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THE STRATEGIC MANAGEMENT PROCESS

STRATEGIC PLAN
A companys plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.

Strategy & Strategic Management


Strategy :-The companys long-term plan for how it will balance its internal strengths and weaknesses with its external opportunities and threats to maintain a Competitive advantage. Strategic Management :-The process of identifying and executing the organizations mission by matching its capabilities with the demands of its environment.

Steps in Strategic Management Process


1. Define the current business and mission. 2. Perform external and internal audits. 3. Formulate new business and mission statements. 4. Translate the mission into goals. 5. Formulate strategies to achieve the strategic goals. 6. Implement the strategy. 7. Evaluate performance

Vision:- A general statement of its intended direction that evokes emotional feelings in organisational members

Mission:- Spells out who the company is, What it does , and where its headed.
SWOT Analysis:- The use of a swot chart to compile and organize the process of identifying company Strengths, Weakness, Opportunities and Threats.

A SWOT CHART
STRENGTHS Example :-strong research group OPPORTUNITIES Example:- Expanding china markets WEAKNESS Example:- Aging machinery THREATS Example:- Merger of two competitors to form single strong one.

Types of Strategies
Corporate-Level Strategies

Diversification Strategy

Vertical Integration Strategy

Consolidation Strategy

Geographic Expansion Strategy


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Strategic Control:- The process of assessing progress towards strategic goals and taking corrective action as needed Types of strategies :Corporate strategy:Example:- Pepsico runs Pepsi, Frito-lay, and Pizza Hut
Diversification corporate strategy- By expanding And adding new product line. A vertical integration strategy means the firm expands by ,perhaps producing its own raw materials, or selling its products direct. Consolidation reducing the companys size - and Geographic expansion for instance, taking the business abroad are other corporate strategy possibilities.

Types of Strategies (contd)


Business-Level/ Competitive Strategies

Cost Leadership

Differentiation

Focus/Niche

2. Competitive strategy :- any factor that allows


an organisation to differentiate its products or service from those of its competitors to increase market share.
Cost leadership means the enterprise aims to become the lowcost leader in an industry. Example:- Dell- by selling directly. Differentiation is a second example of a competitive strategy. Example:- VOLVO Stresses the safety of its cars, MERCEDESBENZ Emphasis reliability and quality. Focusers carve out a market niche( like ferrari), and compete by providing a product or service customers can get in no other way.

Focusers carves out a market niche( like fierrari ) , and compete by providing a product or service customers can get in no other way.

3. Functional strategy:- Identify the basic


courses of action that each department will pursue in order to help the business attain its competitive goals. Example:- Dells HR strategies include putting its HR activities on the web to support Dells low-cost competitive strategy.

Human Resource Management Strategy


The Meaning of Strategy
A critical factor that affects Firm Performance A factor that contributes to Competitive Advantage in markets Having a long-term focus Plans that involve the top executives and/or board of directors of the firm A general framework that provides a perspective for selecting specific policies and procedures

Human Resource Management Strategy


Why is HR critical to firm performance?
85% of all firms in the US are service firms. Service is delivered by people. Low quality HR leads to low quality customer service. In the 21st century effective knowledge management translates into competitive advantage and profits. Knowledge comes from a firms people.

Human Resource Management Strategy


What is unique about Human Resource Management?

HR is multidisciplinary: It applies the disciplines of Economics (wages, markets, resources), Psychology (motivation, satisfaction), Sociology (organization structure, culture) and Law (min. wage, labor contracts, EEOC) HR is embedded within the work of all managers, and most individual contributors due to the need of managing people (subordinates, peers and superiors) as well as teams to get things done.

HR Strategy: Strategic Fit


Corporate Strategy Business Strategy HR Strategy HR System Training (Performance Mgmt.)

Rewards

HR Strategy: HR System Internal Fit


HR Strategy
Appeal Goal Setting Performance Measurement Coaching Rewards Performance Evaluation

Performance Management System

HRM and its Environment


Cultural

Strategy, Task & Leadership

External

Internal

Economic

HRM

Professional Bodies

HR Strategy: Context of HR System


1. The Five Factors Influencing the HR System
External Environment Social: social values, roles, trends, etc. Political: political forces, changes. Ex. Bush presidency and its agenda for Social Security. Legal: laws, court decisions, regulatory rules. Economic: product, labor, capital, factor markets.

HR Strategy: Context of HR System


2. The Workforce

Demographics

HR Strategy: Context of HR System


3. Organization Culture

Weak vs. Strong culture Type of culture

HR Strategy: Context of HR System


4. Organization Strategy
What are a firms distinctive competencies? What is the basis that competitive strategy be sustained? What are a firms strategic objectives? Compare corporate and Business strategies.

HR Strategy: Context of HR System


5. Technology of Production & Organization of Work

Physical layout/employee proximity Required employee skills Ease of monitoring employees input

HR Scorecard:- Measures the HR functions effectiveness


and efficiency in producing employee behaviors needed to achieve the companys strategic goals The Ten steps HR Scorecard Process: Define the business Strategy Outline the companys value chain activities. Outline a strategy map. Identify the strategically required organisational outcomes. Identify the required workforce behaviors. Identify the strategically relevant HR systems policies & activities. Creat HR scorecard. Design the HR Scorecard measurement system. Summarize scorecard measures in digital dashboard Periodically re-evaluate the measurement system.

Achieving Strategic Fit


The Fit Point of View (Porter)
All of the firms activities must be tailored to or fit the chosen strategy such that the firms functional strategies support its corporate and competitive strategies.

Leveraging (Hamel and Prahalad)


Stretch in leveraging resourcessupplementing what you have and doing more with what you have can be more important than just fitting the strategic plan to current resources.

Strategy Formulation Role


This expanded strategy formulation role reflects the reality employer face today. Globalization means more competition, more competition means more performance, and most employers are pursuing improved performance by boosting the competence and commitment level of employees. That makes HR managements knowledge and expertise crucial to the strategy formulation process.

Creating the Strategic Human ResourceManagement System


Components of a Strategic HRM System

Human Resource Professionals

Human Resource Policies and Practices

Employee Behaviors and Competencies

Components of a Strategic HRM System


The HR Function:- HR professionals with strategic management competencies. The HR system:- High performance Work System(HPWS) consisting of strategically aligned Hr policies, practices, and activities. Employee behavior:- Employee competencies, values, motivation, and behaviors required by the companys strategic plan.

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