THREE GRAND STRATEGIES Cost Leadership Michael Porter @MichaelEPorter Michael Porter is an economist, researcher, author, advisor, speaker and teacher. Differentiation Focus
FOUR STRATEGIC TYPES Raymond Miles Professor Emeritus and Former Dean Berkeley Haas Prospector Defender Charles Snow Professor Penn State Analyzer Reactor
VALUE CHAIN Primary Activities: Strategy involves the combination 1.Inbound of Logistics goals and plans to achieve competitive advantage 2.Operations and the methods of implementing 3.Outbound them. Logistics 4.Marketing and Sales 5.Service Support Activities: 1.Firm Infrastructure 2.Human Resource Management 3.Technology Development 4.Procurement
KNOWLEDGE CHECK The three major approaches to achieving long-term competitive advantages are cost leadership,.. A) Quality, and production efficiency B) Resource acquisition, and market share C) Cost containment and cost sharing D) Differentiation and focus
STRATEGY FORMULATION Strategic Management Process 1 Identify the Organization s Mission & Objectives 2Analyze Environment: Opportunities & Threats 3 Analyze Resources: Strengths & Weaknesses 4 Formulate Strategy 5 Implement Strategy 6 Evaluate and Monitor Results
STRATEGIC ALIGNMENT
ORGANIZATIONAL CAPABILITIES
ALIGNING THE ORGANIZATION
RESOURCE BASED THEORY OF THE FIRM Control of resources that are rare, nontradable, nonsubstitutable, valued by the market, and difficult or impossible to imitate. Distinctive Competencies: Human resources Physical resources Organizational capital resources
DISTINCTIVE COMPETENCIES Human resources Physical resources Organizational capital resources
FIVE FORCES MODEL
COMPETITOR ANALYSIS Future Objectives Current Strategy Assumptions Capabilities
KNOWLEDGE CHECK The resource-based theory of the firm claims that an organization s competitive advantage is determined by its: A) Core Capability B) Relationship with suppliers and buyers C) Superiority over rival firms D) Ability to limit new entrants into the industry
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SECTION 03 HR Control & Evaluation
LESSON OBJECTIVES List and describe quantitative and qualitative measures. Identify key performance indicators and describe their benefits within the organizational scorecard. Recognize the value-add of HR technology and variations of innovation.
HR BUDGETING PROCESS A budget is an itemized estimate of the operating results of a company for a future time period. Three major purposes: 1.Coordination and Integration 2.Motivation 3.Control and Evaluation
MEASURES OF HR EFFECTIVENESS Subjective Attitudinal Measures Human Resource Audit Statistical Benchmark Employee measures Productivity measures HR process measures Human Resource Accounting Outlay Cost Replacement Cost Human Resource Value Costing HR Activities
HUMAN RESOURCE AUDIT Step 1: Define responsibilities of HR Dep t Step 2: Collect data Step 3: Analyze results Step 6: Implementation & follow-up Step 4: Data feedback and evaluation Step 5: Develop an action plan
KEY PERFORMANCE INDICATORS Organizations need HR metrics that measure both efficiency (time & cost) and effectiveness (ROI & profitability). Leading Indicators Lagging Indicators
BALANCED SCORECARD Analyzing the traditional HR measures concurrently with performance metrics. Four perspectives: 1.Strategic perspective 2.Operational perspective 3.Financial perspective 4.Customer perspective Stakeholders: 1.Stockholders 2.Customer 3.Employees
OUTSOURCING Human Resources Outsourcing (HRO) is a means of outsourcing specialists to perform human resources functions. HRO Options Professional Employer Organization (PEO) Employee Leasing
HR TECHNOLOGY New technologies has dramatically changed the way many HR practices are performed.
KNOWLEDGE CHECK The primary advantage of using a professional employee organization is A) It provides inexpensive consulting advice B) Human resource functions can be outsourced and performed more capably C) The company reduces its exposure to illegal discrimination D) The company saves the money it would have spent on employee benefits and services
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SECTION 04 Organizational Environments
LESSON OBJECTIVES Examine and evaluate the eight environmental sectors of an organization. Demonstrate the conditions of environmental scanning. Identify the four processes in which HR Managers can influence the legislative process.
ENVIRONMENTAL SECTORS
ENVIRONMENTAL SCANNING Examining the economic & social forces influencing the organization, especially the long-term composition of the labor force and the future availability of employees. Economic conditions Unemployment Inflation Competition Technological advances
INFLUENCING LEGISLATION HR managers are expected to actively participate in the formation of state and federal laws. Legislative Process Proposed Legislation Informing Legislators Protesting a Law or Agency Regulation
ENVIRONMENTAL UNCERTAINTY Some organizations enjoy a fairly stable world while others face growing uncertainty. Environmental uncertainty stems from two variables 1. The complexity of the environment 2. How rapidly the environment changes
ORGANIZATIONAL ENVIRONMENTS Rate of Change Rapid Slow Entrepreneurial Organizations Proprietorship Organizations Simple Flexible Organizations Institutional Organizations Complex Environmental Complexity
REDUCING UNCERTAINTY Because uncertainty threatens organizational survival and reduces its effectiveness, organizations use a variety of strategies to reduce environmental uncertainty. Changing the organizational structure Planning and forecasting Mergers and acquisitions Cooptation Public relations and advertising Political activity Illegal activities (although wrong)
KNOWLEDGE CHECK When examining environmental uncertainty, the number of external elements that are relevant to an organization is referred to as environmental A) Domain B) Relevance C) Stability D) Complexity
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SECTION 05 Organizational Design & Development
LESSON OBJECTIVES Differentiate between organizational structures and assign which structures would best be suitable to make an organization functional and profitable. Define and describe the advantages and disadvantages of the matrix structure.
DIFFERENTIATION AND INTEGRATION The creation of an organizational structure requires an organization to respond to two basic issues: Differentiation How to divide the work into specialized jobs. Integration How to coordinate what has been divided.
DEPARTMENTALIZATION Functional Focus on one function May cause suboptimizing Product Combines jobs that produce similar products May cause duplication of roles
DECISION MAKING Centralized Authority to make organizational decisions is retained by top managers within the central office. Decentralized Power and authority are extended to supervisors and the production employees at lower hierarchical levels of the organizational structure.
DECISION MAKING Authority: Delegation Centralized Decentralized
FORMAL VS. INFORMAL RULES The creation of an organizational structure requires an organization to respond to two basic issues: Coordinating mechanisms: Personal discretion Direct supervision & rules Mutual adjustment
DIVISION OF LABOR The extend to which jobs should be specialized. Division of Labor: Specialization High Low
SPAN OF CONTROL The number of individuals in a group under one supervisor. Span of Control: Number Few Many
MATRIX STRUCTURE
KNOWLEDGE CHECK A bureaucracy that is characterized by homogenous functional departmentalization, centralized decision making, formal rules and control mechanisms, and highly specialized jobs is considered A) Mechanistic Structure B) Organic Structure C) Matrix Structure D) Paradox Structure
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