Strategic Management
Overall Goal of Strategic
Management for an Organization
 Deploy
&
allocate
resources
==>
competitive
advantage
Exhibit 3-1
Process of Strategic Management
What is Strategic
Management?
analyze
competitive
situation
develop strategic goals
devise plan of action
allocate resources
implement plan
evaluate results
Two Contrasting Approaches
 Industrial
Organization Model vs.
Resource-Based View
 Research provides support for both
positions
 What drives strategy?
 I/O: External considerations
 RBV: Internal considerations
 I/O: Strategy drives resource acquisition
 RBV: Strategy determined by resources
Corporate Strategies
Corporate Strategies: Growth
1–9
Corporate Strategies: Growth
Benefits
Gaining
economies of scale in operations & functions
Enhancing competitive position vis-à-vis industry
competitors
Providing opportunities for employee professional
development & advancement
1–10
Corporate Strategies: Growth
- Internal
1–11
Corporate Strategies: Growth
- Internal
Internal
Methods
Penetration
of existing markets
Developing new markets
Developing new products or services for existing or new
markets
1–12
Corporate Strategies: Growth
- Internal
Internal
Methods
Penetration
of existing markets
Developing new markets
Developing new products or services for existing or new
markets
HR
Issues
Planning
for new hiring
Alerting current employees
Ensuring quality & performance standards are
maintained
1–13
Corporate Strategies: Growth
- External
1–14
Corporate Strategies: Growth
- External
External
Methods
Acquiring
other organizations
Vertical integration
1–15
Corporate Strategies: Growth
- External
External
Methods
Acquiring
other organizations
Vertical integration
HR
Issues
Merging
organizations
Dismissing redundant employees
1–16
Corporate Strategies: Stability
Corporate Strategies: Stability
 Maintaining
status quo due to
limited environmental opportunities
for gaining competitive advantage
Corporate Strategies: Stability
 Maintaining
status quo due to
limited environmental opportunities
for gaining competitive advantage
 Few employees will have
opportunities for advancement
 Critical that management identify
key employees & develop specific
HR retention strategies to keep
them
Corporate Strategies:
Turnaround or Retrenchment
Corporate Strategies:
Turnaround or Retrenchment
 Downsizing
or streamlining
organization in cost-cutting attempt
to adjust to competitive
environment
 Few opportunities & many
environmental threats
Corporate Strategies:
Turnaround or Retrenchment
 Downsizing
or streamlining
organization in cost-cutting attempt
to adjust to competitive
environment
 Few opportunities & many
environmental threats
 Important to develop HR practices
to manage “survivors”
Business Unit Strategies
Business Unit Strategies: Cost
Leadership
Business Unit Strategies: Cost
Leadership
 Increases
in efficiency & cutting of costs,
then passing savings to consumer
 Assumes price elasticity in demand for
products or services is high
 Assumes that customers are more price
sensitive than brand loyal
Business Unit Strategies: Cost
Leadership
 Increases
in efficiency & cutting of costs,
then passing savings to consumer
 Assumes price elasticity in demand for
products or services is high
 Assumes that customers are more price
sensitive than brand loyal
 HR strategy focuses on short-term
performance measures of results &
promoting efficiency through job
specialization & cross-training
Business Unit Strategies:
Differentiation
Business Unit Strategies:
Differentiation


In order to demand a premium price from
consumers
 Attempting to distinguish organizational
products or services from other competitors
or
 Creating perception of difference
Organization offers employees incentives &
compensation for creativity
Business Unit Strategies:
Differentiation



In order to demand a premium price from
consumers
 Attempting to distinguish organizational
products or services from other competitors
or
 Creating perception of difference
Organization offers employees incentives &
compensation for creativity
HR strategy focuses on external hiring of
unique individuals & on retaining creative
employees
Business Unit Strategies:
Focus
Business Unit Strategies:
Focus
Business attempts to satisfy needs of only a
particular group or narrow market segment
 Strategic intent is to gain consumer loyalty
of neglected groups of consumers

Business Unit Strategies:
Focus
Business attempts to satisfy needs of only a
particular group or narrow market segment
 Strategic intent is to gain consumer loyalty
of neglected groups of consumers
 Strategic HR issue is ensuring employee
awareness of uniqueness of market
segment

 Thorough
employee training & focus on
customer satisfaction are critical factors
 Hiring members of target segment who are
empathetic to customer in target segment
Reading 3.3
Randall Schuler
Text pages 144-155
Strategic Human
Resource Management:
Linking the People with
the Strategic Needs of the
Business
Schuler’s 5-P Model
Strategy Implementation
Strategy
Formulation
HR Practices
Recruiting
Mission
Goals
Job Design
Selection
Training
Development
Performance Pay Structure
Management Incentives
Benefits
Job Analysis
Labor
Relations
Employee
Relations
Strategic Choice
Human Resource
Needs
Human
Resource
Capability
Human
Resource
Actions
Skills
Skills
Behaviors
Behaviors
Abilities
Culture
Knowledge
Results
(Productivity,
Absenteeism,
Turnover)
Emergent Strategies
Firm
Performance
Productivity
Quality
Productivity
Strategy
Evaluation