Models of Strategy

Industrial Organization (I/O) Model

External environment is primary
determinant of organizational strategy
rather than internal decisions of
managers
Environment presents threats and
opportunities
All
competing
organizations
control or have equal access to
resources
Resources
are
highly
mobile

Resource-Based View
(RBV)
An organizations resources and
capabilities,
not
external
environmental conditions, should
be basis for strategic decisions
Competitive advantage is gained
through acquisition and value of
organizational resources
Organizations can identify, locate and
acquire key valuable resources
Resources are not highly mobile across

Contrasting the Two

Approaches
Research provides support for
both positions
What drives strategy?
I/O: External considerations
RBV: Internal considerations

I/O: Strategy drives resource

acquisition
RBV: Strategy determined by
resources

Corporate Strategies:
Growth

Benefits
Gaining economies of
scale in operations and
functions
Enhancing competitive
position
Providing opportunities
for employee
professional
development and
advancement
HR Issues
Planning for new hiring
Alerting current
employees
Ensuring quality &
performance standards
are maintained

Internal Methods
Developing new
markets
Penetration of existing
markets
Developing new
products or services for
existing or new markets
External Methods
Acquiring other
organizations
Vertical integration
HR Issues
Merging organizations
Dismissing redundant
employees

Traditional HR Versus Strategic

HR
Traditional HR

Strategic HR

Responsibility for HR

Staff Specialists

Line Managers

Focus

Employee relations

Partnership with internal

&external customers

Role of HR

Transactional, change
-follower

Transformational, change
leader

Initiatives

Slow,reactive,fragmented

Fast, proactive, Integrated

Time Horizon

Short-term

Short, medium, long (as

necessary)

Control

Bureaucratic

Organic, flexible

Job design

Tight division of labor

Flexible, teams

Key Investments

Capital, products

People, knowledge

Accountability

Cost centre

Investment centre