The Organizational Environment
Identifying the HR Contextual Factors that will shape the business competitive strategy.
SWOT analysis

The New Competitive Context

No Sustainable Competitive Advantage: HYPERCOMPETITION- all competitive advantages are short-term and temporary
Due to:
Iconoclastic market rivals- competition we didn’t expect “reject the past way of doing things”
Transitory customer tastes- less brand identity, people change
Ineffective barriers to entry- new ways of thinking
Rapid change in technology- sell online
Acceleration in global competition

The New Competition
Time Based
Rapid change (technology, preferences, etc.)
Short product life cycle
Advantage to first mover
Quick response to market shifts
Proliferation in Variety
New sources of competition
Types of products and services
Emergent/redefined industries and markets
Increased Customization
Mass customization
Micro marketing
Heightened Importance of Service
Service as value
Service as dominant industry
Emphasis on Cost Reduction
Restructuring
Outsourcing, Contingency resources

Strategy Innovation and Corporate Reinvention
Better execution per se and incrementalism will not be the basis for new wealth creation
Strategy innovation is the ability to reinvent the basis of competition with existing industries and to invent entirely new industries- innovation is a core competency
Only nonlinear strategies will create substantial new wealth in a nonlinear world

Competition Demands that an Organization be:
Focused yet Flexible
Efficient and Fast
Quality Driven

Environmental and Competitor Analysis
If the Organization is to leverage HR for competitive advantage, then it must monitor and be aware of the changes in the environment where HR will be impacted and can have an impact

The Environment:
Six Evolutions Shaping the Future
Technological Evolution
Competitive Evolution
Knowledge Evolution CHANGE
Demographic Evolution
Evolution of Rising Expectations
Educational Evolution

Connected Assets
In the next decade, assets such as relationships with suppliers, customers, and employees will supplant traditional “hard” assets (plants, equipment) as a core source of value.
Rather than invest in physical assets, there will be outsourcing to networks of suppliers. There will be real-time collaboration and innovation among customers, suppliers and employees.
These “connected assets” are intangible and cannot be owned as they are.
In a system of connected assets, innovation will greatly accelerate. The main competitor will be the business life cycle.
True connectivity will be achieved only when issues of trust, reliability and leverage among customers, suppliers and employees are resolved.

Resource Dependency Theory
Based on the idea that organizations are the source of scarce resources and organizations are dependent on finite environmental resources for survival and success
1. A lack of control of these resources creates uncertainty for the organization
2. Dependence on a particular resource is determined by the importance of the resource to the firm, its scarcity, and the extent of competition for it.
Together these factors influence

Resource Dependency & Strategic Choice
A firm’s strategic options are determined to a great extent by its environment
A firm will enact a strategy that will allow it to acquire and utilize these resources

Environmental Volatility –(EV) the unpredictability and instability in the relevant dimensions of the organizational environment
2 key dimensions of EB that will affect the HR system
Product market volatility affects the number and type of employees needed; Workforce volatility affects the number and type of persons available for employment This volatility will affect
HR Forecasting and Planning- the more volatile and uncertain the environment, the shorter the forecasting and planning time frame
Policies and Programs- volatility will require more flexible programs in core functions i.e. compensation/staffing
HR role as