Servitization Operations Management

Implications of Servitization in Operations Management

The concept of servitization in operations management has become more pronounced in the last one decade. The term sensitization is defined as where the manufacturer offers services that are in line with the traditional products offerings. The service industry is growing globally and dominating the world’s economies and much of the strategic thinking of business. Businesses have in the recent bundled together products and services with the aim of increasing value of their companies. This paper aims to increase the understanding of the concept of servitization in operations management. The paper is based on a systematic review of journals of servitization in manufacturing. Through critical literature review, the paper seeks to understand the extent of servitization across the global, the motivation behind servitization in operations management and the implication of servitization in operations management.

Literature Review

Servitization is happening across all the industry and all the countries across the globe. According to Vandermerwe and Rada (1998), it is the forces of globalization, fierce competitive pressure and forces of deregulation that have pushed both firms in the services industry and the manufacturing sector to dramatic move into services. Manufacturing firms have been offering services but not to the extent they are offering today. The manufacturers have specialized more in providing the services that are in line with the products they produce and have set up special units and companies to provide specialized services.

The process of servitization of business occurs in a multi-stage process;

Stage 1: Goods or Services

Initially, companies and firms were either providing goods or offering services. The firms either fit in one of the two companies, with little or no overlap. This was viewed as generating a low level of profits and hence limited revenue to sustain the company in the current competitive market environment. As a result, there was a need for a more advanced source of income which could assist in generating a better income for the day-to-day running of business activities. This led to the next stage in the process of servitization which is more advanced as discussed below.

Stage 2: Goods and Services

With the development of technology and converging trends, it becomes clear that companies needed both goods and services. Therefore, the firms started offering services that were in line with their products. For example, the computer companies demonstrated the inseparable ability of goods and services once and for all.

This stage enabled companies to secure a better profit than the initial stage of dealing with either a good or a service. Apart from the profitability and high generation through producing goods and services at the same time, this stage gave firms and companies superiority over the small firms dealing only with one line of product. Furthermore, it led to strong customer sovereignty and loyalty which increased firm profits and revenue to enable them to cope with the existing tough competition in the global market. Firms saw that this was not enough and they sought to a more advanced stage which could incorporate more commodities.

Stage 3: Goods, services, Support, knowledge, and self-service

The firms have now developed to an advanced stage. This is where the firms consisting of focused bundles that are customers oriented and composed of goods, services, support, self-service, and knowledge. By engaging in this type of business practice, it enabled the firms to acquire more capital goods for producing final products for customers spread across the globe.

The performance was seen as being high together with quality; profitability increased revenue at the same rate. These coupled with government subsidy and provision of incentives contributed to the robust growth in the firm’s sizes and hence development. The bundles are in some cases high standardized and in other cases customized.

Servitization Operations Management
Servitization Operations Management

Implications of servitization in operations management

Servitization among the manufactures and other firms across the world has been as a result of increased competitive pressure, forces of globalization as well as the development of technology. Therefore, the manufacturers move to providing services that are in line with their traditional products to increase their competitiveness in the market. The motivation for servitization can be discussed in particular forms of service offerings. In this respect, there is customer based motivation aim at improving the quality of the services that are offered to customers, product-related services which are aimed at providing support services to the products, competitive motivation which is aimed at improving the functioning of the products as well as services aimed at supporting clients. Other motivations include economic motivations which are aimed at increasing the revenues of the firm (Raddats et al., 2016).

Servitization works through some ways to increase the competitiveness of the firms. Some of these ways include setting barriers to possible competitors. Servitization creates barriers for customers to be wooed by competitors. If the customers are in a position to get all their need from the firm, that is both goods and support services, then they are more likely to be glued to the company and remain loyal to the firm. The main idea is to block potential competitors by making the entry into the market too expensive or complex.

Servitization also creates barriers to their customers. The customer who is used to getting all the services from any particular firm will be less likely to leave the firm for a competitor. Offering services to customers together with the products makes it unnecessary for them to look for other firms. Servitization also creates dependency on the side of the customers. Through servitization, the customers will depend so much on the products of the firm, and therefore the firm can keep the customers.

Spring and Araujo (2013) discuss the role of servitization in product differentiation. For this case, firms take the advantage of servitization by offering product-services combinations that are unique to any other firms’ products. Servitization increases the complexity of the firm’s products and services and therefore hard for the competitors to match the design of the products and the services. This makes the firm’s products face little competition in the market, and therefore the income from sales is kept at optimum point hence maximum profits made. Building customer loyalty in the market comes as a result of barriers to entry by other potential competitors since servitization offsets this through product-service combination which makes it different from products of other firms.

