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Strategic Human Resources Management
Linda M. Balboul
Ph.D. Sociology
MBA Human Resources
PMP
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Art & science of formulating,
implementing, and evaluating, cross-functional decisions that enable an
organization to achieve its objectives
Strategic ManagementDefined
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In essence, the strategic plan is a
companys game plan
Strategic Management
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Strategic Management
The term strategic management is used
synonymously withstrategic planning.
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3Stages of the Strategic Management Process
Strategy formulation
Strategy implementation
Strategy evaluation
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Vision&Mission
Strategy Formulation
ExternalOpportunities&Threats
InternalStrengths&Weaknesses
Long-TermObjectives
AlternativeStrategies
StrategySelection
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Issues in Strategy
Formulation
Businesses to enter
Businesses to abandon
Allocation of resources
Expansion or
diversification
International markets
Mergers or joint ventures
Avoidance of hostile
takeover
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Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
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Strategy Implementation Steps
Developing a strategy-supportive culture
Creating an effective organizational structure
Redirecting marketing efforts Preparing budgets
Developing and utilizing information systems
Linking employee compensation to organizationalperformance
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Strategy Evaluation
Internal Audit
External Audit
Performance Measurement
Corrective Action
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Peter Drucker: Think through the overall
mission of a business.Ask the key question:
What is our Business?
Prime Task of
Strategic Management
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Anything that a firm does
especially well compared to rival
firms
Strategic Management is Gaining and
Maintaining Competitive Advantage
Strategic Management
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Strategy
Strategies are the means bywhich long-term objectives
will be achieved.
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What Is A Strategy?
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Strategic Management Process
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What Is A Strategy?
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Strategic Management Process
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Comparing Business And Military
Strategy
A Strong Military Heritage Underlies the Study of StrategicManagement
Terms such as objectives, mission, strengths, and weaknesseswere firstformulated to address problems on the battlefield.
A fundamental difference between military and business strategy is thatbusiness strategy is formulated, implemented, and evaluated with theassumption of competition, while military strategy is based on an
assumption of conflict.
The similarities between military and business strategy can be seen inSun TzusThe Art of War.
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Strategic Management Model
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Benefits of Strategic Management
Nonfinancial Benefits
Enhanced awareness of threats Improved understanding of competitorsstrategies
Increased employee productivity
Reduced resistance to change
Clearer understanding of performance-rewardrelationship
Enhanced problem-prevention capabilities
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Why Some Firms Do No Strategic Planning
Lack of knowledge of strategic planning
Poor reward structures
Fire fighting
Waste of time
Too expensive
Laziness
Content with success
Fear of failure
Overconfidence Prior bad experience
Self-interest
Fear of the unknown
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Strategic Management (Buzz Word)
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Strategy Is Modern-day War
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Defining Our Strategy
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IKEA: Well-defined Strategy
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What Do We Want To Become/Where Do We
Want To Go?
Importance of a Vision Statement
A vision statement should answer the basic question, Whatdo
we want to become/where do we want to go?
A clear vision provides the foundation for developing acomprehensive mission statement.
Many organizations have both a vision and a mission
statement, but the vision statement should be established
first and foremost.
The vision statement should be short, preferably one
sentence
As many managers as possible should have input into
developing the statement.
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What Is Our Business?
Drucker says asking the question, Whatis our business?is
synonymous with asking the question, What is our mission?
An enduring statement of purpose that distinguishes one
organization from other similar enterprises, the missionstatement is a declaration of an organizations reason for
being (raison dtre).
Sometimes called a creed statement, a statement of purpose, a
statement of philosophy, a statement of beliefs, a statement ofbusiness principles, or a statement definingour business,amission statement reveals what an organization wants to be and
whom it wants to serve.
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Vision Statement
What do we want to become?
Mission Statement
What is our business?
Formulate a New Business Mission and
Its Vision
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Mission Statement Components
Components and Questions That a Mission Statement Should Answer
1. Customers: Who are the firmscustomers?
2. Products or services: What are the firmsmajor products?
3. Markets:Geographically, where does the firm compete?
4. Technology: Is the firm technologically current?
5. Concern for survival, growth, and profitability: Is the firm committed to growth and
financial soundness?
