INSTITUTE OF MANAGEMENT

AND
INFORMATION TECHNOLOGY

STRATEGIC HUMAN RESOURCES MANAGEMENT

ASSIGNMENT
Topic:- Linkage of corporate strategy, core competencies and
competitive advantage

SUBMITTED TO:-
Mrs. TAMANNA MOHAPATRA
SUMMITED BY:-
MRUTUNJAY DEBAJYOTI DEY
REGD. NO :- 1906102057
4th SEMESTER MBA
Linkage of Corporate Strategy
Corporate strategy encompasses a firm’s corporate actions with the aim to
achieve company objectives while achieving a competitive advantage.

A corporate strategy entails a clearly defined, long-term vision that organizations

set, seeking to create corporate value and motivate the workforce to implement
the proper actions to achieve customer satisfaction. In addition, corporate
strategy is a continuous process that requires a constant effort to engage
investors in trusting the company with their money, thereby increasing the
company’s equity. Organizations that manage to deliver customer value
unfailingly are those that revisit their corporate strategy regularly to improve
areas that may not deliver the aimed results.

Examples of corporate strategies include the horizontal integration, the vertical

integration.

Horizontal Integration
Horizontal Integration is a strategy that a company adapts when it seeks to offer
its products or services in different markets in order to strengthen its position in
the industry. This can be done by either merging with or acquiring another
company that produces or offers the same services.

The Horizontal Integration strategy can lead to a business monopoly, as with this
strategy it is possible to capture and cover the provision of services, reduce
competition, achieve high economic profitability and access new markets.

Example:- In 2012, Facebook bought Instagram for $1 billion in cash and stock

with the intention to keep Instagram management independent. The acquisition
business was officially closed at the price of $300 million in cash and 23 million
shares.

Advantage
  Using the Horizontal Integration strategy, organizations can take advantage
of the following advantages

 Reduces competition in the sector

 New distribution channels are taken advantage of as a result of merging

with other companies

 Strengthens market positioning

 Complements the existing product portfolio rather than creating a new

brand from scratch

 Increases the company’s negotiating power with its customers and

suppliers

 Reduces costs for international trade

 Increases in the organization’s income.

Disadvantage
 Synergies with other companies do not always produce the expected added
value for the organization

 Legal implications. Horizontal integration can lead to a monopoly which is

discouraging for many governments due to the lack of competition from
other organizations

 Reduced flexibility. Large companies are more difficult to manage as they

are less flexible in introducing new products to the market

 Potential problems with organizational culture and leadership styles when

merging companies

Vertical Integration
Vertical integration is a strategy whereby a company owns or controls its
suppliers, distributors or retail locations to control its value or supply chain.
Vertical integration benefits companies by allowing them to control process,
reduce costs and improve efficiencies. However, vertical integration has
disadvantages, including the significant amounts of capital investment required.

Types of Vertical Integration:-

There are various strategies companies use to control multiple segments of the
supply chain. Two of the most common include backward and forward
integration.

1.Backward Integration
Backward integration is when a company expands backward on the production
path into manufacturing, meaning a retailer buys the manufacturer of their
product. An example might be Amazon, which expanded from an online retailer
of books to become a publisher with its Kindle platform. Amazon also owns
warehouses and parts of its distribution channel.

2.Forward Integration
Forward integration is when a company expands by purchasing and controlling
the direct distribution or supply of its products. A clothing manufacturer that
opens its own retail locations to sell product is an example of forward integration.
Forward integration helps companies cut out the middleman. By removing
distributors that would typically be paid to sell a company's products, overall
profitability is improved.

Advantages:-
Below are the benefits of vertical integration:

 Decreased transportation costs and reduced delivery turnaround times

  Reduced supply disruptions from suppliers that might fall into financial
hardship

 Increased competitiveness by getting products to consumers directly and

quickly.

 Lower costs through economies of scale. By buying large quantities of raw

materials or streamlining the manufacturing process, per-unit costs are
lowered.

 Improved sales and profitability by creating and selling a company-owned

brand.

Disadvantages
Below are disadvantages to vertical integration:

 Companies might get too big and mismanage the overall process.

 Outsourcing to suppliers and vendors might be more efficient if their

expertise is superior.

 Costs of vertical integration such as purchasing a supplier can be significant.

 Increased amounts of debt if borrowing is needed for capital expenditures.

Core Competencies
Core competencies are the defining characteristics that make a business or an
individual stand out from the competition. Identifying and exploiting core
competencies is seen as important for a new business making its mark or an
established company trying to stay competitive. A company's people, physical
assets, patents, brand equity, and capital can all make a contribution to a
company's core competencies. The idea of core competencies was first proposed
in the 1990s as a new way to judge business managers compared to how they
were judged in the 1980s. Core competencies are also known as core capabilities
or distinctive competencies. Core competencies lead to competitive advantages.
Three conditions a business activity must meet in order to be a core competency:

 The activity must provide superior value or benefits to the consumer.