Servitization and Profitability

Visnjic and Van look (2012) argues that the relationship between servitization and profitability is complex. The approach that is adopted by any particular firm is the determinant of the level of profitability of servitization. Profitability is related primarily to the level of service culture, that is, to the firm qualities and that of the employees since they participate directly in the company’s activities. The provider’s employees must be autonomous, competent and able to communicate well with customers and be able to gather useful information for the firm. The customer interface is very important. These aids in the high levels of sales and hence boosting the profitability level. Therefore, service culture becomes a key element in the performance of every firm.

Services are globally more profitable. The main reason behind this is the fact that services have a lower price sensitivity. As a whole, results confirm the assumption that the operational service system must be adapted to the service strategy to attain expected financial benefits (Baines et al., 2017). While managers of manufacturing firms are skeptical, that service could generate potential revenue and real value.

It has been observed that in industries with a high-installed product base (e.g., aerospace, automotive industries), higher revenue potential often exists as service revenues can be one or two orders of magnitude greater than new product sales (Meely, 2008). Moreover, as services seem to be a steadier source of revenue (Smith, Maull and Ng, 2014), increasing service revenues can serve as compensation for declining revenues in equipment sales, and because services are more resistant to economic cycles, they can support steadier cash flows in periods of economic crisis. Furthermore, service offerings tend to be less sensitive to price competition and tend to promote customer loyalty.

Motivation for Servitization

Demand-based/customer demand motivation

Due to high demand for certain services in the local/global markets by the customers, the company may be forced to venture into servitization process and offer the service in high demand. This motive is strongly held by the fact that there is a ready market for the service to accompany to initial products produced by the firm. The final result is the high-profit yield accompanied by high level of income generation (Vinsnjic and Van look, 2012).

Development purposes

A firm is said to be developed when it produces a wide range of products to be sold in the market. Since every company aspires to increase its profitability and the desire for continued growth, it thus starts servitization due to the high and first service revenues (Vinsnjic and Van look, 2012). Therefore, the firm will experience growth with the product- service provision and hence developing at either constant or increasing rate depending on the technology and labor applied.

Conclusion

Servitization has become an emerging issue in the global business for the past one decade due to the benefits accruing from its practice. From the above description in evolution section, it is a fact that companies advanced progressively from a lower stage of producing single, that’s dealing with a line of product to a better stage of adopting two line products of producing goods and service provision and then finally to the final advanced and technical stage of incorporating goods, services, support, knowledge, and self-service. Furthermore, we looked at the implications of servitization in operations management and finally the critical motivations for practicing servitization as discussed in the above context.

Bibliography

Baines, T., Baines, T., Ziaee Bigdeli, A., Ziaee Bigdeli, A., Bustinza, O.F., Bustinza, O.F., Shi, V.G., Shi, V.G., Baldwin, J., Baldwin, J. and Ridgway, K., 2017. Servitization: revisiting the state-of-the-art and research priorities. International Journal of Operations & Production Management, 37(2), pp.256-278.

Neely, A., 2008. Exploring the financial consequences of the servitization of manufacturing Operations Management Research, 1(2), pp.103-118.

Raddatz, C., Baines, T., Burton, J., Story, V.M. and Zolkiewski, J., 2016. Motivations for servitization: the impact of product complexity. International Journal of Operations & Production Management, 36(5), pp.572-591.

Spring, M., and Araujo, L., 2013. Beyond the service factory: Service innovation in manufacturing supply networks. Industrial marketing management, 42(1), pp.59-70.

Smith, L., Maull, R., and CL Ng, I., 2014. Servitization and operations management: a service dominant-logic approach. International Journal of Operations & Production Management, 34(2), pp.242-269.

Vandermerwe, S. and Rada, J., 1988. Servitization of business: adding value by adding services. European management journal, 6(4), pp.314-324.

Visnjic, I. and Van Looy, B., 2012. Servitization: Disentangling the impact of service business model innovation on the performance of manufacturing firms.

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Climatic Alteration United States Economy

An Exploration on How Climatic Alteration Has Affected the Economy of the United States

The impact of climatic alteration varies considerably across the US due to the size of the nation, economies, different topographies, and ecosystems. The implications of the climatic alteration will likely put immense strains on public financial plans more especially the cost of maintaining road and rail networks and increasing replacements. Depending on the climatic alteration, economic losses translate into lost tax revenues, and federal officials have raised taxes in the United States to help sustain safety and sufficient provision of goods and services.

