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At the same time, many organizations are coming to view effective HRM as a source of
competitive advantage so they are focusing on its potential benefits and examining the costs and
benefits to see which ones actually contribute to competitive advantage and which should be
outsourced. In any event, line managers may even be allowed to decide between the
corporation’s HR department or an outside vendor when they need HRM help.
Closing Case: Acting on a Strategic Vision
Case Summary
Established as Amazin’ Software by an ex-Apple marketing executive named Trip Hawkins,
Electronic Arts (EA) was a pioneer in the home computer-game industry. From the outset, EA
published games created by outside developers—a strategy that offered higher profit margins and
Enter Robert Kotick, a serial entrepreneur with no particular passion for video games, who
bought one-fourth of the firm and took over as CEO. Kotick looked immediately to Electronic
Arts for a survey of best practices in the industry. What he discovered was a company whose
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with the passion that its customers brought to the video-game industry. Between 1997 and 2003,
Kotick proceeded to buy no fewer than nine studios, but his concept of a video-game studio
Case Questions
1. How might different competitive strategies help to explain why Electronic Arts lost its
leadership in the video-game market to Activision Blizzard?
Students’ answers might vary. There are three specific competitive strategies:
differentiation, cost leadership, and focus. Activision Blizzard’s differentiation strategy
2. How would you use the adaptation model to advise Activision Blizzard on the best way to
maintain its leadership in the video-game market?
Students’ answers might vary. The adaptation model suggests that managers in an
organization should try to match the organization’s strategy with the basic conditions of its
environment.
• If any of the Activision Blizzard studios are situated in an environment when
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3. If you ran a small video-game start-up, what would be your strategy for competing with EA
and Activision Blizzard?
Students’ answers might vary. The strategy for the firm to compete in the market should
The following items appear on the in-text Instructor Prep Cards. These notes and
suggested talking points should help instructors conduct these exercises with the students.
Discussion Questions
1. Discuss the influence of organizational purpose, mission, and the top management team on
human resource strategy.
The purpose and mission of an organization are two of the most fundamental contextual
forces that define the strategic context of human resource management. An organization’s
purpose is its basic reason for existence, while its mission is how its managers have
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2. Distinguish among corporate, business, and functional strategies. How does each general
level of strategy relate to human resource management?
Corporate strategy is the set of strategic alternatives that an organization chooses as it
manages its operations across several industries and markets. This includes the choice of a
3. Specify the circumstances under which, from a firm’s perspective, a firm’s human
resources might be seen as an organizational strength. Specify the circumstances under
which human resources might be seen as a weakness.
A firm’s human resources might be seen as a strength if the people who work within the
organization are capable, flexible, contributing employees that conscientiously work
4. Discuss how the specific business strategies relate to human resource management.
Particular business strategies relate to human resource management in different ways.
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Under the adaptation model of business strategy, an organization may choose the defender,
analyzer, or prospector strategy or may operate under the reactor strategy. A defender
The analyzer strategy falls between the prospector and defender strategies. The analyzer
firm is most likely in a relatively stable environment with a moderate degree of uncertainty
and risk. The organization will try to identify and take advantage of new markets and
products while maintaining a nucleus of traditional core products and services. Human
resource managers in analyzer firms may seek to recruit and retain employees who are
moderately entrepreneurial and flexible while also dedicated and loyal to the firm.
A cost leadership strategy focuses on minimizing costs so that the firm can charge the
lowest possible prices for its products, thus generating a higher overall level of revenue.
Human resource contributions focus on recruiting and retaining employees who work as
efficiently and productively as possible. They may also reengineer jobs to require minimal
skills. Reward systems may be based more on quantity than quality of output. Production
may be moved to countries with lower labor costs, creating global human resource
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challenges.
5. What are the advantages and disadvantages for an individual who accepts a job as a
human resource manager in a firm that is in the midst of a retrenchment corporate
strategy? A reactor business strategy?
Students’ answers will vary. Within a retrenchment corporate strategy or a reactor business
strategy, advantages and disadvantages will be similar. In both situations, the organization
Advantages for a new human resource manager may include:
Disadvantages may include:
6. If you were hired as a human resource manager in a large firm in which the human
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Chapter 4: TheCompetitive Environment
resource function was poorly integrated with other functional areas, what steps would you
take to improve this integration?
Students’ answers will vary. To better integrate the human resource function with other
functional areas, various steps could be taken. The manager could begin by examining the
7. Explain how organization design, culture, and unionization issues are related to human
resource management.
Organization design refers to the framework of jobs, positions, groups of positions, and
reporting relationships among positions within an organization. The design of the
organization will dictate the design of the human resource department as well. Simple
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Chapter 10: Performance Appraisal and Career Management
8. How does the firm’s human resource strategy interact with other functional strategies and
the strategic leadership of top management to affect organizational effectiveness?
The new view of the human resource manager is that the human resource manager’s job is
to help operating managers achieve their strategic goals, by serving as a center of expertise
for all employment-related activities and issues. An organization must adopt human
9. Why is it important for all managers to understand behavioral forces in organizations?
Why might it be especially important for human resource managers to understand these
forces?
All managers need to understand the actions of those with whom they work. Individual
processes such as psychological contracts, personality traits, employee attitudes,
motivation, and stress will impact every employee’s behaviors and subsequent on-the-job
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10. What are the two primary reasons many businesses today are interested in evaluating the
effectiveness of their human resource management function?
Companies tend to be highly interested in the costs and benefits of human resource
Ethical Dilemmas in HR Management
Scenario Summary
Students are asked to assume they are project managers in the human resource department for a
large manufacturing business. As part of a strategy calling for related diversification, the firm has
while unofficially the boss would like employees of the controlling firm to receive preference.
Questions
1. What are the ethical issues in this situation?
The primary ethical issue is whether to give preference to employees in the human
2. What criteria might you find it necessary to use in making your decisions?
Criteria should be performance related (i.e., work related) in order to make the best
3. What are your personal feelings about how to prioritize individual employees in a situation
like this?
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Students’ answers will vary. Students will likely discuss their personal feelings about the
Assignment
Purpose: The purpose of this exercise is to appreciate the strategic links between human
resources, corporate, business, and other functional strategies.
Step 1 (5 minutes): Divide the class into groups of 4 to 5. Students are then asked to read the
Step 2 (5 to 10 minutes): Identify 3 fundamental human resource strategy issues, challenges,
and opportunities facing the firm immediately.
Step 3 (5 to 10 minutes): Fast-forward 5 years: Their firm’s turnaround has been successful.
Step 4 (5 to 10 minutes): Fast-forward another 5 years: The firm has continued to prosper and
has just launched a diversification program. The core business now has almost 25% of the home-
Step 5 (5 to 10 minutes): Fast-forward another 5 years: The firm has continued to prosper and
now sees itself as mature, diversified home-products company. The company now owns