ANSWER: ∙ Clarity – to help focus and guide decision-making about resource allocations
∙ Coordination – everyone working together towards the same goals
∙ Efficiency – daily decision-making guided toward the question “does it fit our strategy?”
∙ Incentives – employees understanding the behaviours and performance that will be rewarded
∙ Change – if major change is under consideration, then understanding current strategy is essential
∙ Career development – clear outline of organization’s strategy can help you decide if you want to work for the company, if there is a skills fit, and what training and development you will need in order to facilitate the achievement of strategy
∙ Understanding of the strategic planning process is the essential first step to creating an HR strategy that makes sense for the organization
92. Compare and contrast the HRM practices of a company using a low-cost provider strategy with one using a differentiation strategy.
ANSWER: Low-cost providers provide a product or service at a price lower than that of its competitors while appealing to a broad range of customers. A major emphasis with this type of strategy is to reduce cost; therefore, contingent workers are recruited and paid minimal hourly wages. There is a high turnover of staff and minimal on-the-job training. There are minimal opportunities for career growth and advancement. Businesses using a differentiation strategy seek to differentiate their products in ways that will appeal to a broad range of buyers. More staff training may be required in businesses employing this type of strategy. There is more emphasis on product knowledge and customer service. There may be more opportunities for advancement in this type of business.
93. Cupcasions is a small bakery that crafts and sells gourmet cupcakes and cakes. Besides scanning and monitoring its external environment, the managers also consider what competitive advantage the organization possesses—that is, what characteristics enable them to generate more value for customers at a lower cost, thereby earning higher rates of profit than its competitors. List the three categories of resources and describe one example of a resource that Cupcasions would have that would allow them to perform more effectively or efficiently than its competitors.
ANSWER: Tangible assets: These are future economic resources that have substance and form from which an organization will benefit. Examples are land, inventory, building, location, cash, and technology.
Intangible assets: These are future economic resources that have been generated from past organizational events. These assets lack substance and form. Examples are human capital, reputation, goodwill, trust, and copyright.
Capabilities: These are a complex combination of people and processes that represent the firm’s capacity to exploit resources to achieve the firm’s objectives. Examples are managerial capabilities, innovative capabilities, marketing capabilities, and organizational cultures.
94. According to the resource-based view, an organization’s sustained competitive advantage must meet four criteria. List these four criteria.
ANSWER: ∙ They are valuable to the firm’s strategy (they help generate value/reduce cost).
∙ They are rare (competitors don’t have them).
∙ They are inimitable (they cannot easily be copied by competitors).
∙ They can be organized by the firm (the firm can exploit the resources)
95. With the information from external environment and internal competence analysis,
managers can summarize the conclusions using a SWOT analysis. What is a SWOT analysis?
ANSWER: A SWOT analysis is a tool for analyzing a company’s resource capabilities and deficiencies, its market opportunities, and the external threats to its future. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. A strength is something that a company does well or an attribute that makes it more competitive. A weakness is something that an organization does poorly, or a condition, such as location, that puts it at a disadvantage relative to competitors. Opportunities and threats are environmental conditions external to the firm that may be beneficial or harmful.
96. Describe one step in the strategic planning process. Identify an organization you are familiar with (such as from your work experience or from the course textbook). Provide an example of how your chosen organization performs the one strategic planning step.
ANSWER: ∙ Establish the mission, vision, and values
∙ Develop objectives
∙ Analyze the external environment
∙ Identify the competitive advantage