6. Philosophy: What are the basic beliefs, values, aspirations, and ethical priorities of the
firm?
7. Self-concept: What is the firms distinctive competence or major competitive
advantage?
8. Concern for public image: Is the firm responsive to social, community, and
environmental concerns?
9. Concern for employees: Are employees a valuable asset of the firm?
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Jerry McGuires Mission Statement
http://localhost/var/www/apps/conversion/tmp/scratch_8/SHRM/Jerry%20McGuire%20Mission%20Statement.mp4http://localhost/var/www/apps/conversion/tmp/scratch_8/SHRM/Jerry%20McGuire%20Mission%20Statement.mp4 -
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Define The Current Business
Decisions on:
Products and services to provide
Where to sell them Product/Services differences from competitors
Example: Rolex sells high-priced quality watches vs.
Seiko sells inexpensive but innovative watches
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Clearly Define Your Industry
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BMW Case
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Perform Internal And External Audits
Analyze external and internal situations
Usage of SWOT (Strengths, Weaknesses,Opportunities and Threats) analysis through the
usage of a SWOT chart
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SWOT Analysis
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Analysis of Trends
Economic
Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
Technological
Competitors
External Opportunities and Threats
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Basic Rule Of Strategic Management
External Opportunities and Threats
Strategy Formulation
Take advantage of
External Opportunities
Avoid/minimize impactof External Threats
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It is not the strongest of the species that survive,nor the most intelligent, but the one most responsiveto change.
Charles Darwin
External Assessment
Nothing focuses the mind better than the constantsight of a competitor who wants to wipe you off
the map.
Wayne Calloway, Former CEO, PepsiCo
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Ch 3 -41
Industrial Organization (I/O) View
-- Industry factors more important than
internal factors
Performance determined by industry forces
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Economies of Scale
Industry Analysis
Barriers to market entry
Product differentiation
Level of competitiveness
I/O Perspective Firm Performance
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Industry Analysis (EFE)
External Factor Evaluation Matrix
Summarize & evaluate:
CompetitivePoliticalCultural
TechnologicalEnvironmentalSocial
GovernmentalDemographicEconomic
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Industry Analysis (EFE)
Five-Step process
List key external factors (10-20) Opportunities & threats
Assign weight to each (0 to 1.0)
Sum of all weights = 1.0 Assign 1-4 rating to each factor
Firms current strategies response to the factor
Multiply each factors weight by its rating
Produces a weighted score Sum the weighted scores for each
Determines the total weighted score for the organization.
Highest possible weighted score for the organization is 4.0; thelowest, 1.0. Average = 2.5
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.201.20Political unrest/change of governments
.202.10Bad media exposure
.102.05Smokeless market/places
.153.05Production limits on tobacco
.202.10Legislation against the tobacco industry
Threats
.303.10More social pressure to quit smoking
2.101.00TOTAL
.604.15Leader in discount market
.051.05Astronomical Internet growth
.153.05Increased demand
.151.15Markets untapped
Weighted
scoreRatingWeight
Key External Factors
Opportunities
Sharkeya Case
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Industry Analysis (EFE)
Sharkeya (in the previous example), has a
total weighted score of 2.10indicatingthat the firm is below average in its
effort to pursue strategies that
capitalize on external opportunities andavoid threats.
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Controllable activities performedespecially well or poorly
Determined relative to competitors
Internal Strengths and Weaknesses
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Assessing the Internal Environment
Internal Strengths and Weaknesses
Internal Factors
Performance Measures
Ratios
Industry Averages
Survey Data
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Internal Versus External Factors
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What are internal factors?
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STARBUCKS Case
3
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Internal resources come from 3categories
A. Physical resources: plant, equipment, location,
technology, raw materials, machines, etc.
B.
Human resources: employees, training,experience, intelligence, knowledge, skills, abilities,
etc.
C. Organizational resources: firm structure, planning
processes, information systems, patents,trademarks, copyrights, databases, etc.
