Strategies Flashcards
define strategy
Strategy is the long term goals of the organisation and usually is stated in mission statements (that state the purpose of the organisation), vision statement (where the organisation would like to go), and organisational strategy (‘the decisions and actions that determine the long-run performance of an organisation’ Robbins et al., 2009, p273)
3 factors of porter’s generic competitive strategies
cost leadership
differentiation
Focus (niche) strategies
Cost leadership
- organisation is to provide low-cost services or products, with an emphasis on efficiency and low overhead costs.
differentiation 2
- Opposite to cost leadership
- businesses offer unique products that are highly valued by customers (so they are prepared to pay a premium for those products).
Focus (niche) strategies
2
- Focus strategy is when firms adopt either a cost leadership strategy or a differentiation strategy for a narrow segment of the market, or a niche.
- It has become more commonly known as a niche strategy. In this niche strategy, the organisations focus their attention on a smaller part of the market, whether it is a small select group of customers
how does MBO work
- The MBO is a strategic system that is a cycle that begins with the setting of organisations common goals and objectives and ultimately returns to that step.
- Goals are then systematically established for individual departments, individual managers and employees.
roles of supervisors and employees MBO
Supervisor and employees propose goals and measure and develop a jointly agreed goals and measures which are periodically reviewed. A final review evaluates employee results against established or revised goals.
MBO criticisms
MBO is criticised for being a lengthy and costly performance review system with only moderate impact on success, that focuses on short-term rather than long-term goals. Ignores some standards important to job success. MBO has also been criticised on the basis that mutual goal setting is a myth with management imposing goals on employees. Nankervis et al.,
MBO involves
–Cascading of objectives
–SMART goals, actions taken and measures used are discussed
–Continuous monitoring and feedback, periodic reviews
–Responsibilities and authorities for positions are defined, which brings in clarity in the organisations
–Linked to outcomes
Goal setting theory
Goal setting is based in goal setting theory. The idea with goal setting as a performance management system is that individual performance is measured against set goals. These goals are developed to be in line with the strategy or overall goals of the organisation. Arguably more refined process than MBO but still has some problems as the focus is on what is achieved over how results are achieved which can lead to unintended side effects as individuals focus on only those elements of their job that are measured against goals. Nankervis et al
Strategic HRM
A broad perspective, oriented toward managing the workforce as a whole (Lepak and Snell, 2002)
benefits of HRM
Increased clarity for organisation and employees •
Can improve culture of organisation •
Can provide useful information to help managers’ manage •
Can improve performance
3 Key approaches to examining relationship between HRM and performance:
best practice HRM or universalistic approach •
best fit or contingency approach •
resource-based view of the firm (RBV)
Best Practice HRM approach to HRM/performance debate
Set of HR practices that are the ‘best practices’ to improve organisational performance
HR practices operate more effectively when ‘bundled’ together
universally applicable
Also known as: ‘high commitment management’ (HCM), ‘high involvement management’ (HIM), ‘high performance work systems’ (HPWS). – Underpinned by AMO theory
Criticisms of Best Practice HRM Approach
Can practices always be the best no matter the context?
Many different lists of HR best practices that do not agree with each other
Methodological problems with how and what was measured – Organizational/individual outcomes
Research can only tell us that HRM and performance are related (association) not that adopting these specific HRM practices will improve performance (causation) • ‘black box’ problem – It is not clear how and why HR practices improve performance?
‘Best Fit’ approach to HRM/ performance debate
“the effectiveness of HR practices depends on how closely they are aligned to the internal and external environment of the organisation” (Hutchinson, 2013, p.5) •
Importance of context
Institutional theory (Pauuwe, 2004)
Need for HRM practices to ‘fit’ the organisational strategy
Internal fit/horizontal
External fit /vertical
Criticisms of Best Fit approach •
Not clear how organisational strategy is defined •
May not be flexible enough to fit demands of volatile environments •
Limited empirical support testing value of best fit. •
‘Black box’ problem – How and why does aligning HRM practices with strategy and environment lead to improved performance?.
Resource Based View (RBV) approach to HRM/performance debate
Focuses on the -internal resources of the firm that lead to competitive advantage (improved organisational performance compared to competitors)
Resources must be:
Valuable: resources must add value to the firm.
Rare: resources must be unique
Inimitabile: resources must be difficult to copy
Non-Substitutabile: resources must not be easily substituted.
HRM and the Resource Based View •
3 kinds of resources in organisations: –
Physical capital resources, –
Organisational capital resources, and –
Human capital resources (knowledge, skill, experience, commitment and social relationships). •
Criticisms of RBV approach •
Is this really a theory? •
Fails to account for external environment •
Issue with applicability to all kinds of organisations •
Not clear how practitioners apply ideas •
‘Black box’ issue: How do human resources and HRM practices specifically lead to improved organisational performance?
Miles and snow’s 3 generic strategies
3 factors
Defenders
Prospectors
Analysers
role of defender
defenders (stable product line, growth through market penetration, emphasis on efficiency),
Defender characteristics include a limited product line a single, capital-intensive technologu, a functional structure, and skills in production efficiency, process engineering and cost control.
role of Prospectors
prospectors (Broad, changing product line, growth through product and market development, emphasis on effective product design),
Continually search for product and market opportunities, and regularly experiment with potential responses to emerging environmental trends
role of analysers
analysers (Stable and changing product lines, growth mostly through market development, some focus on efficiency)
Operate routinely and efficiently through the use of a formal structure and process
