Managing Organizations And People

ACKNOWLEDGEMENT

I would like to take this opportunity to thank all those who supported me right throughout this project. My most sincere appreciation and thankfulness goes to my mop lecturer Dr. Mahesha Samarathunga, for helping and assisting continuously me in every step of the way to fulfill this report. Through her assistance it was easier for me to complete this project successfully. Finally my utmost appreciation goes to all others those who helped me in many ways including, library staff at APIIT and also the library staff at IPM, my family members, and particularly my own batch mates.

Asia Pacific Institute of Information Technology

Managing Organizations And People Table of Content Abstract..........................................................................................................................................03 Introduction...................................................................................................................................04 Question one..................................................................................................................................05 Question two..................................................................................................................................09 Question three................................................................................................................................14 Question four.................................................................................................................................17 Conclusion.....................................................................................................................................21 Appendices....................................................................................................................................22 Referencing....................................................................................................................................30

List of Figures Figure 1: Strategic planning process..............................................................................................06 Figure 2: Questions to seek answers during the process of thinking strategically........................09 Figure 3: Porters generic strategies source...................................................................................10 Figure 4: Distinctive features of the Generic competitive strategies.............................................11 Figure 5: Porters Five Forces Model............................................................................................12 Figure 6: Linking Company wide and HR Strategies...................................................................15 Figure 7: Types of flexibilities......................................................................................................17 Figure 8: Different components of flexibility...............................................................................18 Figure 9: A SWOT Chart..............................................................................................................22 Figure 10: Components of a company macro environment..........................................................24 Figure 11: Relationship among Strategies in Multiple-Business Firm.........................................25 Figure 12: Portes Five Forces Model..........................................................................................27

Asia Pacific Institute of Information Technology

Managing Organizations And People Abstract Credit Agricole can be introduced as a pioneer in consumer credit in France and Europe with 11,500 branches operating world wide. In order to create an edge over its competitors, and also to provide their services to approximately 59 million customer base in 70 countries, Credit Agricole uses a wide network of subsidiaries. Sofinco can be introduced as another subsidiary of Credit Agricole, which has been established in order to expand the business of the parent company. Within the case, the process of human resource planning will be discussed in the context of Sofinco and how HR planning is concerned by the bureaucratic organizations. This HRP is discussed through the wider area of employee resourcing (planning for, acquiring and allocating the desired human resources for the organization). And the importance of the strategic planning, in a competitive environment will be discussed as well as the strategic planning model of Sofinco. Third aim is to discuss the linkage between the corporate planning and HR planning in relation to Sofinco. Finally this leads to identify Sofinco as a flexible firm. Apart from that, what is meant by a flexible firm and the implications of the flexible firm model for HRP, will be analyzed in depth.

Asia Pacific Institute of Information Technology

Managing Organizations And People INTRODUCTION

Human resource strategy is the pattern of planned human resource deployments and activities intended to enable the organization to achieve its objectives. Sofinco is specialized in consumer credit and operates as a major bank in both France and Europe since 1997(Sofinco case, 2010). Sofinco case study is basically concerned with the aspects of strategy. The structure of the report has been dividing in to four chapters. First chapter is concerned with Sofinco is specialized in consumer credit and operates as a major bank in both France and Europe since 1997(Sofinco case, 2010).the process of strategic human resources planning. Second chapter carries a depth discussion regarding the importance of strategic planning in a competitive environment. The link between HR planning and corporate planning will be discussed in the third chapter. Final chapter will analyze Sofinco, as a flexible firm model. In order to improve the knowledge and to support this report, Sofinco case study, Journal articles, slides and certain books are used as methodologies.

Asia Pacific Institute of Information Technology

Managing Organizations And People

Question 01 The process of strategic human resources planning Following analysis has been done in order to understand the process of strategic human resource planning and to understand whether the traditional human resource planning only of interest to bureaucratic organizations. Strategic HRM can be introduced as the linking of human resources with strategic goals and objectives to develop organizational culture to support innovation, flexibility and competitive advantage and to improve overall business performance and this means accepting and coordinating the HR function as a strategic partner in the design of company strategies through HR activities. (Sinha: 2007) According to Dessler (2009, pg.79), strategic management process consist seven steps: 1. Defining the current business and mission 2. Performing internal and external audits 3. Formulating new business and mission statements 4. Translate the mission in to goals 5. Formulate strategies to achieve the strategic goals 6. Implement the strategy 7. Evaluate performance Figure one indicates the steps in strategic management. Step one indicates the most basic strategic decisions of the management, deciding what business their firms should be in. This can be done in relation to the company mission, vision and goals. Mission derives from the fundamental statement of the organization that should manifest the main purpose of the organization. Mission derives from the vision of the organization. Vision refers the ability to see in to ones future with the hope of realizing the expectations and decide them early. (Costa: 2010) (Refer Appendix: 01. 1. An example for defining the current business and mission)
5

