Levels of Strategy

• Strategy that allows one business to rise above the

others to become successful
• The three levels of strategy that are typically used by
organizations. Only when all three of these levels are
carefully considered will your business be able to get
on the right path toward a prosperous future.
Corporate Strategy
• The first level of strategy in the business world is corporate
strategy
• Corporate strategy will outline exactly what businesses you
are going to engage in, and how you plan to enter and win in
those markets.
• Describes a company’s overall direction towards growth by
managing business and product lines? These include
stability, growth and retrenchment.
• For example, Coco cola, Inc., has followed the growth
strategy by acquisition. It has acquired local bottling units to
emerge as the market leader.
Business Strategy

• The strategies that you outline at this level are slightly more specific
and they usually relate to the smaller businesses within the larger
organization.
• Even in smaller businesses, it is a good idea to pay attention to the
business strategy level so you can decide on how you are going to
handle each various part of your operation.
• For example, Apple Computers uses a differentiation competitive
strategy that emphasizes innovative product with creative design. In
contrast, ANZ Grindlays merged with Standard Chartered Bank to
emerge competitively. (Standard Chartered Bank acquired ANZ Grindlays in 2000, after which
the Grindlays name fell out of use)
Functional Strategy
• It is at this bottom-level of strategy where you should start to think about
the various departments within your business and how they will work
together to reach goals.
• Your marketing, finance, operations, IT and other departments will all have
responsibilities to handle, and it is your job as an owner or manager to
oversee them all to ensure satisfactory results in the end.
• It is the approach taken by a functional area to achieve corporate and
business unit objectives and strategies by maximizing resource
productivity.
• It is concerned with developing and nurturing a distinctive competence to
provide the firm with a competitive advantage.
• For example, Procter and Gamble spends huge amounts on advertising to
create customer demand.
 Corporate level Business strategies
• Business strategies (Grand strategies) are intended to
provide basic direction for strategic actions.
• They are seen as the basic of coordinated and sustained
efforts directed toward achieving long-term business
objectives.
• Business strategies indicate how long-range objectives will
be achieved, thus, a grand strategy can be defined as a
comprehensive general approach that guides major actions.
• Business strategies fall under four categories
1. Growth 2. Stability 3. Retrenchment 4. Portfolio restructuring (Combination)
Growth strategies
• Organizations usually seek growth in sales, profits, market share, or
some other measure as a primary objective.
• The different grand strategies in this category are:
Concentration
Integration
Diversification
Mergers and acquisitions
Joint Ventures
Concentration
• The most common Business strategies is concentration on the current
business.
• A concentration strategy is one in which an organization focuses on a single
line of business . The firm directs its resources to the profitable growth of a
single product, in a single market, and with a single technology.
• Some of America’s largest and most successful companies have
traditionally adopted the concentration approach. For example, Mc
Donald’s concentrates on the fast food industry and Holiday Inns.
• The reasons for selecting a concentration grand strategy are easy to
understand. Concentration is typically lowest in risk and in additional
resources required. It is also based on the known competencies of the firm.
• Because of their narrow base of competition, concentrated firms are
especially susceptible to performance variations resulting from industry
trends.
 Integration
• Integration may take two forms: vertical and horizontal integration.
Vertical integration
• Vertical integration strategy involves growth through acquisition of other organizations in a
channel of distribution.
• When an organization purchases other companies that supply it, it engages in backward
integration. The organization that purchases other firms that are closer to the end users of the
product (such as wholesalers and retailers) engages in forward integration.
• Vertical integration is used to obtain greater control over a line of business and to increase
profits through greater efficiency or better selling efforts.
Horizontal integration.
• This strategy involves growth through the acquisition of competing firms in the same line of
business. It is adopted in an effort to increase the size, sales, profits, and potential market
share of an organization. This strategy is sometimes used by smaller firms in an industry
dominated by one or a few large competitors, such as the soft drink and computer industries.
• BHEL had undertaken the path of backward integration for the manufacture of assorted
equipments such as, switchgears and transformers, to the full-fledged production of thermal,
hydel, and nuclear power generation equipment
Diversification
• This strategy involves growth through the acquisition of firms in other
industries or lines of business as explained below.
1. Organizations in slow-growth industries may purchase firms in faster-
growing industries to increase their overall growth rate.
2. Organizations with excess cash often find investment in another
industry (particularly a fast-growing one) a profitable strategy.
3. Organizations may diversify in order to spread their risks across
several industries.
4. The acquiring organization may have management talent, financial
and technical resources, or marketing skills that it can apply to a weak
firm in another industry in the hope of making it highly profitable
Diversification Cont..
• Diversification may be of different types.
Related or concentric diversification
• When the acquired firm has production technology, products,
channels of distribution, and /or markets similar to those of the firm
purchasing it, the strategy is called concentric diversification.. This
strategy is useful when the organization can acquire greater efficiency
or market impact through the use of shared resources. A case of
related or concentric diversification is the tie-up of McDonald with
Coco-cola.
Diversification Cont..
• Unrelated or conglomerate diversification
• When the acquired firm is in a completely different line of business,
the strategy is called unrelated or conglomerate diversification.
• An example of unrelated conglomerate diversification is Marico’s
venture into cooling oil segment
Mergers and acquisitions

