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Air Canada faced strategic challenges including declining revenue and increased competition. To address this, Air Canada sought bankruptcy protection and made strategic decisions including acquiring competitors, divesting assets, creating new brands, increasing international business, and downsizing through job cuts. The document discusses how strategic management and planning are important and must be aligned with human resource management to ensure organizational strategies are successfully implemented.

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Stone Forest Ltd
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21 views

SHRP01 (Compatibility Mode)

Air Canada faced strategic challenges including declining revenue and increased competition. To address this, Air Canada sought bankruptcy protection and made strategic decisions including acquiring competitors, divesting assets, creating new brands, increasing international business, and downsizing through job cuts. The document discusses how strategic management and planning are important and must be aligned with human resource management to ensure organizational strategies are successfully implemented.

Uploaded by

Stone Forest Ltd
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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6/16/2022

Concept of Strategy
and Planning
Kamal Uddin Ahmed Ph.D.

Crucial strategic challenges


Air Canada :
• Drop in passenger traffic due to unstable
political condition around the world
• Increased competition from the low-cost
carriers
• Heavy debt and
• Declining revenue

– SOUGHT BANKRUPTCY PROTECTION

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Strategic decisions
Air Canada – In an attempt to survive and become
profitable :
• Acquire its competition-Canadian Airlines
• To focus on key business – attempted to divest
some of its assets
• Create multiple brands – Tango and Zip to
compete with low-cost carriers
• Try to increase the market share of international
business travel because of stagnant domestic
airlines market
• Downsize by laying off 10% of employees in an
attempt to reduce $3-billion labor expense

Strategic decisions
• Acquisitions
• Divestiture
• Downsizing
• Going International
Each of the above strategic choices have
implications for management of human resources

Indicates a need for common understanding of


strategy, its importance, and link to HRM

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Strategy and HR
• Unless the HRM strategy is
– appropriately formulated and
– skillfully implemented
• the success of the organizational strategy is at risk

• Managers who implement any kind of change within


organization realize the importance of matching the HRM
practices with organizational goals

• Strategic Management of people within orgs affects


important orgl outcomes such as survival, profitability,
customer satisfaction levels and employee performance

• HR practices support organizational strategies

Strategy
• Strategy is the formulation of
– organizational missions, goals, and objectives,
– as well as action plans for achievement that
– explicitly recognize the
• competition and the impact of outside
environmental forces.

• Strategy is the plan for how the org intends to


achieve its goals.

– The means it will use,


– the courses of action it will take, and
– how it will generally operate and compete constitute the
organization’s strategy

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Mintzberg’s 5Ps of strategy


• Plan : an intended course of action a firm has
selected to deal with a situation
• Purpose : a consistent stream of actions that
sometimes are the result of a deliberate plan
and sometimes the result of emergent actions
based on reactions to environmental changes or
shifting of assumptions
• Ploy : a specific maneuver at the tactical level
with a short time horizon
• Position : the location of an organization relative
to its competitors and other environmental
factors
• Perspective : the gestalt or personality of the
organization

Formulation and implementation of


strategy
• Define the vision, and thus provide the
organization with a sense of purpose, a mission,
and a clear direction
• Convert this vision into measurable objectives
and performance targets
• Determine the plan to achieve the strategy
• Implement the plan in ways that are both
effective and efficient
• Measure the results against goals and revise
plans in light of actual experience, changing
conditions, new ideas, and new opportunities

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adapting to changes
• Logical incrementalism : redirecting strategy to
accommodating changes
• Strategic planning is viewed as a dynamic
process, moving and shifting and evolving as
conditions warrant changes.
• No straight path to goal, strategy calls for a
series of actions to react to changes in
competitor actions or new legislation : emergent
strategy
• this cumulative process - looks like revolutionary
change to those on the outside; to those inside :
strategy has been incrementally implemented
• Firms can wait passively to see changes to
occur, and then react or they can anticipate
moves and adopt proactive stance.

alignment with external contingencies


• Intended strategy : formulated at the
beginning of the period
• Realized strategy : what actually happened
(the implemented plan)
• A good strategy recognizes the complexity of
realities.
• To be effective, strategic management
anticipates future problems, provides an
alignment with external contingencies and
internal competencies, recognizes multiple
stakeholders, and is concerned with
measurable performance

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Strategy : classifications and typologies


• no two organizations are identical so
uniqueness in strategies may be possible but
it is also possible to group strategies into
categories or generic types
• typologies and classification schemes aid our
understanding
• the more we add variables to approximate
the reality of an organization, the more the
typology becomes unwieldy
• identifiable basic strategies classified into -
corporate strategies and business strategies

Corporate Strategies
Company-wide strategy – focused on overall strategy
for the company and its businesses and interests; long-
term growth and survival goals – involve major
decisions
1. Restructuring Strategies
a. Turnaround strategy
b. Divestiture strategy
c. Liquidation strategy
d. Bankruptcy
2. Growth Strategies
a. Incremental growth
b. International growth
c. Mergers and acquisitions
3. Maintenance Strategies : neutral or do-nothing strategy
– current profitable situation will not last forever, milk
investment – retrenchment strategy - harvest strategy
to restructuring goal

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Business Strategies
• Many large organizations operate several
businesses under the same or different names.
Each of these businesses within the organization
might have its own strategy.
• Action plans to build a competitive focus in
– one line of business
– in a diversified company or public organization
– how to build a strong competitive position
• become or remain competitive based on
– core competence,
– specialized expertise that rivals do not have and
cannot easily match

Corporate Strategy Business Strategy


Which competitive strategy to choose How to build a strong competitive position
Long-term survival and growth Remain competitive based on core
competence, specialized expertise that
rivals don’t have and cannot easily match
Action plan for managing the whole Action plan for managing a single line of
corporate body business
Should we be in business ? How should we compete ?
What business should we be in ? Should we compete by offering products at
prices lower than those of the competition
or by offering the best service ?
What is the best way to compete in that
line of business

Overall strategy of the company All about means and ends


Focuses on company-wide strategies Focuses on the best way to compete in a
particular sector
Single corporate strategy for the There can be one corporate strategy but
company many business strategies

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Business strategy models


• Boston Consulting Group Model : Orgs
with multiple businesses – to analyze the
strategies of different business units
• Portfolio matrix analysis
• Indicators : industry growth rate, market
share, long-term industry attractiveness,
competitive strategy, stage product/market
evaluation etc placed on the graph

The BCG Growth in Share


business position
Relative Market Share
High Low
Above 1.0 below 1.0

High Stars Question marks


Industry
Growth
Rate

Low Cash cows Dogs

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Miles and Snow’s Organizational Types

• Defender : competes in a relatively stable and


predictable environment
• Prospector : operates in a dynamic environment.
Innovation and adaptation are critical to success
• Analyzer : combination of the defender and
prospector, attempting to achieve efficiency with
an interest in new markets and products
• Reactor : no apparent strategy, imperfect type
that lacks a consistent response to changing
conditions.

Porter’s Model

• Low-cost provider strategy


• Broad differentiation strategy
• Best-cost provider strategy
• Focused or market niche strategy based
on lower cost
• Focused or market niche strategy based
on differentiation

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