Asia Pacific Institute of Information Technology

Managing Organizations And People

Step 1: Define the current business and mission Step 2: Perform external and internal audits Strategic Planning

Step 3: Formulate new business & mission statement

Step 4: Translate the mission into goals Step 5: Formulate strategies to achieve the strategic goals

Step 6: Implement the strategy

Strategic Execution

Step 7: Evaluate performance

Strategic Evaluation

Source: Dessller (2009, p79)

Asia Pacific Institute of Information Technology

Managing Organizations And People Figure 1: Strategic planning process Second step is about environmental analysis. Usually managers start their strategic planning by analyzing their internal and external situations, also Known as SWOT analysis. (Refer appendix: 01.2 SWOT - analysis) Formulation of strategies, involves deciding the impact of the strategies. Such as: deciding the strategies to support organizational goals and objectives. Strategic implementation refers translating the strategies in to actions and results. This involves using of management functions (Planning, organizing, leading, controlling and staffing). Final step is to evaluate the strategy performance. In this stage management monitors the extent to which, the organization is meeting its strategic goals. Strategic evaluation addresses few important questions: for example, Are all the resources of the firm contributing as planned to achieve strategic goals? What is the reason for any discrepancies? Do changes in situation suggest that should revise the strategic plan?(Dessler: 2009). This will help company to identify their edge between competitors. Before HR management came in to action most of the companies used to practice personnel management. In personnel management employees were managed according to a hiring and firing concept. After deciding on strategies, HR planning is done to recruit the suitable person as an input to the strategy and Employees were controlled by strict rules of the senior management. This is known as bureaucratic management pattern. After HR management came in to practice managers had to show much concern on their employees. As HR can be developed according to the organizational needs, they had to admit HR as the most vital resource in their organizations. In HRM policies, basically they address two fundamental questions: (Ranasinghe: 2010) 1. What kind of people we need to compete effectively, now and in the foreseeable future? 2. What do we have to do to attract, develop and these people? It means that in HRM its not only about creating a working environment, but about understanding human conditions as well.
7

Asia Pacific Institute of Information Technology

Managing Organizations And People Further, managers identified HR as a core competency and that the methods must be well aligned with the corporate objective of the organization to meet their goals and objectives. (Fernando: 2010) (Refer Appendix: 01.3 Reasons why organizations choose to engage in HR planning) Finally, according to all the above information it appears that HR planning model and traditional HR planning is not only belonging to bureaucratic organizations.

Asia Pacific Institute of Information Technology

Managing Organizations And People Question 02 Importance of strategic planning in a competitive environment The following analysis is done in order to understand the importance of strategic planning in a competitive environment and to discuss Sofincos strategic planning model. According to marketing definitions (2007), competitive environment is basically a part of companys external environment which consists of other firms vying for patronage of the same market. (Refer appendix 02.1: A companys macro environment). So to create a proper corporate strategy it is important to understand competitive environment of the business. The purpose of every business is to become a giant within the industry. But as there are many companies operating in the same industry every company cannot became successful due to high competition. Therefore it is essential to identify the current position of the company and what market positions do rivals occupy (Thompson, Stricland & Gamble: 2005), in order to develop suitable strategies to survive this competition. (Refer appendix 02.2: Strategic group mapping) This process to choose a strategy is called as thinking strategically about the company. According to Thompsom, Strickler and Gambler (2005, pg83-84)), thinking strategically about a companys external situation consists probing for giving answers to below seven questions.