• In a merger, a company joins with another company to form a new

organization.
• There are several examples of mergers. Ponds, Lakme, Lipton, Brooke
bond India, Milk food ice creams etc. have merged with Hindustan
Lever Ltd. More examples are given in the lesson on Mergers and
Acquisitions in the same Unit.
Joint ventures
• In a joint venture, an organization works with another company on a
project too large to handle by itself, such as some elements of the
space program.
• Similarly, organizations in different countries may work together to
overcome trade barriers in the international market or to share
resources more efficiently.
• For example, GMF Robotics is a joint venture between General
Motors Corporation and Japan’s Fanuc Ltd. to produce industrial
robots
 Stability Strategy
• The organization that adopts a stability strategy focuses on its existing line
or lines of business and attempts to maintain them through one of the
following ways.
Maintaining status quo-continue to do what it has been doing
Sustainability- reinforcing the organization with more competencies to
carry on things in a better or innovative way
• This is a useful strategy in several situations.
 An organization that is large and dominates its market(s) may choose a
stability strategy in an effort to avoid government controls or penalties for
monopolizing the industry.
Another organization may find that further growth is too costly and could
have detrimental effects on profitability.
 An organization in a low- growth or no-growth industry that has no other
viable options may be forced to select a stability strategy
Retrenchment Strategies

• When an organization’s survival is threatened and it is not competing

effectively, retrenchment strategies are often needed.
• The three basic types of retrenchment are
Turnaround,
 Divestment
 Liquidation.
Turnaround strategy
• Turnaround strategy is used when an organization is performing
poorly but has not yet reached a critical stage.
• It usually involves getting rid of unprofitable products, pruning the
work force, trimming distribution outlets, and seeking other methods
of making the organization more efficient. If the turnaround is
successful, the organization may then focus on growth strategies.
• Divestment strategy involves selling the business or setting it up as a
separate corporation. Divestment is used when a particular business
doesn’t fit well in the organization or consistently fails to reach the
objectives set for it. Divestment can also be used to improve the
financial position of the divesting organization.
• Liquidation strategy involves closure of the business, which is no
longer profitable. It may be technologically obsolete or out of times
with market trends.
 Combination Strategy

