Chapter 4 - The Competitive Environment PDF

Human Resources, 6e Chapter 4: The Competitive Environment DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not b...

Human Resources, 6e Chapter 4: The Competitive Environment DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1  Chapter Objectives 4-1: Describe the competitive environment of human resource management 4-2: Identify three types of strategies and relate each to human resource management 4-3: Discuss human resource strategy formulation and relevant organizational factors 4-4: Discuss the processes through which human resource strategy is implemented 4-5: Discuss how the human resource function in organizations can be evaluated DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2  Competitive Environment Firms can gain competitive advantages through their management of human resources (HR) HR managers: – Adopt strategic perspectives – Recognize the critical links between organizational and HR strategies – Add value by providing expertise on how to use a firm’s existing human resources to accomplish its objectives and gain competitive advantage DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3  Strategic Perspective in the Competitive Environment Employees are important sources of competitive advantage – Steps to gain a sustained competitive advantage  Hire the right people  Train them to be effective  Place them in the right jobs  Motivate them to work hard  Strive to retain them – Organizations must develop strategies to use their human resources in the most effective manner DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4  Strategic Human Resource Management DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5  Influence of Organizational Purpose and Mission Fundamental contextual forces that define the strategic context of HRM include an organization’s purpose and mission – Purpose: Basic reason for an organization’s existence – Mission: Statement of how an organization intends to fulfill its purpose  Provides subtle cues about the importance an organization places on its human resources – Both its purpose and its mission affect an organization’s HR practices in some ways DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 6 Influence of the Top Management Team Top management team: Group of senior executives responsible for the overall strategic operation of an organization – Sets the tone for the organization and plays a major role in shaping its culture Abilities of top management teams to influence their organizations and success depend on the nature of the industry, organization, and individual – Described using the term managerial discretion DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7  Corporate Governance Determinant of managerial discretion Role: To deal with agency problems – Agency problems: Mismatch in the interests of the managers and owners of a firm  Solved by a board of directors who monitor actions of the top management team to ensure the protection of stockholders’ interests DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8  Types of Strategies Corporate strategy – Deals with determining what businesses the corporation will operate Business strategy – Deals with how a firm will compete in each market where it conducts business Functional strategy – Deals with how a firm will manage each of its major functions such as marketing, finance, and human resources DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9  Corporate Strategies (1 of 3) Growth strategy – Focuses on growing and expanding the business – Pursued internally by opening additional locations – Pursued externally through mergers, joint ventures, or acquisitions Retrenchment or turnaround strategy – Occurs when an organization finds that its current operations are not effective DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10  Corporate Strategies (2 of 3) – Major changes are needed to rectify the problem – Involves rightsizing the organization by closing operations, shutting down factories, and terminating employees to get back on the right track Stability strategy – Used after a period of retrenchment or rapid growth when a company plans to stay in its current businesses and intends to retain the way they are managed DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11  Corporate Strategies (3 of 3) Diversification strategy – Used by firms that are adding new products, product lines, or businesses to their existing core products, product lines, or businesses – Related diversification: Used when a firm believes it can achieve synergy among its various businesses – Unrelated diversification: Used when a firm attempts to operate several unique businesses in different, unrelated markets DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12  Business Strategy Adaptation model: Popular approach to business strategy where a business seeks ways to adapt to its environment – Strategic alternatives include:  Defender strategy  Prospector strategy  Analyzer strategy  Reactor strategy: Seen as a strategic failure DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 13  Defender Strategy Identifies a relatively narrow niche in the market and then directs a limited set of products or services at that niche Guards and secures a position in existing markets Appropriate in an environment with low uncertainty and risk and high stability HR managers recruit and seek to retain stable employees who exhibit high levels of commitment and loyalty to a firm DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14  Prospector Strategy Focuses on new products and markets Avoids long-term commitment Business environment is dynamic and grows with considerable uncertainty and risk HR managers prefer to recruit and retain entrepreneurial employees who are highly flexible and more dedicated to their craft or profession than to the organization itself DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15  Analyzer Strategy Identifies and exploits new markets and products Simultaneously maintains a nucleus of traditional core products and customers Appropriate in relatively stable conditions with moderate uncertainty and risk HR managers may seek to recruit and retain employees who might be moderately entrepreneurial and flexible but who will also be quite dedicated and loyal to a firm DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 16  Specific Competitive Strategies Differentiation strategy – Firms attempt to develop an image or reputation for their products or services that set the firms apart from their competitors Cost leadership strategy – Focuses on minimizing the costs as much as possible Focus strategy – Undertaken when an organization tries to target a specific segment of the marketplace for its products or services DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17  Functional Strategies Address how an organization will manage its basic functional activities, such as marketing, finance, operations, research and development, and HR HR strategy formulation formally begins to take shape at the functional level – HR strategy should be closely integrated and coordinated with corporate, business, and other functional strategies DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 18  Human Resource Strategy Formulation (1 of 2) Staffing strategy – HR planning – Recruiting – Selection – Placement Development strategy – Performance management – Training – Development – Career planning DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19  Human Resource Strategy Formulation (2 of 2) Compensation strategy – Wage/salary structure – Employee benefits – Incentives DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20  Basic Components of HR Strategy Organization design Corporate culture Unionization DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 21 Forms of Organization Design (1 of 2) Functional design (U-form organization) – Organizations group members into basic functional departments – Has a single HR department for an organization Conglomerate (H-form) design – Used when an organization has implemented a strategy of unrelated diversification – HRM is a common staff function, but each of the unrelated businesses has its own HR department that functions with relative autonomy within that business DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22 Forms of Organization Design (2 of 2) Divisional (M-form) design – Facilitates synergy across businesses – HR function is likely to be diffused so that operating managers take on more of the responsibility for HR activities  Somewhat smaller HR staff provides basic services and plays more of a consultative role DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23  Corporate Culture (1 of 2) An organization’s culture refers to the set of values that help members understand: – What the organization stands for – How it accomplishes what it desires – What it considers important Plays a major role in shaping managerial behavior Strong element in how an organization manages its human resources DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24  Corporate Culture (2 of 2) Firms must have a strong and well-articulated culture Communicated through training, consistent behavior, and other organizational activities May either facilitate or impede the work of HR managers Crucial for the success of corporate mergers and acquisitions DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25  Impact of Unionization and Collective Bargaining Labor relations – Process of dealing with employees who are represented by a union Unionized firms tend to have more rules and formal procedures that may limit a firm’s ability to formulate an ideal strategy – Strong unions facilitate strategic change if their leaders and the firm’s management work together productively DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26  Interpersonal Processes (1 of 2) Psychological contract – Overall set of expectations held by an individual with respect to what he or she will contribute to an organization and what the individual receives in return Personality – Relatively stable set of psychological attributes or traits that distinguish one person from another DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27  Interpersonal Processes (2 of 2) Motivation – Set of forces that causes people to behave in certain ways Stress – A person’s adaptive response to a stimulus that places excessive psychological or physical demands on that person DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28  Strategy Implementation HR managers are responsible for: – Identifying potential leadership qualities among existing employees and to help structure procedures for developing and enhancing those qualities – Improving behavioral processes Directly related to communication – Written, oral, and nonverbal communication are all pervasive in organizations DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 29  Evaluating the HR Function in Organizations The costs and benefits of HRM functions are examined to see which ones contribute to competitive advantage and which should be outsourced Line managers may choose between the corporation’s HR department or an outsider vendor when they need HRM help Recent trend is to evaluate entire systems of HR activities DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 30 Human Resource Management Practices That May Lead to Improved Firm Performance Self-directed work teams Total quality management(TQM) Contingent pay Attitude or engagement surveys Formal performance appraisals Continuous training DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31  Key Terms Purpose Adaptation model Mission Differentiation strategy Top management team Cost leadership strategy Corporate strategy Focus strategy Business strategy Organization design Functional strategy Culture Growth strategy Psychological contract Retrenchment or turnaround strategy Personality Stability strategy Motivation Diversification strategy Stress Related diversification Unrelated diversification DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32  Summary Firms gain competitive advantages through the management of human resources Key to strategic operations is developing and implementing effective strategies HR strategy can be developed using a firm’s corporate and business strategies as context Interpersonal processes play a major role in the implementation of HR strategies Evaluating the effectiveness of the HR function has become a trend in recent years Click the link to review the objectives for this presentation Link to Objectives DeNisi, Human Resources, 6 Edition. © 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33