Figure 2: Questions to seek answers during the process of thinking strategically

Asia Pacific Institute of Information Technology

Managing Organizations And People This leads to understand the importance of using a strategic planning. (Refer appendix 02.3: Types of strategies). According to Dessler (2009:pg82), a competitive strategy identifies how to create and stable the businesss long term competitive position in the market place. It identifies, for example in relation to Sofinco, how City Bank will compete with Standard Charted or how HSBC competes with targets. These international banks can be identified as Sofincos

competitors. In order to survive among these competitors Sofinco needs to identify main strategies which are used by the competitors to develop the suitable strategy to Sofinco. For any company to manage the existing position in the industry, main thing is to achieve a competitive advantage. Competitive advantage refers factors that allow an organization to differentiate its product or service from those of its competitors to increase market share (Dessler: 2009). There are few methods which are using by companies to achieve competitive advantage, such as cost leadership and differentiation. y Cost Leadership: Refers when the enterprise targets to become the low-cost leader in an industry. y Differentiation: Means a firm tries to be unique in the industry along dimensions that are widely valued by buyers.

Figure 3: Porters generic strategies source. Source: Google images (2010)

10

Asia Pacific Institute of Information Technology

Managing Organizations And People Types of features Strategy Low Cost Leader Differentiation Focus

A broad cross section A broad cross section Narrow market of the market. of the market. niches where buyer needs & preferred are different from the rest of the market.

Basis of competitive advantage

Lower costs than the competitors.

An ability to offer buyers something different.

Lower cost in serving the niche or an ability to offer niche buyer something customized.

Product line

A good basic product with frills.

Many product variations with wide sections.

Customized to fit the specialized needs of the target market. Tailor made for niche.

Production -emphasis A continuous search for cost reduction without reducing acceptable quality. Markets emphasis Try to make a difference of product features that lead to low cost. Sustain the strategy Economical prices/goods.

Investigations to create value for buyers.

Build in what ever buyers are usually to pay for.

Communicate the focusers unique ability to satisfy the buyers.

Communicate the points of difference in creditable ways.

Remain totally dedicated to serving the niche better than the competitors.

Figure 4: Distinctive features of the Generic competitive strategies. Source: Stricland (1993, pg104)

11

Asia Pacific Institute of Information Technology

Managing Organizations And People This concept can be further illustrated by analyzing Porters five forces model. According to Michael Porter, managers must ensure that the firms functional strategies are aligning with and support its corporate and competitive strategies. It is mentioned as the fit that breathes life into the firms strategy (Dessler: 2009). (Refer appendix 02.4: An example in relation to use of strategies).

Figure 5: Porters Five Forces Model. (Google images: 2010) (Refer appendix 02. 5: Porters five forces model)

According to Porters five force model it is significant that new comers & existing competitors creates challenges to Sofinco. Therefore in order to face the competition successfully Sofinco has to do an environmental scanning to identify its rivals to create core competencies and differentiate their offerings from its competitors.

12

Asia Pacific Institute of Information Technology

Managing Organizations And People In relation to this discussion Sofinco has come up with, several evidence through the case in order to prove this concept further. Following term proves that Sofinco has a clear objective of what they want to become in the particular industry. Sofinco, whose objective is to become one of the leaders in consumer credit in Europe, has ....of management skills. (Sofinco case: 2010) Further it is significant that Sofinco has identified HR as a core competency to achieve their objectives and to create and edge between its competitors. This is possible by an innovative human resource management policy (Sofinco case: 2010) Through out the following evidence it appears how Sofinco has differentiated their product to face the competition. They are using internet as the major tool to recruit workers (Sofinco case: 2010). Apart from that they recruit young employees. About 200 new employees are recruited every year. Most of them are young graduates (Sofinco case: 2010). Here Sofinco tries to use HR as a core competency as young employees are more willing to learn and more innovative. Above explanation emphasize the importance of strategic planning in a competitive environment and how Sofinco has developed their strategic planning to become successful in the industry.

13

Asia Pacific Institute of Information Technology

Managing Organizations And People Question 03 HR planning and Strategic planning The following explanation is done in order to understand how HR planning is linked to corporate planning in relation to Sofinco. HR planning determines the HR required by the organization to achieve its strategic goals. Strategic management refers formulating and executing HR policies & practices that develop the employee competencies and behaviors the company needs to support its strategic aims (Dessler: 2009). HR planning needs to be an integral part of strategic business planning. And the Strategic planning process must be able to define projected changes in the scale and types of activities done by the organization. This should identify the core competencies; the organization needs to achieve its goals and its skill requirements. (Fernando: 2010) As a decision making process HR planning combines three important activities:  Identifying and acquiring the right people with the proper skills.  Motivating them to achieve performance.  Creating interactive links between organizational objectives and HR activities. HR planning takes place within the context of the organization. The extend to which it is used, and the approach adopted, will be contingent on the extent to which management recognizes that success depends on forecasting future people requirements and implementing plans to satisfy those requirements(Fernando: 2010). The skill requirements are identified through environmental analysis and this context for obtaining the people relevant can be recognized as the internal labour market and the external labour market. Internal sources refer promoting and training existing workers in the company. This leads to create a link between HR planning and strategic planning. After deciding company goals, environmental analysis is done in order to take appropriate HR decisions to support those goals. Figure two indicates how the link is created in between a company HR plan and strategic plan.

