Strategic Human

Resource
Management

Chapter 1.2
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 Strategic Human
Resource
Management
• SHRM is part of strategic planning
• Strategy : The company’s long term plan for
how it will balance its internal strengths and
weaknesses with its external opportunities
and threats to maintain a competitive
advantage
• Essence is to ask “ Where are we now as a
business, where we want to be, and how
should we get there”
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• SHRM means formulating and
executing human resource policies and
practices that produce the employee
competencies and behaviors the
company needs to achieve its strategic
aims

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Need and Importance
• Changing demand from customers or the market place
• New technology and increasing pressure from
competitors (Philips)
• Changes in the basic business environment Rising costs
• Rapid technological change
• Changing demographics
• More limited supplies of highly trained labor
• Rapidly changing government legislation and regulations
• Increased globalization of industries

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 Strategic Management Process

•Strategic Management : The process of

identifying and executing the organization’s
mission by matching its capabilities with the
demands of its environment

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• SM process consist of 7 steps
• Step1 - define the current Business
• Choose the terrain on which it will
compete – what product it will sell,
where it will sell them, how to
differentiate products from its
competitors

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• E.g Rolex and Seiko
• Managers use statements like
• Vision – A general statement of its
intended direction that evokes
emotional feelings in organization
members
• Broad terms – “what we want to
become”
• Gives the direction
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• Mission – What our main task are now
• Spells out who the company is, what it
does, and where it’s headed
• Step 2 – Perform external and internal
audits
• Analyzing external and internal situations
• SWOT analysis

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• SWOTchart
eg.
Strengths Weakness

• *Strong R&D *Aging

Machinery

Opportunities Threats
t * Merger
• *Expanding
Marke of Competitors

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• Step 3 : Formulate new Business and
mission statements
• Based on situation analysis
• What should our business be
• What products
• Where it will sell
• How to differentiate from competitors
• New vision and mission

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• Step 4 : Translate the mission into
strategic goals
• Operationalizing the mission for
managers – strategic goals
• For each department
• Step 5 : Formulate strategies to achieve
the strategic goals
• Strategies, Course of action – how to
move from the current business to what
it wants to
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• Strategies act as bridge between these
two
• Step 6 : Implement the strategies
• Translating strategies into action
• Hiring, firing people, building plants,
adding products, product lines
• This include managerial functions like
Planning, organizing, staffing, leading,
and controlling
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• Step 7 : Evaluate performance
• Management Monitors the extend to
which the firm meeting its strategic
goals
• Strategic Control – keep strategy up to
date
• According to the environmental
changes
• Competitors action
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 Types of Strategies
Three types of strategic planning A)Corporate
strategy
•Company wide level (corporate level)
•Pepsico runs pepsi, fritto lay, and pizza hut, so
needs a corporate level strategy
•Diversification- expand by adding new product
lines
•Vertical integration – expands by producing its
own raw material

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Relationships among strategies in multiple businessFirms

Corporate
Strategy

Business 1 Business 2 Business 3

Competitive Competitive Competitive
Strategy Strategy Strategy

Functional Functional Functional

Strategies Strategies Strategies

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B)Competitive Strategy (Business level
) E.g., Pizza hut
•Next level down, each of the business
need How to build and strengthen the
business’s long term competitive position
in the market place
•How pizza hut will compete with Papa
John’s

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• Strategies like
• Cost leadership, low cost leader,
Amway by direct selling
• Differentiation, Firm seeks to be
unique, Toyota by quality,
woodland/timberland by adventure
shoes
• Focusers, Carve out a market niche,
like ferrari, by providing products and
services customers can get in no other
way
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• Functional strategy
• Business composed of departments –
manufacturing, selling, finance, HRM
• This identify the basic courses of action
that each department will pursue in
order to help the business attain its
competitive goals

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