STRATEGY IN STRATEGIC HRM: PART 2Anilesh SethIdeator, Co Founder & CEO, KROWwww.krow.inEx-CEO/MD: LGSI, Qatalys & Supervalu India

www.slideshare.net/anileshhttp://In.linkedin.com/in/anileshsethanileshseth@hotmail.com

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

Strategy Implementation

Strategy Development

Strategic Analysis

Strategy development is done in the context of a company’s Vision, Mission and Values

Vision

Mission

Values

So what is Vision, Mission and Values?

Vision

• Long term, encouraging aspiration for the business• Must be in line with corporate values

Mission

• Purpose of the business

Values

• Attitude, behavior, character of the organization to guide actions

Examples of Vision and MissionCompany Vision Mission

Tata Motors PCBU To develop TATA into a world class Indian car brand for innovative and superior vehicles

- Be the most admired multi-national Indian car company 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 their communities and around the world-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

Our mission is to provide a flexible platform for digital publishing and collaboration.

And some Values…Company What we believe/Values

Google 1) We want to work with great people2) Technology innovation is our lifeblood3) Working at Google is fun4) Be actively involved; you are Google5) Don't take success for granted6) Do the right thing; don't be evil7) Earn customer and user loyalty and respect every day8) Sustainable long-term growth and profitability are key to our success9) Google cares about and supports the communities where we work and live10) 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

Strategy Implementation

Strategy Development

Strategic Analysis

PESTEL analysis of the macro-environment

PESTEL analysis of the macro-environment

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm

Govt policy – e.g.,priorities in supporting business like FDI in retail

Interest rates, tax rates, inflationetc.,

Say a young population

Online shopping,3G services,Wifi

The monsoon is a greatexample in India

New IT law in India,LLP introduction

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

PESTEL case: IkeaPolitical:- Unpredictable tenure of coalition

government- Slow economic reforms- Opened up FDI in retail to the extent

of 51%

Economical:- Reducing GDP growth – current

estimates at about 5.3 % down from 8% in 2012

- CPI Inflation rates for Sept 2012 at 9.14%

Social:- Aspirational, young population- Rapid urbanization - However still a traditional mind set- Caste system – social inequalities- Customer service orientation is low

Technological:- Great IT manpower – but fewer skilled

manpower in areas like supply-chain, procurement, assortment etc

- Poor supply chain/poor infrastructure (Roads, Water, Power)

Environmental:- Monsoons can disrupt the economies

in places like Mumbai- JV Partners in India can dictate terms

to their overseas partners- Too much red tape

Legal:- Taxation laws are not favorable to

investments (like the Vodafone case)- Labor laws- The no of clearances required to set up

a retail firm are huge and time consuming

SWOT Analysis

http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_16.htm

PESTELANALYSIS

SWOT Analysis

SWOT Analysis…WalmartStrengths- Largest retailer: huge buying

volumes and negotiating styles keeps its cost low

- Tight cost and operational control through sophisticated IT systems

Weaknesses- Image of pushing small retailers out

of business- A very large organization – potential

issues with communication etc

Opportunities- Growing markets outside the

US - eg India

Threats- Other retailers are adopting Walmart’s

practices and the pressure on prices may increase over time, to remain competitive

SWOT Analysis…Sector example: Indian Aviation

Source: http://centreforaviation.com/analysis/mei-perspective-7731

Strengths- Modern fleet- High Quality

Weaknesses- Airport infrastructure- Airways infrastructure- National carrier Accumulated debt/losses- High cost structure- Skilled resources

Opportunities- Liberal environment- Economic growth- Political stability- Market growth- Location- Lower costs potential

Threats- Mid east aviation- Terrorism

SWOT Analysis can apply to individuals too (an important HR tool)

Example taken from a personal blog

Back to the Ikea example..using PESTEL and SWOT together

Strengths Weaknesses

Opportunities- Middle class

population of 400 million

- Growth of Indian furniture market estimated at 30%

- Demand is mostly satisfied by local producers

Threats

Overlay the opportunities on the PESTEL analysis

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/industries, using statistical techniques to aid in decision making

Market segmentation

http://www.tutor2u.net/blog/index.php/business-studies/comments/qa-what-is-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

The Ansoff MatrixThe Product-Market Grid

http://www.ehow.com/video_4957415_business-planning-product-market-grid.html

The Product-Position map

High BHP

High Price

Low Price

Low BHP

A

B

C

D

Example: Motorcycles

The BCG Growth-share matrix

This is a portfolioplanning model developed by BCG

http://www.netmba.com/strategy/matrix/bcg/

The BCG Growth-share matrix - example

http://en.wikipedia.org/wiki/Growth-share_matrix

The Marketing Mix

Strategy Implementation

Strategy Development

Strategic Analysis

Strategy Maps

Strategy map - example

Ref: http://purestonepartners.com/tag/strategy-management/

Strategy Implementation

Strategy Development

Strategic Analysis

The Balanced Score Card

The Balanced Scorecard - Example

Ref: http://www.symphonytech.com/articles/bscard.htm

Back to the link between Strategy and HR

Financial Perspective

Customer Value Proposition

Value Creating Processes

Learning and Growth

Perspective. HUMAN CAPITAL

Vision

Vision

VisionVi

sion

StrategySt

rate

gyStrategy

Strategy

At the core is ensuring thata company’s Human Resourcesare a source of key Competitiveadvantage

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