Strategic Management
Copyright © 2016 by Nelson Education Ltd.
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Discuss why managers need to examine the
human resources implications of their
organizational strategies
Discuss why human resources managers
need to understand strategy
Understand the various terms used to
define strategy and its processes
Copyright © 2016 by Nelson Education Ltd.
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Describe organizational strategies,
including restructuring, growth, and
maintenance
Define business strategy and discuss how it
differs from corporate strategy
Discuss the steps used in strategic planning
List the benefits of strategic planning
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Common theme among many companies
◦ Adapting organizational strategies to
include HRM is essential
If HRM strategies are not skillfully
applied, they can negatively affect
organizational strategy
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Strategic management of people through
HR programs and policies helps to ensure
positive organizational outcomes, such as:
◦ profitability
◦ customer satisfaction
◦ employee performance
◦ organizational survival
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Hemera/Thinkstock
The formulation of
organizational
objectives,
competitive scopes,
and action plans for
gaining advantage
The plan for how
an organization
intends to achieve
its goals
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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
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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
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Corporate strategies
◦ Organizational-level decisions that focus
on long-term growth and survival
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2.
3.
Restructuring: turnaround, divestiture,
liquidation, and bankruptcy
Growth: incremental, international, and
mergers and acquisitions
Stability: maintains status quo
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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
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Thinkstock
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
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Copyright © 2016 by Nelson Education Ltd.
Thinkstock
Incremental
growth: Can be
attained by
expanding the
client base,
increasing
products/services,
changing the
distribution
networks, or using
technology
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International growth: Can be attained by
seeking new customers or markets by
expanding internationally
Acquisition: The purchase of one company
by another
Merger: Two organizations combine
resources and become one
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Maintenance strategies where companies do
not wish to see their companies grow and
so their strategic HRM practices remain
constant. Can be called
◦ status quo
◦ do-nothing strategies
◦ pause and proceed with caution
◦ harvest strategy
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Business strategy:
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Many large organizations operate several
businesses under the same or different
names
Each may have its own strategy
Business strategy is the action plan for a
single line of business to gain competitive
advantage
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©Pling/Shutterstock
Corporate strategy:
 Organizationallevel decisions
that focus on
long-term
survival
 Examines
questions about
which competitive
strategy to
choose
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A strategic plan describes the
organization’s future direction,
performance targets, and approaches to
achieve the targets in a formal, written
statement
Strategic planning can be a long process
that has numerous steps, including the
following:
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Mission statement: An articulation of the
purpose of the organization and the value
it creates for customers
Vision statement: A clear and compelling
goal that serves to unite an organization’s
efforts
Values: The basic beliefs that govern
individual and group behaviour in an
organization
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1. Conveys a sense of identity for
employees
2. Generates employee commitment to
something greater than themselves
3. Adds to the stability of the organization
as a social system
4. Serves as a frame of reference for
employees to use to make sense of
organizational activities and to use as a
guide for appropriate behaviour
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Hard objectives
• Goals that are an expression in
measurable terms of what an
organization intends to achieve;
include numbers
Soft objectives
• Goals that define the targets of
social conduct for the organization
and may not always be quantifiable
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The characteristics of a firm that
enable it to earn higher rates of
profit than its competitors by
utilizing its resources, including:
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Tangible assets
• Organizational assets that have
substance and can be consumed
Intangible assets
• Organizational assets that are not
concrete, such as reputation, goodwill
Capabilities
• Collective skills, abilities, and expertise
of an organization
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1.
2.
3.
4.
Valuable: Are the resources and
capabilities able to help generate
value/reduce cost?
Rare: Are the resources and capabilities
not available to competitors?
Inimitable: Are the resources and
capabilities hard to copy by competitors?
Organized: Are the resources and
capabilities able to be exploited by the
firm?
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Core competencies: Organizational resources
and capabilities that serve as a firm’s
competitive advantage. A competitively
important activity that directly contributes
to a company’s strategy
Dynamic capabilities: Organizational
capabilities to adapt and renew
competencies in accordance with the
changing business environment
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SWOT is an acronym for:
• Strengths
• Weaknesses
• Opportunities
• Threats
Used to analyze the company’s resource
capabilities and deficiencies and its market
opportunities and threats in the future
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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
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1.
2.
3.
4.
5.
Low-cost provider strategy
Broad differentiation strategy
Best-cost provider strategy
Focused or market niche strategy based
on lower cost
Focused or market niche strategy based
on differentiation
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Strategy implementation is the process by
which a strategy is put into action
This process is sometimes called
operational planning – consisting of
programs, budgets, and procedures
Program – outlines the steps or activities
necessary to accomplish the goal
Procedures – list the steps required to get
the job done
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Clarity
Coordination
Efficiency
Incentives
Change
Career Development
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Relegating the process to official planners
and not involving executives and managers
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 strategy
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