14

Asia Pacific Institute of Information Technology

Managing Organizations And People

Companys competitive environment Economic, political, demographic, competitive & technological trends. Companys strategic plan

For example: Companys strategic situation y y y Should we expand geographically? Cut costs? Diversify?

Companys internal strengths and weaknesses

Companys HR (and other functional) strategies

Organizational performance

What are the basic courses of action HR will pursue to ensure that the recruiting, selecting, appraising, and compensation systems support the companys strategic plan?

Source: Dessler (2009, pg 86) Figure 06: Linking Company wide and HR Strategies

In order to explain this link further, Sofinco has come up with some evidence and they proves how Sofinco has tried to manage their HR policy well aligned with the company objectives. Sofinco, whose objective is to become one of the leaders in consumer credit in Europe, has defined a HR policy as one that gives the privilege of the acquisition of management skills. (Sofinco case: 2010) Above statement is evident that Sofinco was concern in using good HR practices and they had a proper planning of their HR policy and following statements gives evidence to prove that the HR plan of Sofinco is well aligned with its objectives.
15

Asia Pacific Institute of Information Technology

Managing Organizations And People The organizations planned objectives are to increase number of employees in order to reinforce the quality of the service provided. (Sofinco case: 2010) It means Sofinco is recruiting employees in order to improve the quality of their services. They have linked their HR plan with company objectives. (Refer appendix: 03.1. An example to show the link between HR plan & strategic plan) The organization focuses on its internal labor market: it encourages its employees to take training courses in order to become more skilled and to evolve within the firm. (Sofinco case: 2010) Nevertheless, Sofincos internal workforce is not numerous enough to meet its increasing need for human resources. That is why Sofinco hires external people... (Sofinco case: 2010) Above two statements indicates how Sofinco is focusing on both internal and external employee sources to suit with the company objectives and to establish an edge between their competitors. Further they mention that, Sofinco is really attractive for young graduates... and Sofinco has a precise and ingenious recruiting policy. (Sofinco case: 2010) These terms signify in order to fulfill the company objective of becoming a pioneer in consumer credit how Sofinco has set their HR plan, and finally it is significant that Sofincos HR planning is well aligned with its corporate objectives.

16

Asia Pacific Institute of Information Technology

Managing Organizations And People Question 04 Flexible Firm Model in relation to Sofinco According to the flexibility concept developed by Atkinson in 1984, flexibility refers the ability to adjust the size and mix of labour inputs in response to changes in product demand. The flexible firm combines functional, numerical and financial flexibility by operating with workforce consisting of both core and peripheral workers with a number of other workers on a variety of non-standard employment contracts. In modern management, the concept of flexibility is described as a desirable characteristic of firms and employees. Flexible organizations indicate an ability to change in response to market fluctuations. It should be evident, that a range of possibilities exist between rigid organizations and truly flexible ones and a firms ability to demonstrate flexibility depends to a large degree on the flexibility exhibited by its employees. Firms exhibiting different degrees of flexibility have different demands on the flexibility of their coworkers, which means that a matching between supply and demand exists. (Anell, Timothy & Wilson: 2000) There are four main types of flexibilities (Bratton and Gold 2004); Functional flexibility Refers, using the employees capacity to perform different activities when needed, through job rotation, widening the scope of the job, and job enrichment. (Goudswaard, 2004) Numerical flexibility Refers, varying the number of personnel through the use of flexible working time arrangements, part-time work, flexible employment contracts, out sourcing and the hiring of seasonal personnel (Goudswaard, 2004) Pay flexibility The organizations pay & reward structure supports the numerical and functional flexibility. (Zoysa, 2010) Distancing Refers replacing employees with sub-contractors. (Zoysa, 2010) Figure 07: Types of flexibilities

17

Asia Pacific Institute of Information Technology

Managing Organizations And People Figure 8: Different components of flexibility

Source: Lund & Gjerding (1996, p.14) and Gjerding et al. (1997, p.106)

In the above figure, flexibility is separated into internal and external factors. The internal factors indicates that an organizational structure enabling mutual adjustment of goals and aspirations is flexible if horizontal and vertical integration is combined with the empowerment of employees and continuous upgrading of human skills. The external factors indicate that flexibility is achieved by innovation in technology and markets.