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Key Internal Forces
Generally in the Arab world, the internal capacity to
assess external environments and explore their
trends, is lacking.
Arab management, therefore, should give prioritytointernal capacity-building processes and encourage
creative rethinking of strategic initiatives and externaltrends.
The Process of Performing an Internal
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The Process of Performing an Internal
Assessment
1. Representative managers and employees from throughout the firm need
to be involved in determining a firmsstrengths and weaknesses.
2. The internal assessment requires gathering and assimilating information
about the firms management, marketing, finance/accounting,
production/operations, research and development (R&D), and
management information systems operations.
3. Performing an internal assessment requires gathering, assimilating, and
evaluating information about the firmsoperations too.
4. Compared to the external assessment, the process of performing aninternal assessment provides more opportunity for participants to
understand how their jobs, departments, and divisions fit into the
whole organization.
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( )
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The Resource-Based View (RBV)
Th R B d Vi (RBV)
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The Resource-Based View (RBV)
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Specific results that an organization seeks
to achieve in pursuing its basic mission
Long-term means more than one year
Long-Term Objectives
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Essential for ensuring the firms success
Provide direction
Aid in evaluationCreate synergy
Reveal priorities
Focus coordination
Provide basis for planning, organizing, leading
and controlling
Long-Term Objectives
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Levels of Organizational Strategy
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Corporate Strategies
Diversification strategy implies that the firm will
expand by adding new product lines.
Vertical integration strategymeans the firm expands
by, perhaps, producing its own raw materials, or sellingits products direct.
Consolidation strategyreduces the companyssize
Geographic expansion strategy takes the companyabroad.
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Corporate Strategy: Amazon.com Case
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Vertical Integration Strategy
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B i C i i S
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Business or Competitive Strategy
A strategy focused on how anorganization should compete in
each of its SBUs (strategic
business units)
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Business Level Strategic Planning
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373
Business Level Strategic Planning
Achieving Sustained Competitive
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1. Continually adapting to changes in externaltrends and events and internal capabilities,competencies and resources
Achieving Sustained Competitive
Advantage
2. Effectively formulating, implementing, andevaluating strategies that capitalize on thosefactors
T f C i i S i
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Types of Competitive Strategies
Cost Leadership Strategy
Seeking to attain the lowest total overall costs relative toother industry competitors.
Differentiation Strategy
Attempting to create a unique and distinctive product orservice for which customers will pay a premium.
Focus Strategy Using a cost or differentiation advantage to exploit a
particular market segment rather a larger market.
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Fi F O i
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Five Forces Overview
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Corporate Portfolio Analysis
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Corporate Portfolio Analysis
Managers manage portfolio (or collection) of businesses usinga corporate portfolio matrix such as the BCG Matrix.
BCG Matrix
Developed by the Boston Consulting Group Considers market share and industry growth rate
Classifies firms as:
Cash cows:low growth rate, high market share
Stars:high growth rate, high market share
Question marks:high growth rate, low market share
Dogs:low growth rate, low market share
The Boston Consulting Groups Growth-Share
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g p
Matrix (BCG)
Marke
tGrowthRate
Relative Market Share
Dogs 8
7
3
?
Question marks
?21
Cash cows
6
Stars
5
4
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Implement the Strategies
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Implement the Strategies
Implementation = putting into action Hiring people
Building plants adding new product lines
Involves management functions:
Plan
Organize Lead
Control
A l Obj ti
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Short-term milestones that firmsmust achieve to reach long-termobjectives
Annual Objectives
P li i
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Means by which annualobjectives will be achieved
Policies
Strategy Implementation
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Strategy Implementation
Mike Duke
Sam Walton
Evaluate Performance
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Evaluate Performance
Success of strategies dependent on changes inexternal factors
E.g. New trends may reduce demand in one product
and increase the demand for another
Strategic Control necessary
Process of accessing progress towards strategic
goals and taking corrective actions
Managers study new situations and make
adjustments
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Assignment Research and analyze
Azza Fahmy case study
and provide the
following:
Proposed vision
Proposed Mission
SWOT
External FactorEvaluation (EFE) Matrix
Your recommendation if
any
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Questions?
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