• Large, diversified organizations commonly use a number of these strategies

in combination.
• For example, an organization may simultaneously seek growth through the
acquisition of new businesses, employ a stability strategy for some of its
existing businesses, and divest itself of other businesses.
• Formulating a consistent organizational strategy in large, diversified
companies is very complicated, because a number of different business –
level strategies need to be coordinated to achieve overall organizational
objectives.
• Business portfolio models are designed to help managers deal with this
problem
Combination Strategy Cont…
• This strategy is the combination of stability, growth and retrenchment strategies.
• Combination strategies may involve implementation of two or more strategies.
• In some cases, particularly during the periods of rapid environmental change,
adoption of combination strategy would be necessary.
• Firms may liquidate one unit, develop another unit and allow the third unit to
survive simultaneously to improve the efficiency of the business and maximise
the profitability.
• Once the company’s profitability is satisfactory, it may adopt a growth strategy.
This strategy is common for large scaleorganisations with multiple units,
diversified products and national or global markets.
• The combination of survival, growth and retrenchment strategies may be either
simultaneous or sequential. This strategy is also called portfolio restructuring
strategy as it is the mix and percentage make up of the different types of
businesses in the portfolio. It involves both divestment and acquisition/takeover
 Business unit level strategy
• Business unit level strategy is a co-ordinated, integrated and
a comprehensive action or plan.
• The purpose of business unit level strategy is to provide a
value to customers by gaining a competitive advantage
through exploiting the core competencies in specific
individual product/service markets.
• Business unit level strategies are designed based on the
firm’s belief about where and how it has an advantage over
its competitors.
Types of Business Unit Level Strategies
• Michael E. Porter suggested three generic business-unit
level strategies, viz., cost leadership, differentiation and
focused
• 1. Striving to be the overall low cost producer in the industry
(a low-cost leadership strategy).
• 2. Seeking to differentiate one’s product offering from the
rival’s products (a differentiation strategy).
• 3. Focusing on a narrow portion of the market rather than
the whole market (a focus or niche strategy).
low-cost leadership strategy
• The low-cost leader’s basis for, competitive advantage is
lower overall costs than the competitors. The low cost
strategy is a powerful approach in markets where most of
the customers are price sensitive.
• The purposes of striving to be a low-cost producer are:
(i) to fix the price for the products at the lower level compared
to that of the competitors,
(ii) to gain the maximum market share from the competitors,
or
(iii) to earn a high profit margin and thus, maximise the
profits.
• This strategy will help the firm initially to gain the market share from the competitors and later to maximise the profits. The danger of this
strategy is that, if the firms cut the prices abnormally to kill the competitors, the firms may end-up with problems of a cheap product
low-cost leadership strategy
• The firm should see that their costs in all areas of production are
lower than that of the competitors. There are two ways to accomplish
this goal. They are:
(a) out-managing rivals on efficiency and cost control and/or
(b) finding creative ways to cut cost producing activities out of the
activity cost chain
Necessary conditions
• The following conditions should also be present in order to enable a
firm to achieve low-cost leadership strategy. The significant among
them are:
• Low-cost Plus Conveniences -Low-cost strategy helps to compete
with the current competitors and allows creating entry barriers to the
prospective competitors. But, sometimes it would be difficult to compete with the major competitors
exclusively based on low cost. Companies, under such circumstances should provide additional conveniences to the
customers. For example, Disco SA, could not compete with the retail giants like Wal-Mart and Carrefour of France in South
American countries exclusively based on low-cost strategy. Then it provided additional conveniences like home delivery,
online ordering and childcare facilities to compete in the market in addition to low cost. Tiger Airways provide low-cost
plus time convenience to its customers
Necessary conditions
• Loyalty and relationship with suppliers: Prices of inputs significantly
influence the margin maintained by a firm as well as in maintaining
the low cost. But, suppliers, sometimes tend to increase the price. Bargaining power of the
firm with suppliers would influence the latter to maintain a low price. However, small firms can’t
have better bargaining power to influence the suppliers. Under such situations, the loyalty and
good relationship with the supplier help the firm in getting the inputs at a less and competitive
price.
Necessary conditions
• Cost leaders should be satisfied with average returns:
Cost leaders continuously strive for reduction of cost.
At the same time potential new entrants as well as
existing competitors observe the cost leader’s
strategies.
Therefore the cost leader should be satisfied with average profits by charging low prices rather than enjoying higher profit margins. The option of enjoying higher profit margins,
would provide a chance to the new entrants to enter the market with a low price than that of the cost leader. For example, Telikom (PNG)’s strategy of higher prices and profit for
mobile phone services before 2007 attracted Digicel to enter Papua New Guinea’s mobile market and grow as the market leader in mobile market of Papua New Guinea. However,
Acer Computer Corporation of Taiwan followed the low profit margin strategy and fixed the price at a low level. The Corporation could follow the low price strategy due to its core
competency in building cutting edge on personal computers faster and cheaper than those of the competitors.
 Steps to Minimise Cost
1. Firms intending to be a low cost producer should appraise each cost creating
activity and should identify the factors driving the cost of the activity.
2. Firms have to identify the controllable and uncontrollable costs, immediate
and postponable costs, present and future costs, etc.
