Strategic Planning

1
Strategic Planning
2
Corporate Strategy Simplified

• 1. Core Competencies
• An area of specialized expertise
• C.K. Prahalad and Gary Hamel (1990) Harvard
  Business Review
• Competitive advantage
• Something you do better than competitors

• 2. Efficiency vs. Innovation

Cost Leadership Cheaper Prices
Differentiation Better Products
3
Strategy

• A set of integrated and coordinated commitments
  and actions intended to achieve a stated goal.
• A guide for action that is closely linked to the
  nature of the business.
• Strategic Human Resource Management
• Involves aligning initiatives involving how
  people are managed with the organizational
  mission and objectives.

4
Models of Strategy

• Industrial Organization (O/I) Model
• The external environment is the primary
  determinant of organizational strategy rather
  than the internal decisions of its managers.
• All competing organizations control or have equal
  access to resources.
• Resources are highly mobile between firms.
• Organizational success is achieved by offering
  goods and services at lower costs than
  competitors or by differentiating products such
  that they bring premium prices.
• Resource-Based View (RBV)
• An organizations resources and capabilities, not
  external environmental conditions, should be the
  basis for strategic decisions.
• Competitive advantage is gained through the
  acquisition and value of organizational
  resources.
• Organizations can identify, locate and acquire
  key valuable resources.
• Resources are not highly mobile across
  organizations and once acquired are retained.
• Valuable resources are costly to imitate and
  non-substitutable.

5
Levels of Strategy

• Corporate Strategy
• Growth
• Stability
• Turnaround
• Business-Level Competitive
• Cost leadership
• Focus
• Differentiation
• Functional

6
Corporate Strategies Growth

• 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 and performance standards are
  maintained

• External Methods
• Acquiring other organizations
• Vertical integration
• HR Issues
• Merging organizations
• Dismissing redundant employees

7
Corporate Strategies (contd)

• Stability
• Maintaining the status quo due to limited
  environmental opportunities for gaining
  competitive advantage.
• Few employees will have opportunities for
  advancement.
• Critical that management identify key employees
  and develop specific HR retention strategies to
  keep them.
• Turnaround or Retrenchment
• Downsizing or streamlining the organization in a
  cost-cutting attempt to adjust to the competitive
  environment.
• Few opportunities and many environmental threats.
• Important to develop HR practices to manage the
  survivors.

8
Competitive Strategy
Behavioral imperatives for success.
Innovation
Focus
Low Cost

• Efficient Production
• Lower Labor Costs
• Part-time/shift work
• Repetitive work
• Minimum benefits
• Reengineering

• Experimentation
• Risk Taking
• Project Management
• Teamwork

• Responsiveness to customers
• Problem Solving
• Quality Standards

9
Differentiation Strategy

• Attempting to distinguish organizational products
  or services from other competitors or creating
  the perception of a difference in order to demand
  a premium price from consumers.
• Organization offers employees incentives and
  compensation for creativity.
• What types of HR issues / practices?

10
Cost Leadership Strategy

• Increases in efficiency and cutting of costs
  then passing the savings to the consumer.
• Assumes price elasticity in demand for products
  or services is high small change in price will
  cause large increase in demand.
• Assumes that customers are more price sensitive
  than brand loyal.
• What types of HR issues / practices?

11
Focus Strategy

• Business attempts to satisfy the needs of only a
  particular group or narrow segment of the market.
• Strategic intent is to gain consumer loyalty of
  neglected groups of consumers.
• What types of HR issues / practices?

12
Benefits of a Strategic Approach to HR

• Facilitates the development of a high-quality
  workforce through its focus on the types of
  people and skills needed.
• Facilitates cost-effective utilization of labor,
  particularly in service industries where labor is
  generally the greatest cost.
• Facilitates the planning and assessment of
  environmental uncertainty and the adaptation of
  the organization to the external forces that
  impact the organization.

13
Starbucks Coffee

• Corporate Strategy?
• Competitive Strategy?

14
What benefits will I receive as a Starbucks
Partner?

• Partners who work full time or part time
  (generally 20 hours or more per week) may
  participate in a variety of programs including
• Progressive Compensation
• Healthcare Benefits (Medical, Prescription Drugs,
  Dental and Vision)
• Retirement Savings Plan
• Stock Options and Discounted Stock Purchase Plan
  Bean Stock
• Income Protection Plan (Life and Disability
  Coverage)
• Management Bonus Plan
• Adoption Assistance Plan
• Domestic partner benefits
• Referral programs and support resources for child
  and eldercare
• Employee involvement
• A pound of coffee each week
• http//www.starbucks.com/aboutus/jobcenter_thesbux
  experience.asp

15
HR and Performance

• Performance requires HR practices that
• Match the business strategy
• Are internally consistent
• Fit with organizational values and beliefs
• HR affects performance through
• Skills acquisitions and skill development
• Employee motivation
• Organizational efficiencies
• Is HR the only truly sustainable competitive
  advantage?