6 terms

MGMT Final: Ch1


Terms in this set (...)

Porter's Strategy typology
• According to Porter, competitive advantage stems from a company's being able to create value in its production process... value can be created in two ways:
o Value can be created by reducing costs
o Value can be created by differentiating a product or service in such a way that it allows the company to charge a premium (top/best) price relative to its competitors

o The "overall cost leadership" strategy focuses on becoming the lowest cost producer in the industry... this is achieved by constructing efficient large-scale facilities, by reducing costs through capitalizing on the experience curve, and by controlling overhead costs and costs in such areas as research and development, service, sales force, and advertising... provides above average returns within an industry, and it tends to bar other firms' entry into the industry because the firm can lower its prices below competitors' costs

o The "differentiation" strategy attempts to create the impression that the company's product or service is different from that of others in the industry... can come from creating a brand image, from technology, from offering unique features, or from unique customer service... it will achieve above average returns, and the differentiation may protect it from price sensitivity
"Core Capabilities"
integrated knowledge sets within an organization that distinguish it from its competitors and deliver value to customers
• Today there is greater acceptance that core capabilities/competencies or "strategic capabilities" serve as the dominant sources of competitive advantage
• These competencies or capabilities are the strategic resources leveraged to achieve strategic objectives
• These capabilities are valuable, rare, and difficult to imitate by competitors
Identify the criteria for a core capability (or resource) to become a source of sustained competitive advantage for an organization.
• Different parts of a firm's workforce have different strategic value to the firm in that they differ in their influence on core competencies
• Greater source of competitive advantage from
• Firm-specific skills vs. general skills
• Teams vs. individuals
• The entire system of human resource management practices vs. individual practices
• Human Capital and HRM practices can be sources of competitive advantage
• One may bring about the other
Two dimensions along which human capital differs according to the human capital architecture
Two Dimensions of the HC/HR Architecture
o Value of Human Capital
• "Potential to contribute to ... competitive advantage"

o Uniqueness of Human Capital
• Are the skills and knowledge needed to perform firm specific or general?
Four types of workers identified by the human capital architecture model
Strategic Knowledge Workers: employees who have unique skills that are directly linked to the company's strategy
o EX: top management
o High value & high uniqueness

Core Employees: employees with skills to perform a predefined job that are quite valuable to a company, but not particularly unique or difficult to replace
o EX: salespeople
o High value & low uniqueness

Supporting Labor: employees whose skills are less strategic value and generally available in the labor market
o EX: clerical workers
o Low value & low uniqueness

Alliance Partners/Complementary: individuals and groups with unique skills, but those skills are not directly related to a company's core strategy
o EX: consultant's
o Low value & high uniqueness
The two generic HR strategies
High Performance Work System (HPWS): is a specific combination of HR practices, work structures, and processes that maximize employee knowledge, skill, commitment, and flexibility; is composed of many interrelated parts that complement one another to reach the goals of an organization, large or small

Control-Oriented Work System: is a specific combination of HR practices, work structures, and processes that minimize employee knowledge and skill requirements, and seeks to limit the variability of performance across people