3. Firms have to use their knowledge about the controllable costs, postponeable
costs, to manage and control these costs, month after month or year after year.
4. Wherever and whenever, it is possible, firms have to eliminate the whole
activity from the activity cost-chain.
5. Firms have to control costs to keep the products affordable.
6. Firms have to reengineer processes to improve time utilisation and
minimisation of wastage.
7. Firms have to forge relationships with vendors to minimise costs.
8. Firms have to build global capacities, if the domestic market is large enough.
9. Firms have to steer clear of diversification even, if synergies are available.
10. Firms have to focus on the chosen segments without straying into new ones.
 Differentiation Strategies
• Generally, customers’ needs, tastes and preferences vary from one customer
to the another customer.
• These differences in customers’ tastes, preferences and needs can be satisfied
by producing the product with different attributes.
• This situation results in adoption of a differentiation strategy by the producer
to satisfy the diversified needs of the customer by a standardised product.
• The producer to make this strategy successful should study the different
needs, tastes and preferences of various classes of customers.
• He should study the buying and consumption behaviour of different classes of
customers. The producer, then should incorporate the features into the
product offering based on the study.
• This will make the product much suitable to the different customers compared
to the competitors’ offerings. Consequently, most of the customers will prefer
this product to the rivals/competitors.
 Conditions for Successful Differentiation strategy
Customer Loyalty for Differentiation Customer Loyalty for Differentiation
• Normally, customers prepare to buy the products at the lowest price.
However, customers prefer to pay a high price when the product design
configuration and the services associated with the product are of their choice.
• The customers would be loyal to the brand whose product features match
with their preferences. As the customers, loyalty to a brand increases,
customer’s sensitivity to the price increases is reduced. “This relationship
between brand loyalty and price sensitivity insulates a firm from competitive
rivalry.”
• Example, Gujarat Gas Company provides all associated and necessary services
to its customers including on-the-spot repair services in addition to supplying
gas. Hence, customers prefer to buy from Gujarat Gas Company rather than
from its competitors, though the price is higher than that of the competitors.
 Conditions for Successful Differentiation strategy
• Customers’ willingness to pay premium price
• Some customers belonging to upper income group pay the premium price for
the differentiated products based on quality, convenience and prestige.
• Business class air passengers and full economy class passengers are the best
examples as they are willing to pay a premium price compared to special fares
class passengers who will not enjoy any conveniences for altering the dates of
journey. Similarly, Indian Railways, differentiate services like A.C. two tier, A.C.
three tier, tatkal class (tatkal refers to ad-hoc arrangement for journey
without required prior plan), sleeper class and ordinary class as the upper
income group passengers are willing to pay as high as 20 times to that of the
ordinary class fares.
 Differentiation
• Approaches to Differentiation
Differentiation may take several forms. Important among them are:
(i) A different taste
(ii) Special features
(iii) Superior service
(iv) Spare parts availability
(v) Overall value to the customer
(vi) Engineering design and performance
(vii) Product reliability
(viii) Quality manufacturer
(ix) Technological leadership
(x) A full range of services (xi) Complete line of products
(xii) Top-of-the-line image and reputation.
 Focus strategy
• Focusing begins by choosing a market niche where customers have
distinctive preferences or requirements.
• Thompson and Strickland define the term ‘niche’ as, “geographic
uniqueness, by specialised requirements in using the product or by
special product attributes that appeal only to niche members.”
• A strategist’s basis for competitive advantage is either lower costs
than the competitors, in serving the market niche or an ability to offer
niche members something different from that of competitors.
• If the buyer’s needs can be satisfied through a low cost based
product compared to the rest of the market, the producer can adopt
a focus strategy based on low-cost.
• Alternatively, if there is a customer segment that demands unique
product attributes, then the producer can adopt a focus strategy
based on differentiation.
Situations Where the Focus Strategy is Efficient
• A focus strategy will be efficient in the following situations:
(i) The market segment is large enough to be profitable.
(ii) The market segment has a good growth potential.
(iii) The market segment is not significant to the success of major competitors.
(iv) The focusing producer has the skills and resources to serve the segment efficiently.
(v) The focusing producer can defend himself against the challengers based on the customer
goodwill he has built up and his superior ability to serve customers in the segments.
(vi) When it is costly or difficult for the competitors to meet the specialised needs to the niche.
(vii) When no other competitor is attempting to specialise in the same target segment.
(viii) When a company does not have enough resources to pursue a wider part of the total
market.
(ix) When the industry has many different segments and allows a focuser to select an attractive
segment based on his strengths and capabilities.
 Advantages of Focus Strategy
(i) Specialised skills of a producer adopting the focus strategy in serving the
target market niche provide a basis for defending against five competitive
forces.
(ii) The focused company’s competence in serving the market niche creates
entry barriers for new firms. Therefore, it is harder for firms outside the
niche to enter.
(iii) This strategy also presents a hurdle to the producers of substitute
products to enter the niche market.
(iv) The powerful customers’ bargaining power is also lowered as the
competitor’s ability to serve their needs is less as compared to the focused
firm.
• (v) The niche strategy combined with low-cost and differentiation
strategies will enable the producer to enhance the market share and
profitability
 Pre-emptive Strategies