One of the most noteworthy impacts of climatic alterations in the US may be related to water supply (Inslee, 2016). The continued economic, as well as population growth, has exacerbated existing and future stresses placed on supplies. Substantially, the nature of climatic alterations all over the nation make the net effects of worldwide warming on the agricultural sectors doubtful. Financial impacts on the agricultural sector vary by region particularly areas where precipitation levels are likely to remain stable. Ideally, warmer temperatures result in augmented threats of severe drought by increasing the pace of evaporation.

This dissertation explores how climatic alteration has affected the economy of the United States and the impacts caused include water scarcity, wildfires, energy, and infrastructure stress, flooding, and Hurricane intensity. Moreover, the rise in sea levels, temperatures, the occurrence of extreme precipitation conditions alternated with periods of elongated droughts will also be the centerpiece of discussions in this context.

The study presents projections of climatic effects on the US, by means of information obtained from existing data and modeling exercises that fall into one of the two quantification designs. Policy makers are pursuing clarifications to help in avoiding the worst implications of climatic alteration while transitioning the country to a green energy compliance system. On the other hand, the U.S global change study program lately released a wide-ranging report describing some of the major impacts of climatic alteration.

Climatic Alteration Economics
Climatic Alteration Economics

Dissertation Objectives

  • To identify the economic effects of climatic alteration that occurs all over the country
  • To classify the economic impacts and how they are strewn across regions and within the economic landscape and society
  • To determine the adverse climatic alterations and the most affected sectors that supply crucial goods and services to society
  • To determine how Climatic alteration impacts will place vast strains on public sector budgets and how their occurrence dictates EPA’s priorities and financial situations.

Dissertation Contents

1 – Introduction
Background information on the Study
Problem statement of the study
Purpose of the Study
Dissertation objectives
Study questions and statement of hypothesis
Statement of hypothesis
Significance of the Study
Limitation of the study

2 – Review of the Literature
Introduction to literature review
Review of the principles and concepts
Climatic theories
Anthropogenic worldwide warming theory (AGW)
The Bio-thermostat theory
Cloud formation and Albedo theory
Human-related forcing besides greenhouse gases
Planetary oscillation theory
Solar Variability
Economic theories
Adam Smith and the invisible hand of capitalists
Karl Marx and the exploitation theory
The Keynesian concept of government intervention in the economy
Review of the empirical literature
Summary of the literature and the emerging issues

3 – Study Methodology
Introduction to study design and methodology
Areas of study
Study design
Targeted climatic zones
Targeted economic zones
sample areas of concern and sampling mechanisms
Data collection methods
Data collection procedure
Framework for data analysis and presentation

4 – General Overview
Scope of the results
Data analysis criteria
Findings/results
Statewide Findings
Overall economic findings
Alternative representation of data

5 – Results Interpretation, Recommendations and Conclusions
Interpretations of the results
Recommendations
Conclusions

References

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Investment Appraisal Techniques

Investment Appraisal Techniques

Investment appraisal is normally undertaken by a company before committing to any form of high-level capital spending. The appraisal has two main features including the assessment of the level of returns expected that could be earned from the investment made and an estimate of the future benefits and costs in the span of the project (Ross et al. 2010). In this regard, long-term forecasting is important for estimates of future benefits and costs especially in the purchase of the non-current asset. There are several techniques for investment appraisal, but the two most basic include the payback and return on capital employed (ROCE).

ROCE follows the same principle with the accounting rate of returns as they both relate the investment and the accounting profits (Lumby & Jones 2001). It is computed by getting the percentage of average pre-tax annual profits to the initial capital costs. The method has the advantages of simplicity, especially in the computation. This is because it gives a percentage that indicates the rate of return expected from an investment that is familiar to the management. Also, the technique can be easily linked to other accounting measures (Lumby& Jones 2001). However, the method has disadvantages in that it cannot account for project life, the timing of cash flows and mostly varies depending on policies of accounting employed. Additionally, the method ignores working capital and fails to measure the absolute gain attained while it still lack definitive signal for investment (Watson & Head 2010).

Examples

The ROCE technique is quite popular in the assessment of the business performance after the investments are completed (Haka 2006). This technique is widely used as a measure of the business performance as well as to measure the performance of the management (Lumby & Jones 2001). It is most commonly used in the privately owned businesses as it depicts an increase of wealth for the owner. Also, it can be applied in the expression of the financial goals of a business (Watson & Head 2010). Both independent and mutually exclusive projects can employ the ROCE technique. For example, if a project needs an investment of $800,000 and earns cash inflows of 100, 200, 400, 400, 300,300, 200 and 150 in terms of thousand dollars in a span of seven years.