 It should be difficult for a competitor to replicate or imitate it.

 It should be rare.

Example :- Apple has style. The beauty of its devices and their interfaces gives
them an edge over its many competitors.

Competitive Advantage
Organizations are operating in a dynamic and competitive environment. They
need to create and sustain a competitive advantage if they want to survive and
grow. A traditional source of competitive advantage has been eroded. Now it is
believed that productivity is through people. People provide an organization with
a source of competitive advantage. Various studies have concluded that an
organization’s human resources can be a significant source of competitive
advantage.

The human factor is the only organizational resource that can develop a
competitive advantage those are :-

1.Employment Security:-
Employment security is a critical element of a high-performance work
arrangement. The security of employment signals a longstanding commitment by
the organization to its workforces. Feeling of stable employment may generate
loyalty, commitment, or willingness to expend extra efforts for the organization’s
benefits. Employment security enhances employee involvement because
employees are more willing to contribute to the work process when they need
not fear losing their own or co-workers’ jobs.

2.Selective Recruiting
Organizations serious about making a profit through people will expend the
efforts needed to ensure that they recruit the right people in the first place.
Organizations need to have a large applicant pool from which to select the right
person. Firms serious about selection put applicants through several rounds of
interviews and a rigorous selection procedure.

3.High and Lucrative Wages:-

An organization can attract and retain qualified candidates if it pays a high and
lucrative pay package. Higher wages tend to attract more outstanding applicants,
permitting the organization to be more selective in finding people who will be
committed to the organization. Higher wages send a message that the
organization values its people. Low labour costs cannot ensure competitive
success for a long time.

4.Incentive Pay:-
The pay system should be based on the performance or productivity of
employees. Employees will contribute more if they earn more. The contingent
incentive can take many forms, such as gain sharing, profit sharing, stock
ownership, pay for skills, or various forms of individual or team incentives.

Microsoft, for example, encourages sharing ownership. When employees are

owners, they act and think like owners.

Moreover, the conflict between capital and labour can be reduced by linking them
through employee ownership. Profit-sharing causes employees to focus on costs
and profits because they receive a percentage of those profits.

5.Employee Ownership:-
Organizations should make an employee a mini-employer. This can be done by a
stock ownership plan. This may increase their sense of ownership. Employee
ownership reduces conflict between labor and capital. Employee ownership puts
stock in the hands of people.
6.Employee Empowerment and Participation:-
Empowerment indicates many things to many experts. It refers to mutual
influence, creative distribution of power, and shared responsibility. It is a
democratic and long-lasting process. Empowering enables people to use their
talents and capabilities, fosters accomplishment, invests in learning, finds the
spirit in an organization and builds effective relationships, informs, leads, coaches,
serves, creates, and liberates. Participation increases both satisfaction and
employee productivity. Managers should encourage the decentralization of
decision making.

7.Information Sharing:-
If people are to be a source of competitive advantage, they must have the
information necessary to do what is required to be successful. Information
sharing is an essential element of high-performance work systems. The sharing of
information on issues like budget, strategy, and financial performance conveys
the people of an organization that they are trusted.

8.Training and Development of Skills:-

Training is an essential component of high-performance works systems because
these systems rely on front line employee’s skill and initiative to identify and
resolve problems, to initiate change in work methods, and to take responsibility
for quality. They need to be retrained to upgrade and acquire new skills. Training
also changes and modifies employee attitudes and behaviours. Trained people
must be placed in jobs in which they can apply their acquired skills.

9.Treat People with Respect and Dignity:-

Dignity is a term used in moral, ethical, legal, and political discussions to signify
that human being has an innate right to be valued and receive ethical treatment.
At the heart of human right, it is the belief that everybody should be treated
equally and with dignity – no matter what their circumstances. This means that
nobody should be tortured or treated as an inhuman or degrading way. It also
means that nobody has the right to ‘own’ another person or to force them to
work under threat of punishment.

10.Promotion :-
It is of vital importance to encourage employee promotion from within the
organization. This practice may boost employee morale. It encourages training
and skill development because of the availability of promotion opportunities
within the firm bind workers to employers and vice versa. It facilitates
decentralization, participation, and delegation because it helps promote trust
across hierarchical levels. Promotion is a reward that is status-based. It provides a
sense of fairness and justice in the workplace. Another advantage of promotion
from within is that it tends to ensure that people in management positions know
something about the business, the technology, and the operation they are
managing.