Leadership & Human Relations
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| Porter on Strategy | Operational Effectiveness vs Strategic Positioning, a company can outperform rivals only if it can establish a difference that it can preserve. | |
| Porter on Strategy, 2 options in OE vs Strategic Positioning | Greater value (differentiation) or same value at lower costs. | |
| What does OE mean? | OE means performing similar activities better than rivals perform them. | |
| What does Strategic positioning mean? | performing different activities from rivals' or performing similar activities in different ways. | |
| Define strategy | is the creation of a unique and valuable position, involving a different set of activities. | |
| 4 Parts to Strategic Planning (SWOT and Strategic Choice) | 1)Strengths 2)Weaknesses 3)Opportunities 4)Threat | |
| Describe the 5 Force Model by Michael E. Porter | Traditional theory of sustainable competitive advantage. Theory that describes what to be aware of in order to stay competitive in the market, sustainable. | |
| 5 parts of the Five Force model? | 1)Risk of entry by potential competitors 2)Bargaining power of buyers 3)Threat of substitute products 4)Bargaining power of suppliers 5) Rivalry among established firms | |
| Describe 6 parts to Porter's Diamond Model | Came after the 5 force model. 1)Firm strategy, Structure and Rivalry 2)Demand Conditions 3)Factor Conditions 4)Related and Supporting Industries 5)Outside factor-Government 5)Outside factor-Chance | |
| 4 parts to a system (organizations at systems) | 1)Inputs 2)Processes 3)Outputs 4)Feedback | |
| Outputs | Products and Services | |
| 4 types of inputs | 1)Human 2)Financial (capital) 3)Physical (raw materials, etc) 4)Informational (info) | |
| Processes | Manufacturing, accounting, uses functions of processes to convert raw material into output. | |
| Supra System | Every system has a sub-system and supra system. EX: CBA is sub system, environment is UNI. Department of management is sub-system. Cedar Falls would be the "supra system" | |
| Efficiency | Ratio of Outputs : Inputs, doing things right. Use fewer things to produce more. | |
| Effectiveness | Doing right things. Achieving goals, producing the right outputs. | |
| 3 Levels of analysis | 1)Firm 2)Industry 3)Nation | |
| Internal analysis | is about the system itself, the firm. How it functions, how it can be more effective and survive. | |
| External analysis | is about nations and industries. | |
| 5 changing basis of competitive success | 1)Protected/regulated markets and global competition. 2)Access to financial resources 3)Economies of scale or scope 4)Product and process technology 5)importance of the work force and how to manage it. | |
| Protected/regulated markets & global competition | Patents are a way to protect, create advantage. Ex:Mac vs PC, Jobs did not seek proper patent, allowed Gates to copy. Now if anyone tries to copy they go after then right away. Black box approach, institutionalization of regulatory framework. | |
| Black box approach | working around legally protected products. As long it is not exactly the same. Ex:Microwave war (goes along with protected/regulated markets) | |
| Access to financial resources | (changing basis of competitive success) This method has become less important because, flow and access to capital has been globalized. For the first time in last qtr. 05, US ranked 3rd in receiving FDI, Chnia was no. 1 and India no. 2 | |
| Economies of Scale or Scope | more resources you add to you production, your outputs increase exponentially. The more number of products produced, and cheaper labor. The scale is large it becomes more economical to produce. This method has become less important because, customers want stuff that is more customized, things like computer-aided designs allow for this to happen. Competitive advantage based on the "econ of scale and scope" at global level requires people skills. | |
| Scope | Common components among different models. Ex:John Deere, uses %60 same parts on different models. This creates Economies of Scale and Scope. | |
| Product of Process Technology | source of competitive advantage through innovation and proprietary know how. People, their skills and knowledge. People have become the key to exploit this method! Changes make method less important, rapid innovation, shorter product-life cycle. Ability of other firms to imitate. | |
| External analysis | Michael Porters models, for industries other for nations. | |
| Value creation chain | Anything corp does, should add value. Corp, processes are done in sequence. Creating value, ex:raw material for the things we buy, i.e cell phones, is cheap. What we pay for is phone?! | |
| 2 Things in terms of Value Creation | 1)Practices or processes. What are their practices and processes? 2) Types of resources. Combined together is organizational capability= A nest of resources corp has and knowledge base of how they process raw material. | |
| 3 Factors of production- Resources | 1)Tangible resources 2)In-tangible resources 3)Human resources, separate them because they have added property. Resources + Practices=organizational capability. | |
| Tangible resources | Physical and financial | |
| Intangible resources | Technology and reputation | |
| Human resources | Skills & Knowledge, teams & culture | |
| Tangible Resources are | Homogenous | |
| Human resources are not | homogenous | |
| Organizational capability, when corps have ability to chose, describe | people have the ability to chose. Able to acquire better resources, ex:uni accountants will work for big better companies, not locally. , successful corps can acquire better resources. | |
| Sustainable competitive advantage | if firm has this, if it can earn better profits in the long run. | |
| Competitive advantage | if firm has this, it can earn better profits compared to other firms. | |
| The relationship between resources, capabilities, and competitive advantage | differences in important attributes, capability gap expected to endure. ->Difference is direct consequence of capability gap between producer and competitors-->Customers perceive a consistent difference in important attributes.(preference) | |