In addition the assets will be sold at $100,000 at the end of the seven years. The ROCE for this project will be 18.75%. The decision rule as to accept the project or not is determined by looking at the expected ROCE and the hurdle rate from the management. If the expected ROCE is more than the target rate, then the project is accepted (Haka 2006).  The popularity of this techniques has however been declining most probably due to the inflation rates that have led to higher interests rates making the decision-making process difficult. In this case, the method is best suited for short-term business approaches (Haka 2006).

Investment Appraisal Techniques
Investment Appraisal Techniques

Payback period, by definition, is the rough estimate of the time taken to recoup the investments made in a project (Lefley 1996). This technique has two variants: discounted and simple payback periods. The periods are calculated by computing the quotient of initial investment divided by annual cash flow (Lefley 1996). This investment appraisal method has the advantages of simplicity and can use the cash flows and not the accounting profits. This is because the profits in the company cannot be sent and are subjective (Watson & Head 2010). Also, cash is used as the dividends have to be paid. For instance, an expenditure of $2million to get cash inflows of $500,000 per year for some seven years can be assessed using payback. The estimated period will be 4 years and the cumulative cash flow would change over the years. The decision rule in using payback is that the objects that pay up to the specified target payback should be accepted (Wambach 2000). Also, the fastest paying option is always considered.

Also, payback has proven to be very useful in some conditions such as in the improvement of the investment conditions and adaptation to the rapidly changing technology (Lefley 1996). Additionally, the technique maximizes the liquidity, increases company growth while still minimizing the risk.

Comparison of the Two Methods

Despite the numerous advantages, the payback method also has some limitations (Wambach 2000). It does not take into consideration the returns that occur after the period and also disregards the cash flow timings although this can be done by the discounted payback period. In the same regard, it does not provide a definitive investment signal making the method subjective (Lefley 1996). Lastly, the payback method does not take into account the profitability of the project.

The best of the methods in this case would be the payback. This is especially because of the cash flows involved in the projects. The method puts into consideration the time as well as the value for money. Payback is also invaluable especially in the world of unlimited resources and the information provided is understandable (Lefley 1996). ROCE and payback period are both classical techniques in investment appraisal (Wambach 2000). Industries are divided among the two methods although it is possible to utilize both although the non-finance managers prefer to use ROCE (Ross et al. 2010). In this regard, two decisions could be made. For instance, a project could be accepted if the ROCE is below 13% and it can payback within four years (Watson & Head 2010).

Conclusion

The forecasts are important for any business before embankment of any project. Although the investment appraisal may but produce accurate results, it would be important to use as many techniques to avoid losses. Spending on too much on current assets is unrealistic, and the forecasts need to be very careful in order for the best possible value to be gotten. Although several methods for the investment appraisal exist, the return on capital employed and payback remains the most popular one especially with the managers with low skills on finances.

References

Lefley, F 1996, ‘The payback method of investment appraisal: a review and synthesis’, International Journal of Production Economics, 44(3), 207-224.

Wambach, A 2000, ‘Payback criterion, hurdle rates and the gain of waiting’, International Review of Financial Analysis, 9(3), 247-258.

Lumby, S, & Jones, C 2001, Fundamentals of investment appraisal, Cengage Learning Business Press.

Haka, S F 2006,‘A review of the literature on capital budgeting and investment appraisal: past, present, and future musings’ ,Handbooks of Management Accounting Research, 2, 697-728.

Ross, S, Hillier, D, Westerfield, R, Jaffe, J, & Jordan, B2010,‘Corporate Finance’, Second Edition.

Watson, D, & Head, A 2010,Corporate finance: principles and practice, Pearson Education.

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Digital Branding Marketing Dissertation

Digital Branding – The Impact of Digitization on the Branding Process: Economic Opportunities and Risks

Digital Branding – The emergence of digital economies and markets has necessitated companies to rethink how they influence and create consumer impressions. Even today, consumers are still brand thinking is still exist just as in the traditional days. However, today, the competition is much stiff and the market much complex. Brands have to depend on social media to engage their consumers, sell their products and also create a following. Today, a brand is seen as a competitive edge of reference, a guarantee to consumers for long term sustainability and security, and dedication to delivering emotional, functional and economic benefits. Such a definition only increases obligations for business to perform, keep innovating while simultaneously keeping cost down. Overall, branding is just a way to justify the price, the quality, functionality, and the product appeals.