Many companies are now adopting flexible firm model in order to survive within the industry and are targeting to reduce employment costs and become more responsive to change in markets and technology, by reorganising their employment systems in this way.

18

Asia Pacific Institute of Information Technology

Managing Organizations And People

And in comparison with the traditional firms, it is evident that the flexible firms seems more productive, less pestered by employee absence, more skills demanding, and less predisposed to labour turnover. In order to identify Sofinco as a flexible firm it is important to identify how they have adopted the flexible firm model in along with human resource planning in order to achieve company goals. It appears that they are trying to become a learning organization due to following evidence.

The organization has a training policy that aims to fit each jobs requirements.... order to give new employee best training and also to ensure quick and effective adoption to technique evaluation. (Sofinco case, 2010) It means that Sofinco is using training and HR plans for to suit each segments of the organization in order adopt their systems to improve competency. The organization focuses on its internal labor market: It encourages its employees to take training courses in order to become more skilled and to evolve within the firm. (Sofinco case, 2010) Above term provides evidence that the Sofinco is consist with self directed work teams and in order to create an edge between competitors how the company have relied on using self directed work teams. Under self directed work teams, the employees are given freedom to manage themselves and it is expected them to be well aligned with company goals and objectives. Employees can use training programs to adopt them selves to the organizational environment. Following term also proves that the Sofinco is relying on self directed work teams. Employees have access to all vacancies on the internet.... evolution within the firm. This task is made easier thanks to the skill reference (each employee can compare their own skills to the skills required for each job). (Sofinco case, 2010)

19

Asia Pacific Institute of Information Technology

Managing Organizations And People Sofincos internal work force is not numerous to meet its increasing need for human resources. That is why Sofinco hires external people; about 200 new employees are employed every year. (Sofinco case, 2010) Its products are sold by different means such as public sales offices in France: partnerships with banks, insurance...with major large scale distribution groups; combination of mail order telephone and internet selling. (Sofinco case, 2010) Above terms provides evidence to identify numerical flexibility of Sofinco. And helps identify its workers as core and peripheral. The need of core & peripheral employees are identified during the environmental scanning process and recruits from external job market in order to reinforce the quality of the service provided. And above terms also proves that, Sofinco is concerned in using part time and seasonal employees in relation to use of peripheral workers, when there are not enough workers to be found within the organization. According to the evidence of the case, it is significant that Sofinco develops functional flexibility and numerical flexibility to support their operations and finally Sofinco can be introduced as a flexible firm. For further improvements Sofinco can try to adopt pay flexibility and distancing as well.

20

Asia Pacific Institute of Information Technology

Managing Organizations And People

Conclusion
Through Sofinco case study it appears that a firms corporate planning, STHP, HR planning and flexible firm model are interconnected and can take different forms according to company objectives.

21

Asia Pacific Institute of Information Technology

Managing Organizations And People

Appendices
Appendix: 01. 1 An example for defining the business and mission. Even though Rolex and Seiko are both in the watch business, it appears that Rolex sells a limited product line of high priced watches. Seiko sells a wide variety of relatively inexpensive but innovative specialty watches with additional features like compasses and altimeters. Source: Dessler: (2009, pg79) Appendix: 01. 2 SWOT analysis Refers the use of a SWOT chart to compile and organize the process of identifying organizations Strengths, Weaknesses, Opportunities and Threats.

Strengths Example: Strong Research group

Weaknesses Example: Aging machinery

Opportunities Example: Expanding China markets

Threats Example: Merger of two competitors to -from single strong one

Figure 9: A SWOT Chart Source: Dessler (2009, pg.80)

22

Asia Pacific Institute of Information Technology

Managing Organizations And People Appendix: 01. 3 Reasons why organizations choose to engage in HR planning. According research conducted by the institute for employment studies, Reily (1999) has suggested several reasons why organizations choose to engage in some form of Human resource planning. According to Fernando (2010), these can be divided in to three groups: a. Planning for substantive reasons In order to have a practical effect by optimizing the use of resources and/ or making them more flexible, acquiring and nurturing skills that take time to develop, identify potential problems and minimizing the chances of making bad decision.

b. Planning for organizational reasons Which involves communicating plans so as to obtain support/ adherence to the, linking HR plans to the business plans so as to influence them, (re) gaining corporate control over operating units, and coordinating and integrating decision making and actions.

c. Planning because of the process benefit Which involves understanding the present in order to confront the future, challenging assumptions and liberating thinking, making explicit decisions which can later be challenged, standing back and providing an overview, and ensuring that long term thinking is not driven out by short term focus.

