LITERATURE REVIEW: CONCEPTS
2.15 Business Strategy
1984). These characteristics make one organisation different from another according to the type of business strategy that it adopts. This then has an influence on the HR strategy and subsequently on TM practices. However, there is no universal definition of business strategy. Boxall and Purcel (2011: 39) argued that the notion of strategy is subject to several interpretations. A few of them are listed in table 2.9.
According to Armstrong (2010), strategy has three underlying features. First, strategy is forward looking and is about deciding where you want to go and how to get there. Second, the organisational capability depends on its resource capability. The last feature is strategic fit, which is the congruence between all aspects of the organisation and its external environment. According to these definitions, the central issue of business strategy rotates around the process of decision making that guide an organisation in a direction that ensures its survival as well as its continuous adaptation to the changes happening in its environment. For clarity purposes, however, business strategy has been classified into different typologies and these are discussed below.
Table 2.9 Summary of Business Strategy Definitions
Author(s) Definition
Chandler (1992) ―The determination of the basic long term goals and objectives of the enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals‖
Miles and Snow (1978)
―The consistent pattern in the decision that guide an organisation in competing in a given business‖
Hofer and(1978) ―A course of action that matches an organisation‘s resources and skills with the opportunities and risks it faces in the environment as well as the mission it wishes to accomplish‖
Snow and
Hambrick (1980)
―The decisions to be directed at maintaining the organisation‘s alignment with its environment and managing the major internal interdependencies‖
Porter (1980) ―The steps taken by an organisation to ensure or protect its competitive position in the market‖
Table 2.9 (Continued)
Author(s) Definition Schuler and
Jackson (1987)
―A series of systematic and related decisions that give organisations a competitive advantage relative to others‖
Mintzberg (1990)
―A set of decisions about the direction of an organisation‖
Robbins (1990) ―The determination of the basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals‖
Liao (2005) ―Is an integrated and coordinated sets of commitments and actions designed to exploit core competencies and gain a competitive advantage‖ (p. 295)
2.15.1 Typologies of Business Strategy
Business strategy is very important in the performance and survival of any organisation and for that reason several researchers have come up with different typologies, each involving a different pattern of competitive position, objectives, and competitive advantage (Hofer and Schendel, 1978; Porter, 1980). For instance, Miles and Snow (1978) identified four business strategies: defender, prospector, analyser, and reactor, while Porter (1980) classified business strategies into cost leadership, differentiation, focus, and stuck in the middle. Schuler and Jackson (1987) on their part have cost reduction, innovation, and quality business strategies. Similarly, Miller (1988) has differentiation (product innovation and innovative marketing), cost control, and breadth. Mintzberg (1978, 1987) also came up with six business strategies as follows: image differentiation, price differentiation, quality differentiation, support differentiation, customer scope, and design differentiation.
Miller (1988) builds on the work of Miles and Snow (1978), Miller (1986) and Porter (1980) and maintained that there are at least two different types of differentiation strategies: those based on product innovation and those based on intensive marketing and image management. Product innovation is aimed at uniquely attractive packages, good services, convenient locations, and good products that are
reliable while marketing innovation are based on leading competitors in quality, efficiency, and design innovation or style.
Undoubtedly, there are a number of business strategies in the literature but those of Miles and Snow (1978), Porter (1980), Schuler and Jackson (1987) and Miller (1988) were considered the most appropriate for this study. Furthermore, these typologies are widely accepted, recognised, and used (Murray, 1988; Zahra and Pearce, 1990; Parnell, 2000). Indeed, these typologies are the most accepted in terms of simplicity, accuracy, and generalisability through empirical analysis (Miller and Friesen, 1983; Parnell, 2000).
In addition, these typologies have generated substantial attention in both the empirical and theoretical literature on business strategy (Miller, 1986, 1988).
Therefore, this study will use cost, quality, and innovative business strategies in line with Schuler and Jackson (1987). The focus of a quality-based strategy is to enhance the quality of the products and services. According to Schuler and Jackson (1987), a quality-based strategy aims to produce and deliver the highest quality products.
In this case employees must be trained to deliver quality services to their customers while at the same time being passionate about and responsive to the desires and needs of customers. Clearly a quality-based strategy will have a strong positive effect on the customer‘s loyalty and dependability regarding the organisation‘s services and products. It takes talented employees to produce quality products and services for their clients. The competitive nature of the business environment and the constant demand of the customers require talented employees to innovate and respond to the needs of the ever-demanding customers.
With reference to cost strategy, its main emphasis is cost reduction.
Organisations that adopt this kind of strategy try to produce products and services more cheaply for their customers than their competitors (Schuler and Jackson, 1987).
Their human resources make this possible by using the most efficient facilities and decreasing expenses related to production, research and development, services, selling, and advertising. This is where talented employees are needed. Talented employees are more efficient, effective, and smart, and produce at less cost. In other words, talented employees can help organisations produce at less cost to their customers through their initiatives, increased productivity, and the efficiency of the entire organisation.
Innovative strategy is sometimes referred to as differentiation strategy. It concentrates on product and marketing innovation in the form of innovation, new product development, and strategic aggressiveness towards competitors. It also includes an attempt to create a unique image for a product. In this way, the organisation needs to understand the preference of the customer and competing products in the market in order to appear unique and to inspire customer loyalty to reduce price elasticity (Porter, 1980; Miller, 1988).
The current business environment is characterized by uncertainties and competition, and for this reason innovative business strategies are more important than ever before. This is because in the present day customers demand the latest, stylish, and sophisticated products. These types of business strategies can be achieved if an organisation has the best talents. Indeed in this current global and information world, no organisation can depend on capital, technology or other non-human resources. TM, which emphasises the acquisition and management of talented employees, has become the last competitive advantage as the talents of these employees cannot be substituted or imitated by any organisation.