This is part 2 in a 2 part foundational portion for the course Strategic HRM. The course is aimed at working professionals pursuing an Executive MBA. This part is intended to provide a grounding in Strategy to enable a smooth segue to the second part of the Strategic HRM program. It does not therefore dive into the HR aspect specifically but focuses on establishing the foundation of Strategy and its linkage to HR
1. STRATEGY IN STRATEGIC HRM: PART 2
Anilesh Seth
Ideator, Co Founder & CEO, KROW
www.krow.in
Ex-CEO/MD: LGSI, Qatalys & Supervalu India
www.slideshare.net/anilesh
http://In.linkedin.com/in/anileshseth
anileshseth@hotmail.com
2. Part 2: Sessions 3 & 4
• Objective of these sessions is to enable an
understanding of strategy and associated terms and
tools to serve as a foundation to segue into Strategic
HRM
• Content of Part 2:The Strategic Planning Process – use
of Analytical tools and frameworks (PESTEL, SWOT,
Ansoff Grid, BCG Matrix etc) to enable an
understanding of strategic issues and strategy
development, linked to a company’s Vision, Mission
and Values. The use of Nortan and Kaplan’s Balanced
Score Card to develop organizational metrics in the
backdrop of a strategy map, connected to human
capital as its core
3. Strategy development is done in the context of a
company’s Vision, Mission and Values
Strategic
Analysis
Vision
Mission Strategy
Development
Values Strategy
Implementation
4. So what is Vision, Mission and Values?
• Long term, encouraging aspiration for the business
Vision • Must be in line with corporate values
• Purpose of the business
Mission
• Attitude, behavior, character of the organization to
Values guide actions
5. Examples of Vision and Mission
Company Vision Mission
Tata Motors PCBU To develop TATA into a world class - Be the most admired multi-
Indian car brand for innovative and national Indian car company
superior vehicles producing vehicles that people love
to buy
- Create an organization that people
enjoy working for, doing business
in and investing in
Google To develop the perfect search engine To organize the world’s information and
make it universally accessible and
useful
Joomla Project -People publishing and collaborating in Our mission is to provide a flexible
their communities and around the platform for digital publishing and
world collaboration.
-Software that is free, secure, and high-
quality
-A community that is enjoyable and
rewarding to participate in
-People around the world using their
preferred languages
-A project that acts autonomously
-A project that is socially responsible
-A project dedicated to maintaining the
trust of its users
6. And some Values…
Company What we believe/Values
Google 1) We want to work with great people
2) Technology innovation is our lifeblood
3) Working at Google is fun
4) Be actively involved; you are Google
5) Don't take success for granted
6) Do the right thing; don't be evil
7) Earn customer and user loyalty and respect every day
8) Sustainable long-term growth and profitability are key to
our success
9) Google cares about and supports the communities where
we work and live
10) We aspire to improve and change the world
Joomla Project -Freedom
-Equality
-Trust
-Community
-Collaboration
-Usability
For detailed commentary on Vision, Mission, Values, read Joomla’s at:
http://www.joomla.org/about-joomla/the-project/mission-vision-and-values.html
7. Strategic
Analysis
Strategy
Development
Strategy
Implementation
9. PESTEL analysis of the macro-
environment
Govt policy – e.g.,
Say a young population
priorities in
supporting business
like FDI in retail
Interest rates, Online shopping,
tax rates, inflation 3G services,
etc., Wifi
New IT law in India, The monsoon is a great
LLP introduction example in India
http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm
10. PESTEL case: Ikea
• Founded in 1943 – started by a 17 year old as a local catalog company
• Today more than 300 stores in more than 35 countries with 130,000 co-
workers
• There are over 10,000 different products in the store
• Just recently received clearance to set up shop in India
• The focus is on:
– Offering a wide range of well designed, functional home furnishing products
– At prices so low that as many people as possible will be able to afford them
• In India the press states that:
– They will not be allowed to set up their cafes
– They will not be allowed to mail a catalog
– There will be strict sourcing norms
11. PESTEL case: Ikea
Political: Economical:
- Unpredictable tenure of coalition - Reducing GDP growth – current
government estimates at about 5.3 % down from
- Slow economic reforms 8% in 2012
- Opened up FDI in retail to the extent - CPI Inflation rates for Sept 2012 at
of 51% 9.14%
Social: Technological:
- Aspirational, young population - Great IT manpower – but fewer skilled
- Rapid urbanization manpower in areas like supply-chain,
- However still a traditional mind set procurement, assortment etc
- Caste system – social inequalities - Poor supply chain/poor infrastructure
- Customer service orientation is low (Roads, Water, Power)
Environmental: Legal:
- Monsoons can disrupt the economies - Taxation laws are not favorable to