23

Asia Pacific Institute of Information Technology

Managing Organizations And People Appendix 02.1: A companys macro environment

Figure 10: Components of a company macro environment Source: Thompsom, Strickler and Gambler (2005, pg 47) According to Thompson, Strickler and Gambler (2005, pg45), a companys macro environment consists with all relevant factors and impacts out side the company limits, by relevant it means important enough to make an impact on the decisions the company is about to make about its direction, objectives, strategy and business model. Referring to figure 7, it appears that most of the time the influences coming from the outer ring of the macro environment have a low effect on business situation and shape only the edge of the companys direction and strategy. However the factors and forces in a companys macro environment have the companys immediate industry and competitive environment.

24

Asia Pacific Institute of Information Technology

Managing Organizations And People Appendix 02:2: Strategic group mapping In order to recognize strengths and weaknesses of the competitors a company needs to identify what positions their rivals are occupying, this procedure for identify its rivals can be known as Strategic group mapping. According to Thompson, Strickler and Gambler (2005), Strategic Group Mapping is a procedure for displaying the various market or competitive positions that rival firms occupy in the industry. This is helpful inn comparing the market positions and also what strategic moves are rivals likely to make next.

Appendix 02.3: Types of strategies According to Dessler (2009), managers can involve in three different strategic planning processes (Corporate planning, competitive strategy and functional strategy).

Corporate Strategy

Business 1 Competitive strategy

Business 2 Competitive strategy

Business 3 Competitive strategy

Functional strategies

Functional strategies

Functional strategies

Figure 11: Relationship among Strategies in Multiple-Business Firm Source: Dessler (2009, pg82)

25

Asia Pacific Institute of Information Technology

Managing Organizations And People According to Dessler (2009), y Corporate Strategy: A corporate strategy of a company refers the portfolio of businesses that, in total, comprise the company and the methods in which these businesses linked to each other.

Competitive Strategy: This refers how to develop and strengthen a firms long-term competitive position in the industry.

Functional Strategy: This refers the basic courses of action that each department will take in order to support the business achieve its competitive goals.

Appendix 02.4: An example in relation to use of strategies For ex; according to Dessler (2009, pg83), Southwest Airlines pursues a low-cost leader strategy, and then tailors its functional activities to deliver low-cost, convenient services on its short-haul routes. It gets fast, 15-minute turn a rounds at the gate, and so it can keep its planes flying longer hours than rival and have more departures with fewer aircraft. Further it shuns frills like meals, assigned seats, and premium classes of service on which other full service airlines build their competitive strategies.

26

Asia Pacific Institute of Information Technology

Managing Organizations And People Appendix 02.5: Porters five forces model

Figure 12: Portes Five Forces Model. 01. Rivalry

Source: Google images (2010).

In order to pursue an advantage over its competitors/rivals, a company can use competitive actions. As followings: y y y y Changing prices Product differentiation Creatively using channels of distribution Exploiting relationship with suppliers

27

Asia Pacific Institute of Information Technology

Managing Organizations And People According to Porter, the intensity of the rivalry may influence by following types of industry characteristics. y y y y y y Larger number of firms Slow market growth High fixed costs High storage costs or highly perishable products Low levels of product differentiation High exit barriers

02. Threats of substitutes According to Porter's model, substitute products refer to products in other industries. A threat of substitutes exists when a product's demand is affected by the price change of a substitute product. A product's price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers will have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices.

