HR Strategy - Development Flashcards
Strategy Development
HOW - use resources for a competitive advantage
WHERE - to complete
Grow, contract, or expand into new markets
The organization considers where it wants to go (vision) and what it knows about itself and its environment (results of environmental scanning). Then it _develops options for how to get there_.
Strategic Fit
Compatibility of an organization’s strategy with its external and internal environments, especially with regard to the goals and values it chooses and the resources and capabilities that can be deployed toward strategic goals.
When strategic fit exists, an organization’s activities are consistent with the strategy
Each organization’s strategy must have what (two specific types of strategies)?
Business Strategy
Corporate Strategy
Business Strategy
How an organization creates a strategic position and a competitive edge over its rivals.
Use Porter’s Competitive Strategies
Corporate Strategy
Defines the scope of the firm in terms of the industries and markets it competes.
The decisions often center on growth and integration, and sometimes shrinking.
There are two ways an organization can create competitive advantage, and both involve change.
What are these two areas?
- External environment:
- Able to react swiftly to change
- In customer demand, prices, or technology, etc
- Tesla for power can when gas prices increased
- In customer demand, prices, or technology, etc
- Able to react swiftly to change
- Internal environment
- Innovation
- Could be technological, discovery of am unmet customer need, new way to appeal to customers, creation of new processes or business models.
- Innovation
External changes
Create competitive advantage for organizations that can react swiftly to the changes.
Snapchat- adapting to a market that craved privacy, and quick communication.
Tesla- gas prices rise create an electric car.
Internal changes
Organization’s ability to create change, to innovate
Apple- creating the first iphone but with touch screen, before that only nokia had flip phone with internet
What are Porter’s competitive strategies?
- Two basic types of competitive advantages
- Cost leadership
- Differentiation
These could be focused on the entire marketplace OR focused on the Organization
Why do firms pursue a strategy of cost leadership?
Aim at capturing market share within their industry by virtue of lowest price - (Walmart, Costco) volume, low price
Create economies of scale
Why do firms pursue a strategy of differentiation?
Aim for being able to charge a higher price by offering something different or by offering the same thing in a different way from competitors in their industry or market - (Tesla) higher price for unique offering
Product or service offering
Marketing strategies
Delivery System
Why do firms pursue a strategy of Focus?
Apply cost leadership or differentiation within narrow industry segments or niches - (financial services company may choose to focus on high-net-worth individuals)
Ryanair applies aggressive low-cost strategy to the leisure travel segment
Growth Strategy Options
- Strategic alliance
- Joint venture
- Equity partnership
- Merger / Acquisition
- Franchising
- Licensing
- Contract manufacturing
- Management contract
- Turnkey operation
- Greenfield operation
- Brownfield operation
Out of the growth strategies what is Strategic alliance?
Companies agree to share assets, technology, or sales capabilities
When you work together with customers, partners, or even competitors to accomplish something
Out of the growth strategies what is Joint Venture?
Two companies come together to open up a new business that they both partially own
Out of the growth strategies what is Equity partnership?
Two or more parties open a company, they have a contract about profits liabilities and control
Out of the growth strategies what is Merger/acquisition?
Merger - two companies to one
Acquisition - one company acquires another
Out of the growth strategies what is Franchising?
a trademark, product, or service is licensed for an initial fee and ongoing royalties (McDonalds)
Out of the growth strategies what is Licensing?
A company sells licenses to other (typically smaller) companies to use intellectual property (IP), brand, design or business programs.
Examples of licenses:
- Best Buy – Apples lets them sell their products
- Design of a popular character, e.g. Mickey Mouse, on their products.
- A clothing manufacturer like “Life is Good” licensing its designs and brand in a certain country to a local company.
Out of the growth strategies what is Contract Manufacturing?
Having someone produce parts of the product. It is a form of outsourcing
For example, Microsoft’s Xbox game machine is made by Flextronics Corporation (www.flextronics.com), a huge company with factories around the world and nearly USD $15 billion in sales in 2004.
Apple outsources the development of Siri
Out of the growth strategies what is “Management Contract?”
Another company is brought in to run the daily operations of the local business, decisions about financing and ownership reside with owners
Out of the growth strategies what is Turnkey Operation?
An existing company gets a new owner and no major changes are made
I.e. CocaCola and Pepsi are not the same owners as they were previously. I did not know until I was told because nothing changed.
Out of the growth strategies what is Greenfield operation?
A company builds up in a new location, a new branch with all new equipment
Out of the growth strategies what is Brownfield Operation?
A company builds up in a new location a new branch however something currently exists there whether its is an existing building, existing people or abandoned property
Divestitures (and the general steps for divestiture)
Selling of parts of the organization that are underperforming or no longer in line with the strategy
- Identifying the candidate for divestiture
- Identifying buyer
3 Restructure - Execute the deal
Blue Ocean
Creating competitive advantage through innovation or entering new markets
Red Ocean
Competing in existing market places through differentiation or lower costs