• Pre-emptive strategies involve moving first to secure an

advantageous position which the competitors are foreclosed
or discouraged from duplicating.

• The efficient pre-emptive strategy will not totally block

competitors from following or copying. But, this strategy
gives an important position to the firm.

• Further, this strategy keeps the competitors in a

disadvantaged position which can’t be easily circumvented.
 Methods of Employing Pre-emptive Moves
• The methods of employing pre-emptive moves to win a prime strategic
position are:
(i) Expand production capacity ahead of the market in hope of discouraging
the competitors from following it.
(ii) Secure the best source of raw material and/or the most reliable, high
quality suppliers through long term contracts or backward vertical integration.
(iii) Secure the best geographical locations.
(iv) Obtain the business of prestigious customers.
(v) Built a psychological image in the minds of customers that is unique and
hard to copy and that establishes a compelling appeal.
(vi) Secure exclusive or dominant access to the best distributors in an area.
 Functional level strategies
Organizations must perform the functions like
Production & Operations
Marketing
Finance
Human Resource Management
Research & Development etc.
• Careful planning, execution and coordination of these functions are highly
essential for effective strategic planning, implementation and control
 PRODUCTION/OPERATIONS STRATEGIES
• The important production and operations management strategies are-
• Decision-making in Operations: The firm before starting the
manufacturing/operations makes specific decisions with
regard to cost, quality, dependability etc.
• Product Design: Product design strategies include market
driven product design strategies, technology driven product
design strategies, and inter-functional driven product design
strategies and flexibility
• Process Strategies: Basically, there are three process
strategies, viz., line process, intermittent process and project
process. For example, automobile companies, TV companies and computer manufacturing companies design line process strategy
PRODUCTION/OPERATIONS STRATEGIES Cont…
• Technology Strategy: Technology strategy is related to set of
processes, tools, methods, machinery and equipment that are used to
convert raw material into finished goods and services.
• Plant Location Strategy: Plant location is influenced by a variety of
factors that includes government policies of various countries,
availability of qualitative inputs at a less price including human
resource, power, material and the like
• Facilities Strategy: Facilities strategy is concerned with the capacity of
production. This strategy crafted taking the marketing strategies into
consideration.
• Chase Strategy and Level Strategy in Aggregate Planning: Aggregate
planning is concerned with matching supply and demand over the
medium term range. Chase strategy aims at chasing demand with the
workforce.
PRODUCTION/OPERATIONS STRATEGIES Cont…

• Inventory Strategies: Inventory strategies cover what to carry, how

much to order, when to order and the type of control system to be
used.
• Quality Strategy: Quality is the conformance to the customer needs.
However, level of the quality varies from customer to customer based
on ability to pay and the degree of requirement of the
product/service.
MARKETING STRATEGIES
• Marketing strategies are primarily based on
business unit level strategies like production
strategies.
Marketing strategies can be studied under the
following areas:
• Product Strategies
• Place/Distribution Strategies
• Pricing Strategies
• Promotion Strategies
Product Strategies

• Improving product/service quality is a critical competitive challenge

that the companies across the world face.
• Quality Improvement Strategy: Quality improvement is an
organisational responsibility.
• Product Differentiation: Under product differentiation strategy,
companies produce different models, sizes and features of the same
product
• Service Differentiation: Similar to product differentiation, companies
providing service also adopt service diffractions strategy.
Place/Channel of Distribution Strategies
• Place/channel of distribution strategies basically depend upon
whether the company prefers to sell directly to the customer or
outsource its distribution function
Promotion Strategies Promotion Strategies

• Promotion mix includes advertising, personal selling and sales

promotion.
• Companies should have a large advertising budgets during product
introduction stage in order to create consumer acceptance.
Pricing Strategies

