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What is Business Strategy?
What is strategy? Strategic thinking and strategic management involve viewing the “big picture” of the organization and devising ways to get all levels of management to buy into the strategies. Historically, human resources was rarely considered to be part of the team of strategic managers, but that is beginning to change. For this change to continue, human resources must understand some basic tenets of strategic management.
Strategic management involves three basic assumptions:
Strategy Is Active and Multi-Dimensional
For human resources to be an active partner in the organization’s strategic planning, there must be sufficient knowledge about the multiple aspects of strategy and financial concepts. As seen below, many aspects of strategy are financially based. In their book,
Strategic Management (Prentice Hall, 2009), Mason Carpenter and William Gerard Sanders said there are five dimensions of the business strategy diamond.
The first dimension and fundamental basis for strategic planning is economic logic. Economic logic is the overall core for strategy or decision-making at the organizational top level. It involves characteristics such as lowest costs through advantages, premium prices due to unmatchable service, etc.
On the perimeter of the strategic-level diamond are the remaining four dimensions:
Vision, Mission, and Strategy
Michael Porter is a well-known strategic management researcher and writer. His theories of generic strategic positions are well-accepted in both the academic world and by businesses. According to Carpenter and Sanders, Porter developed the following options:
Human resources must be acutely aware of the organization’s positioning since this choice drives many financial decisions within the organization.
As an HR professional, what can you expect to gain from reading, understanding, and incorporating business literacy concepts into your career? What would be your expected return on this investment?
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