- 2. Part 2: Sessions 3 & 4 • Objective of these sessions is to enable an understanding of strategy and associated terms and tools to serve as a foundation to segue into Strategic HRM • Content of Part 2:The Strategic Planning Process – use of Analytical tools and frameworks (PESTEL, SWOT, Ansoff Grid, BCG Matrix etc) to enable an understanding of strategic issues and strategy development, linked to a company’s Vision, Mission and Values. The use of Nortan and Kaplan’s Balanced Score Card to develop organizational metrics in the backdrop of a strategy map, connected to human capital as its core
- 3. Strategy development is done in the context of a company’s Vision, Mission and Values Strategic Analysis Vision Mission Strategy Development Values Strategy Implementation
- 4. So what is Vision, Mission and Values? • Long term, encouraging aspiration for the business Vision • Must be in line with corporate values • Purpose of the business Mission • Attitude, behavior, character of the organization to Values guide actions
- 5. Examples of Vision and Mission Company Vision Mission Tata Motors PCBU To develop TATA into a world class - Be the most admired multi- Indian car brand for innovative and national Indian car company superior vehicles producing vehicles that people love to buy - Create an organization that people enjoy working for, doing business in and investing in Google To develop the perfect search engine To organize the world’s information and make it universally accessible and useful Joomla Project -People publishing and collaborating in Our mission is to provide a flexible their communities and around the platform for digital publishing and world collaboration. -Software that is free, secure, and high- quality -A community that is enjoyable and rewarding to participate in -People around the world using their preferred languages -A project that acts autonomously -A project that is socially responsible -A project dedicated to maintaining the trust of its users
- 6. And some Values… Company What we believe/Values Google 1) We want to work with great people 2) Technology innovation is our lifeblood 3) Working at Google is fun 4) Be actively involved; you are Google 5) Don't take success for granted 6) Do the right thing; don't be evil 7) Earn customer and user loyalty and respect every day 8) Sustainable long-term growth and profitability are key to our success 9) Google cares about and supports the communities where we work and live 10) We aspire to improve and change the world Joomla Project -Freedom -Equality -Trust -Community -Collaboration -Usability For detailed commentary on Vision, Mission, Values, read Joomla’s at: http://www.joomla.org/about-joomla/the-project/mission-vision-and-values.html
- 7. Strategic Analysis Strategy Development Strategy Implementation
- 8. PESTEL analysis of the macro- environment
- 9. PESTEL analysis of the macro- environment Govt policy – e.g., Say a young population priorities in supporting business like FDI in retail Interest rates, Online shopping, tax rates, inflation 3G services, etc., Wifi New IT law in India, The monsoon is a great LLP introduction example in India http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm
- 10. PESTEL case: Ikea • Founded in 1943 – started by a 17 year old as a local catalog company • Today more than 300 stores in more than 35 countries with 130,000 co- workers • There are over 10,000 different products in the store • Just recently received clearance to set up shop in India • The focus is on: – Offering a wide range of well designed, functional home furnishing products – At prices so low that as many people as possible will be able to afford them • In India the press states that: – They will not be allowed to set up their cafes – They will not be allowed to mail a catalog – There will be strict sourcing norms
- 11. PESTEL case: Ikea Political: Economical: - Unpredictable tenure of coalition - Reducing GDP growth – current government estimates at about 5.3 % down from - Slow economic reforms 8% in 2012 - Opened up FDI in retail to the extent - CPI Inflation rates for Sept 2012 at of 51% 9.14% Social: Technological: - Aspirational, young population - Great IT manpower – but fewer skilled - Rapid urbanization manpower in areas like supply-chain, - However still a traditional mind set procurement, assortment etc - Caste system – social inequalities - Poor supply chain/poor infrastructure - Customer service orientation is low (Roads, Water, Power) Environmental: Legal: - Monsoons can disrupt the economies - Taxation laws are not favorable to in places like Mumbai investments (like the Vodafone case) - JV Partners in India can dictate terms - Labor laws to their overseas partners - The no of clearances required to set up - Too much red tape a retail firm are huge and time consuming
- 12. SWOT Analysis PESTEL ANALYSIS http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_16.htm
- 13. SWOT Analysis
- 14. SWOT Analysis…Walmart Strengths Weaknesses - Largest retailer: huge buying - Image of pushing small retailers out volumes and negotiating of business styles keeps its cost low - A very large organization – potential - Tight cost and operational issues with communication etc control through sophisticated IT systems Opportunities Threats - Growing markets outside the - Other retailers are adopting Walmart’s US - eg India practices and the pressure on prices may increase over time, to remain competitive
