ORGANISATIONAL RESOURCE MANAGEMENT

Organisational Resource Management

Organisational Resource Management

Critically evaluate, appraise and analyse the management of human resources to aid the development of business strategy within L'oreal

Strategic management is concerned with policy decisions affecting the entire organization, with the overall objective being to position the organization to deal effectively with its environment, and is seen as a vital ingredient in achieving and maintaining effective performance in a changing environment. In large, multi-business organizations, three levels of strategic decision making may be identified: corporate, business and functional. For the single business organizations, corporate and business level strategies become synonymous. However, for multi-business organizations it is important to differentiate between business unit (“competitive”) strategy and organization-wide (“corporate”) strategy.

Corporate, business and functional strategy represent different levels of strategic decision making in L'oreal. Each level involves decisions which are strategic in nature. However, decisions at higher levels, such as those at corporate or business level, will guide subsequent decisions on functional strategy. Purcell emphasizes this point by differentiating between upstream and downstream strategic decisions. Upstream or first order decisions concern the long-term direction and nature of L'oreal. Downstream decisions deal with the implications of first order decisions for L'oreal structure (a downstream decision) (Tanova 1999).

The Search for Competitive Advantage

A key factor influencing the upsurge of interest in linking business strategies and personnel/human resource policies is the quest for competitive advantage. The idea of competitive advantage has been championed by Michael Porter and can be described as any factor(s) which allow(s) L'oreal to differentiate its product or service from its competitors to increase market share. Price and quality are common mechanisms by which L'oreal attempts to achieve competitive advantage. Competitive strategy is, therefore, concerned with achieving sustainable competitive advantage. Porter identifies two main generic strategies for achieving competitive advantage - cost leadership and differentiation(Jameson 2000).

Cost leadership involves positioning the organization as a low cost producer of a standard “no frills” product for either a broad or a focused market. To succeed with a cost leadership strategy it is suggested that the firm must become the cost leader and not one of several firms pursuing this strategy. Cost leadership requires an emphasis on tight managerial controls, low overheads, economies of scale and a dedication to the learning curve.

Differentiation strategy, on the other hand, requires that an organization's product or service becomes unique on some dimension which is valued by the buyer, thus ensuring a premium price. The basis for a differentiation strategy may be the product or service itself or other aspects, such as delivery or after-sales service.

While there are criticisms of Porter's work, there is no doubt that it clarifies the nature of some of the basic strategies that are available to L'oreal given varying external contextual factors. Each of Porter's generic competitive strategies identified warrants different skills and requirements for success. Of particular significance is the need to match personnel selection and workforce profile with the desired generic strategy. Different organizational cultures are also implied in each ...