in places like Mumbai investments (like the Vodafone case)
- JV Partners in India can dictate terms - Labor laws
to their overseas partners - The no of clearances required to set up
- Too much red tape a retail firm are huge and time
consuming
14. SWOT Analysis…Walmart
Strengths Weaknesses
- Largest retailer: huge buying - Image of pushing small retailers out
volumes and negotiating of business
styles keeps its cost low - A very large organization – potential
- Tight cost and operational issues with communication etc
control through sophisticated
IT systems
Opportunities Threats
- Growing markets outside the - Other retailers are adopting Walmart’s
US - eg India practices and the pressure on prices
may increase over time, to remain
competitive
15. SWOT Analysis…Sector example:
Indian Aviation
Strengths Weaknesses
- Modern fleet - Airport infrastructure
- High Quality - Airways infrastructure
- National carrier
Accumulated debt/losses
- High cost structure
- Skilled resources
Opportunities Threats
- Liberal environment - Mid east aviation
- Economic growth - Terrorism
- Political stability
- Market growth
- Location
- Lower costs potential
Source: http://centreforaviation.com/analysis/mei-perspective-7731
16. SWOT Analysis can apply to individuals
too (an important HR tool)
Example taken from a personal blog
17. Back to the Ikea example..using PESTEL
and SWOT together
Strengths Weaknesses
Opportunities Threats
- Middle class
population of 400
million
- Growth of Indian
furniture market
estimated at 30%
- Demand is mostly
satisfied by local
producers
Overlay the opportunities
on the PESTEL analysis
18. Market Research
• MR is any organized effort to
gather information about
markets or customers
• It is a crucial aspect of
determining market strategy –
it is used to identify and
analyze the market need, size
and competition
• It is a key factor to gain
advantage over competitors
• It involves the gathering and
interpretation of information
about
consumers/organizations/ind
ustries, using statistical
techniques to aid in decision
making
19. Market segmentation
• Segmentation is
used by a
business to target
its products at
the right
customers
• It is about
producing
products that
meet customers
needs and wants
http://www.tutor2u.net/blog/index.php/business-studies/comments/qa-what-is-market-segmentation
20. The Ansoff Matrix
The Product-Market Grid
http://www.ehow.com/video_4957415_business-planning-product-market-grid.html
31. Back to the link between Strategy and
HR
Financial
Perspective
Customer Value
Proposition
Value Creating
Processes
At the core is ensuring that
a company’s Human Resources
Learning and are a source of key Competitive
Growth advantage
Perspective.
HUMAN CAPITAL
32. Text books/reference books
• Competitive Strategy: Techniques for Analyzing Industries and Competitors
– Michael Porter
• Competitive Advantage: Creating and Sustaining Superior Performance
– Michael Porter
• Cases in Competitive Strategy
– Michael Porter
• Strategy Maps
– Kaplan & Norton
• What Matters Now
– Gary Hamel
• Strategic Flexibility
– Gary Hamel, C K Prahlad, Howard Thomas, Don O’Neal
• Competing for the Future
– Gary Hamel, C K Prahlad
• Strategic Management
– Hitt, Ireland, Hoskisson
Hinweis der Redaktion
To develop strategy you must be guided by what the company has set out to do – the Strategic Intent – and can this be done in the absence of a vision and mission?
Another way of looking at the Mission of a company is to say that it is what you do best every day. Your vision therefore is what the future looks like simply because you DELIVER on your mission every day.
Sometimes this is referred to as just PEST – the latter two factors, namely Environmental and Legislative can be covered in the first four.
Sometimes this is referred to as just PEST – the latter two factors, namely Environmental and Legislative can be covered in the first four.
Contrast the FDI made in
Can be applied to a product, brand, sector, company, individual – pretty much anything
The size of the bubbles is representative of the market share
Many feel that this is a producer oriented view and what is required is a consumer oriented view. Hence this gave rise to the 5 C’s which are:Product is replaced by Consumer reflecting consumer needsPrice is replaced by Cost representing a focus on total cost of ownershipPromotion is replaced by CommunicationPlace is replaced by ConveniencePartners is not an original P but is intended to reflect the 5th C – namely community
Strategy maps were developed by Kaplan and NortonThis is intended as a visual map to represent the overall strategyThe intent is to define business objectives across four perspectivesOnce the objectives are agreed upon, they get converted into KPIs and Strategic Initiatives
Patagonia is a designer of outdoor clothing and gear. They make organic cotton clothing, sportswear, travel clothing etc
The objective is to align the business activities of an organization to its vision and strategy and therefore to monitor organization performance against strategic goals.This was developed by Kaplan and Norton that added strategic non-financial performance measures to traditional (and historic) metrics to provide a more balanced view.