- 15. SWOT Analysis…Sector example: Indian Aviation Strengths Weaknesses - Modern fleet - Airport infrastructure - High Quality - Airways infrastructure - National carrier Accumulated debt/losses - High cost structure - Skilled resources Opportunities Threats - Liberal environment - Mid east aviation - Economic growth - Terrorism - Political stability - Market growth - Location - Lower costs potential Source: http://centreforaviation.com/analysis/mei-perspective-7731
- 16. SWOT Analysis can apply to individuals too (an important HR tool) Example taken from a personal blog
- 17. Back to the Ikea example..using PESTEL and SWOT together Strengths Weaknesses Opportunities Threats - Middle class population of 400 million - Growth of Indian furniture market estimated at 30% - Demand is mostly satisfied by local producers Overlay the opportunities on the PESTEL analysis
- 18. Market Research • MR is any organized effort to gather information about markets or customers • It is a crucial aspect of determining market strategy – it is used to identify and analyze the market need, size and competition • It is a key factor to gain advantage over competitors • It involves the gathering and interpretation of information about consumers/organizations/ind ustries, using statistical techniques to aid in decision making
- 19. Market segmentation • Segmentation is used by a business to target its products at the right customers • It is about producing products that meet customers needs and wants http://www.tutor2u.net/blog/index.php/business-studies/comments/qa-what-is-market-segmentation
- 20. The Ansoff Matrix The Product-Market Grid http://www.ehow.com/video_4957415_business-planning-product-market-grid.html
- 21. The Product-Position map High Price A B Low BHP High BHP C D Low Price Example: Motorcycles
- 22. The BCG Growth-share matrix This is a portfolio planning model developed by BCG http://www.netmba.com/strategy/matrix/bcg/
- 23. The BCG Growth-share matrix - example http://en.wikipedia.org/wiki/Growth-share_matrix
- 25. Strategic Analysis Strategy Development Strategy Implementation
- 26. Strategy Maps
- 27. Strategy map - example Ref: http://purestonepartners.com/tag/strategy-management/
- 28. Strategic Analysis Strategy Development Strategy Implementation
- 29. The Balanced Score Card
- 30. The Balanced Scorecard - Example Ref: http://www.symphonytech.com/articles/bscard.htm
- 31. Back to the link between Strategy and HR Financial Perspective Customer Value Proposition Value Creating Processes At the core is ensuring that a company’s Human Resources Learning and are a source of key Competitive Growth advantage Perspective. HUMAN CAPITAL
- 32. Text books/reference books • Competitive Strategy: Techniques for Analyzing Industries and Competitors – Michael Porter • Competitive Advantage: Creating and Sustaining Superior Performance – Michael Porter • Cases in Competitive Strategy – Michael Porter • Strategy Maps – Kaplan & Norton • What Matters Now – Gary Hamel • Strategic Flexibility – Gary Hamel, C K Prahlad, Howard Thomas, Don O’Neal • Competing for the Future – Gary Hamel, C K Prahlad • Strategic Management – Hitt, Ireland, Hoskisson
Editor's Notes
- To develop strategy you must be guided by what the company has set out to do – the Strategic Intent – and can this be done in the absence of a vision and mission?
- Another way of looking at the Mission of a company is to say that it is what you do best every day. Your vision therefore is what the future looks like simply because you DELIVER on your mission every day.
- Sometimes this is referred to as just PEST – the latter two factors, namely Environmental and Legislative can be covered in the first four.
- Sometimes this is referred to as just PEST – the latter two factors, namely Environmental and Legislative can be covered in the first four.
- Contrast the FDI made in
- Can be applied to a product, brand, sector, company, individual – pretty much anything
- The size of the bubbles is representative of the market share
- Many feel that this is a producer oriented view and what is required is a consumer oriented view. Hence this gave rise to the 5 C’s which are:Product is replaced by Consumer reflecting consumer needsPrice is replaced by Cost representing a focus on total cost of ownershipPromotion is replaced by CommunicationPlace is replaced by ConveniencePartners is not an original P but is intended to reflect the 5th C – namely community
- Strategy maps were developed by Kaplan and NortonThis is intended as a visual map to represent the overall strategyThe intent is to define business objectives across four perspectivesOnce the objectives are agreed upon, they get converted into KPIs and Strategic Initiatives
- Patagonia is a designer of outdoor clothing and gear. They make organic cotton clothing, sportswear, travel clothing etc
- The objective is to align the business activities of an organization to its vision and strategy and therefore to monitor organization performance against strategic goals.This was developed by Kaplan and Norton that added strategic non-financial performance measures to traditional (and historic) metrics to provide a more balanced view.