03. Buyer power This refers the impact that customers have on a producing industry. Usually, when buyer power is strong, the relationship to the producing industry is near to what an economist terms a monophony. This refers a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopsonies exist, but frequently there is some asymmetry between a producing industry and buyers

04. Barriers to entry: These barriers can arise through following sources; y y y y Barriers through the Government Patents and proprietary knowledge serve to restrict entry into an industry. Asset specificity inhibits entry into an industry Organizational (Internal) Economies of Scale
28

Asia Pacific Institute of Information Technology

Managing Organizations And People 05. Supplier power A producing industry needs raw materials, labor, equipments, and other supplies. This requirement leads to create a buyer and supplier relationships between the industry and the firms that provide it the raw materials used to create products. If the suppliers are powerful, they can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry's profits

Appendix: 03.1.An examples to show the link between HR planning and strategic planning. Example one, one of FedExs strategic aims is to achieve superior levels of customer service and high profitability through a highly committed work force, preferably in a nonunion environment. FedEx HR strategies stem from this aim. They include: Using various tools to build two-way communications; screening out potential managers whose values are not people oriented; guaranteeing to the greatest extend possible fair treatment and employee security for all employees; and utilizing various promotion-from-within activities to give employees every opportunity to fully realize their potential. Source: Dessler (2009, pg 86) Example two: According to Dell Company, The essence of Dells competitive strategy has always been to be a low-cost leader. Dells HR managers use various HR strategies to support Dells low-cost aims. For example, Dell delivers most of its HR services, not through a conventional HR department, but via the Web. A managers tools section on Dells intranet contains about 30 automated Web applications. This allows managers to perform human resource tasks that previously required costly participation by HR personnel. The intranet also lets Dell employees administer their own 401 (k) plans, check job postings, and monitor their total compensation statements. This dramatically reduces the number of HR people required to administer these activities, and thus the cost of doing so. That in turn supports Dells low cost strategy. Source: Dessler (2009, pg 87)

29

Asia Pacific Institute of Information Technology

Managing Organizations And People

Referencing
Anon. (2007). Marketing Definitions (C-D). Available:

http://marketinginformationcentre.ca/marketing_definitions_c-d.htm. Last accessed 18 June 2010.

Barbro I. Anell, Timothy L. Wilson. (2000). The flexible firm and the flexible coworker. Available: http://www.emeraldinsight.com/Insight/viewContentItem.do;jsessionid=B078E5A7E1DF80421F 16D6FF7F14EE32?contentType=Article&hdAction=lnkpdf&contentId=882188. Last accessed 27 May 2010. Credit Agricole Group. (2009). Credit Agricole. Available: http://www.credit-

agricole.com/banking-:-account-bank-and-business-banking-171/the-group-684/index.html. Last accessed 20 June 2010. Costa, A. R. (2010). Evolution of Management thoughts and concepts Slides, Institute of personnel management Sri Lanka. Dessler, G (2009). Human Resource Management. 11th ed. New Delhi: PHL Learning Private Limited. 78 - 88. Fernando, S. (2010). Rationale for Human Resource Planning Slides, Institute of personnel management Sri Lanka.

Goudswaard A. (2004). Functional flexibility good for skills development. Available: http://www.eurofound.europa.eu/ewco/2004/02/NL0402NU03.htm. Last accessed 31 May 2010. Lund, R. & Gjerding, A.N. (1996), The flexible company. Innovation, work organization and human resource management, DRUID Working Paper No.96-17, Aalborg: Aalborg University.

Porter,

(2010).

Porter's

Five

Forces.

Available:

http://www.quickmba.com/strategy/porter.shtml. Last accessed 18 June 2010.

30

Asia Pacific Institute of Information Technology

Managing Organizations And People

Ranansinghe, P. (2010). Strategic Significance of Employee Resourcing & Pre requisites for HR planning process - Slides, Institute of personnel management Sri Lanka.

Shannon, Jones. (2003). Does HR planning improve business performance?. Available: http://www.allbusiness.com/management/business-process-analysis/1034206-1.html. Last accessed 11 MAY 2010.

Sinha,

R.

(2007).

What

is

Strategic

Human

Resource

Management?.

Available: Last

http://ezinearticles.com/?What-is-Strategic-Human-Resource-Management?&id=549585. accessed 03 JUNE 2010.

Strickland, T (1993). Strategic Management Concepts & Cases. 7th ed. Australia: John wiley & Sons. inc. 103-124.

Thompson, A. Stricland, A. J, Gamble, E (2005). Crafting and Excuting Strategy. 14th ed. New delhi: McGraw-Hill. Pg.44-65.

Zoysa, L. (2010). Employee Resourcing: Changing World of Work and Organization Slides, Institute of personnel management Sri Lanka.

31

Asia Pacific Institute of Information Technology