• Price and quantity of the product compete with each other in setting the
price. High quality products compete with each other in setting the price
• Markup Pricing Strategies: Companies fix a price by adding a certain
percentage to the cost of manufacturing or services in order to earn a
desired return on invested capital. Target Return Pricing: Firms fix the price
after adding desired return on invested capital to the cost of manufacturing
• Perceived Value Pricing: Companies determine the price of a product or
service based on the customer’s perceived value of the product or service.
or service per unit.
• Value Pricing: Companies under value pricing strategy fix the price at low
level for a high quality product or service in order to win the loyalty of the
customers.
Pricing Strategies Cont…
• Going Rate Pricing: Companies adopting going rate pricing strategy fix
the price based on the price of their competitors.
• Group Pricing: Internet is providing an opportunity for the buyers and
sellers to form into groups either to buy at a low price or to sell at a
higher price
• Psychological Pricing: High price is viewed as a reflection of high
quality of the product by many of the upper income group customers.
• Geographical Pricing: Companies fix different prices for the same
product in different geographical regions. For example, Sony TVs are
sold at different prices in different countries.
FINANCIAL STRATEGIES
• Finance is the fundamental resource for starting and conducting of a
business. In fact, companies need finance to implement their
strategies.
• Financial strategies are centred around acquiring capital, reducing
cost of capital, making complex investment decisions through capital
budgeting, financing and dividend decisions, capital structure,
working capital strategies in terms of accounts receivables, inventory,
cash management, etc.
FINANCIAL STRATEGIES
• Acquiring Capital: Capital can be equity capital and loan capital/debt
capital. Equity capital provides security, and free from paying interest and
financial risk
• Capital Structure Strategy: Capital structure is the mix of equity capital,
preference capital, retained earnings and debt capital
• Dividend Strategy: Dividend strategy is to decide the amount of profits to
be distributed to the shareholders after retaining certain amount of profits
as a surplus for the future investment of the company and earning benefit
to the shareholder.
• Long-term Investment/Capital Budgeting Strategy: After acquiring the
capital, through capital budgeting strategy, companies invest capital,
capital investment is also called capital budgeting.
• Working Capital Strategies: There are two aspects of working capital, viz.,
gross working capital and net working capital. Company’s investment in
current assets is called gross working capital.
• Cash Management: Management of cash brings into sharp focus on the
trade-off between risk and return.
Human Resource Management Strategies
• Human resource management strategies percolate
into other functional strategies and integrates all of
them towards corporate and business unit level
strategies.
• HRM strategy addresses the issue of whether a
company or business unit should hire a large number
of low-skilled employees who receive low pay,
perform repetitive jobs, and are most likely quit after
a short time or hire skilled employees who receive
relatively high pay and are cross-trained to participate
in selfmanaging work teams.
Human Resource Management Strategies
• The HR strategy of many multinational companies to take part time
temporary employees or leasing temporary employees from leasing
companies.
• Employees specially working in IT firms in India are working on one
to five year projects and re experiencing ‘Pink – slip syndrome’ as to
what to do after the project is completed. The worst hit are those
employees who are sacked from their jobs after September, 11 2002
attack of world trade centre.
• The number of employees who work only part – time is steadily
increasing. Part-timers are attractive to a company because the firm
does not need to pay fringe benefits, such as health insurance and
pension plans.
• Telecommuting, office at home, flexi time are the order of the day
firms also resort for employing from diverse cultures.
Human Resource Management Strategies
• As work increases in complexity, the more suited it is for teams,
especially in the case of innovative product development efforts.
Multinational corporations are increasingly using self-managing work
teams in their foreign affiliates as well as in homecountry operations.
• Research indicates that the use of work teams leads to increased
quality and productivity as well as to higher employee satisfaction
and commitment.
• Companies following a competitive strategy of differentiation through
high quality use input from subordinates and peers in performance
appraisals to a greater extent than do firms following other business
strategies.
• A complete 360-degree appraisal, in which input is gathered from
multiple sources, is now being used by more than 10% of U.S.
corporations and has become one of the most popular and effective
tools in developing employees and new managers.
Human Resource Management Strategies
• One Indian company, HCL Technologies, publishes the
appraisal ratings for the top 20 managers on the company’s
intranet for all to see.
• Companies are finding that having a diverse workforce can
be a competitive advantage. Research reveals that firms with
a high degree of racial diversity following a growth strategy
have higher productivity than do firms with less racial
diversity.
• Avon Company, for example, was able to turn around its
unprofitable inner-city markets by putting African-American
and Hispanic managers in charge of marketing to these
markets.
Human Resource Management Strategies

• Diversity in terms of age and national origin also offers

benefits. DuPont’s use of multinational teams has helped the
company develop and market products internationally.
• McDonald’s has discovered that older workers perform as
well , better than, younger employees.
• According to Edward Rensi, CEO of McDonald’s USA, “We
find these people to be particularly well motivated, with a
sort of discipline and work habits hard to find in younger
employees.”