| Capability gap | something that you do that others cannot. (others willing to pay more $$$) | |
| Basic Assumptions, Comp. Advantage-VIRO Framework | Firms viewed as bundles of resources. Human resources are key, issue of consistency or fit. | |
| Human capital | knowledge.unlike any other capital, if machine breaks you can replace, money can be transfer, but when it comes to people, its harder to do those things. And it can it become obsolete. | |
| Organizational capital | Type of human capital, knowledge for the organizational. Practices and processes created by people for the organization. | |
| Social capital | who you know. | |
| How does the HR division contribuite to a firm's sustainable competitive? | VIRO Framework, value, inimitable, rare, organization | |
| (VIRO) Framework components | 1)Value 2)Rare 3)Inimitable (non) can't copy or substitute 4)Organization, deals with managing your resources. | |
| 3 important attributes of VIRO framework | 1)Value 2)Inimitable 3)Rare | |
| Value | is a profit proposition. revenue-cost=value. For each resource of practice. All resources must create value. Value is created through either decreasing costs or increasing revenues. | |
| Competitive parity | if resource is valuable. you are equal to others, does not give you comp advantage. | |
| In value creation chain everything must create... | value | |
| Revenue users | things that do not create value. | |
| The question of rareness | Value creation is a necessary, but not sufficient condition, for competitive advantage. HR functions source of parity, firm-specific skills are important and v&r functions provide at least a temporary competitive advantage. Value Creation ex:UNI recruiter, computer, etc. | |
| What makes something rare? | 1)Do you have unique skill, form of leadership style, or something you learned on your own, you are the only one who has it, etc. 2)How much better, must be at least two standard deviations above average to be rare. 3)Is it non-imitable, non-substitutable? | |
| What can result in sustained competitive advantage? | valuable, rare, non-imitable, and non-substitutable characteristics of a source or activity. Ex:amazon wants wal-mart processes for inventory. | |
| 3 conditions of sustainable competitive advantage | 1)customer want to purchase product 2)reason to purchase product, attributes are caused by resources and practices 3)others cannot copy this relationship | |
| what can you do to hide relationship, from others copying? conditions for non-inimitability, elaboration of #3 | 1)History, time compression diseconomies & path dependence. 2)Uncertainty 3)Social complexity 4)Level of integration:horizontal and vertical | |
| time compression diseconomies | doing the same thing in less time. | |
| path dependence | took certain path to be who you are. ?? | |
| uncertainty | let things be. In order to ensure someone does not copy, a level of uncertainty is good. Ex:michael jordan, he does not know how come he is so good. | |
| social complexity | the more complex the basis in terms of human skills, the harder to copy. right combination of people. ex:network of resources, second level of so complex is organizational culture. once created, hard to copy. | |
| level of integration | horizontal and vertical. | |
| Horizontal integration | integration of human resource practices, or marketing practices, supply chain practices and how they work together. Indicates that within a function diff organization work together. | |
| vertical integration | how a particular function is integrated with your strategy. vertical connection, is integration between strategy and particular function. | |
| Firm specific skill | only good at that firm. Ex: type of technology only used in your product, that others cannot use. they are a source of competitive advantage. | |
| Implications of sustained competitive advantage | 1)stems from firm specific skills 2)stems from teams more than individuals 3)stems from HR systems more than HR practices. | |
| 8 steps to transforming your organization | 1)establish a sense of urgency 2)forming powerful guiding coalition 3)creating vision 4)communicating vision 5)empowering others to act on the vision 6)planning for and creating short-term wins 7)consolidating improvements and producing still more changes. 8) institutionalizing new approaches | |
| Basic Framework #1 | describes impact of sustainable strategic advantage, resources and processes, and organization and talent, the effectiveness of org and talent, interactions and actions, culture and capacity, policies and procedures as well as the efficiency of polices and procedures and investments. | |
| Basic Framework #2 | is about driving workforce success, it is measures by the impact of HR on workforces success. | |
| 6 parts to Meaning of Fit-Systems view | 1)Fit 2)Individual-organization 3)Individual-task 4)Individual- informal org 5)Task organization 6)Formal-informal Org | |
| fit | issues | |
| individual-organization | organization meets individual needs. Individual has correct skills-set. | |
| individual informal-org | information organization does not create conflicting expectancies. | |
| task organization | organizational structure and process allow for flow of activities smoothly and cause motivation. | |
| formal-informal org | formal structure, processes, etc. are consistent without conflicting interpretations. | |
| The new competency model | 1)business knowledge 2)personal creditability 3)strategic contribution 4)HR delivery 5)HR technology | |
| personal credibility | achieving results, effective relationships, personal communication 27% | |
| strategic contribution | culture management, fast change, strategic decision-making, market-driven connectivity 40% | |
| HR delivery | staffing, development, organization structure, performance management 20% | |
| 7 practices of successful organizations | 1)employment security 2)selective hiring 3)self-managed teams and decentralization 4)high compensation contingent on organizational performance 5)training and skill development 6)symbolic egalitarianism 7)information sharing |
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