To achieve this, companies, even the biggest of them all must depend on digital channels to establish responsive engagement programs for communicating their justifications. However, for the process to be effective, they must understand the consumer because contemporary branding must adopt a consumer centric approach. More importantly, branding is about creating an exceptional experience and lasting impressions in the minds of consumers. Basically, a firm must be able to command attention of consumers with each new product, invention or development. Companies such as Apple who are the global leaders in sale of electronics are able to command such attentions. They have been able to establish themselves as an authority in the field of electronics. Essentially, this is the goal of every small or large corporations. Each company wants to have a dominating factor that differentiates themselves from competitors. This is why there is so much potential in digital branding. They have no boundaries when it comes to engaging consumers.

Dissertation Research Questions

  • How can digital branding contribute to SME’s growth, development and capacity to compete in today’s markets?
  • What inputs and factors determine successful digital branding?
  • Which process of digital branding holds merits in garnering more opportunities and eliminating risks?
  • What is the best way to increase conversation rates to more sales, better visibility and consumer engagement?
  • How to make digital branding data actionable?
Digital Branding Marketing Dissertation
Digital Branding Marketing Dissertation

Dissertation Contents

1 – Introduction
Problem Statement
Research Questions and Hypotheses
Research Questions
Hypotheses
Significance and Purposes of Dissertation
Methodology
Dissertation Structure
Limitation of Study
Definition

2 – Literature Review
Historical Review: Evolution of the Branding Process
Branding before the 1970s
Branding in the 1970s and 1980s
Branding in the 1990s and 21st century
Theoretical Review: Theories of Digital Branding
Customer Based Brand Equity Theory
Applying the Customer Based Brand Equity Theory
Empirical Literature
Dynamics of Digital Branding in an Interactive and Participative Business Environment
Digital Content and Online Presence
Digital Communication Model
Digital Customer Experience
Digital Branding Communication Tools
Content Branding
Social Media Branding
Brand Identity, Image, Trust, Loyalty, Reputation, Equity in Digital Era
Brand Identity
Brand Image
Brand Trust and Reputation
Brand Loyalty
Collaborative Branding
Corporate Branding
Consumer Behavior in Digital Marketing
Consumer Behavior and Behavioral Biases
Innovation in Digital Marketing – Brand Leveraging and Brand Building
The Red Bull’s Brand Leveraging Strategy
Innovative Brand Building
Content Integration – User and Firm Generated Content
User Generated Content (UGC)
Firm Generated Content (FGC)
Digital Branding Story Telling and Consumer Engagement
Storytelling in a Branding Perspective
Storytelling on Social Media Platforms
Brand Reputation Management – Organizational Rejoinders to Negative Brand Stories
Online Reputation Management
Monitoring – Analyzing – Influencing
Digital Branding Implication on Offline Brand Management

3 – The Ultimate Digital Process – Case Studies of Digital Market Leaders
Uber Digitalization Process
Amazon Digitalization Process
American Express Digitalization Process
Airbnb Digitalization Process
Tesla Digitalization Process

4 – Findings and Analysis: Economic Opportunities and Risks in Digital Branding
Statistics – Visual and Informatics
Data Tables, Figures, and Statistics
Confirmatory Analysis
Exploratory Analysis
Descriptive Analysis – Demographics, Quotations, Data Paraphrasing
Economic Opportunities in Digital Markets
Opportunities in Growth
Opportunities in Product Development
Opportunities in Service Improvement
Opportunities in Diversification
Opportunities in Lead Generation – Cross Sell, Upselling, and Retaining
Increase in Operational Efficiency
Finances – Higher Profits, Less Costs, Pricing, Underwriting
Brand Extension
Risks in Digital Markets
Risks in Reputation Management
Risks in Competition – b2b Engagement
Risks in Content Integration and Channel Conflict
Financial Risks – Budgets, Lower Revenue, Price Volatility
Cybercrime
Obsolete Models, Strategies or Products/Services
Inaction and Lower Retention
Distribution Challenges

5 – Discussion
Compare Findings to Theories
Brand Reputation
Brand Image
Brand Identity
Answering the Research Questions
Answering the Hypothesis
Practical Implications of Dissertation
Pedagogical Implications of Study
Future Areas of Research
Creating an Action Plan for Digital Markets

6 – Recommendations
Choosing a Brand Personality
Winning Strategies in Digital Markets
DRIP Framework
Blue Ocean Strategy
Literacy in Digital Branding
Creating Responsive Digital Platforms
Creating Digital Content
Integrating Digital Platforms

7 – Conclusions

Bibliography

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Human Resource Planning Management

Human Resource Planning

Human Resource Planning and Management. The firm’s position in the particular industry that it operates determines whether the profitability of the firm can be defined to be above or below the average profitability in the entire industry. Making the profit level of any particular company be above the industry average is a long-term goal of any particular company regardless of the industry in which it operates. To gain long-term above-average profitability level, two types of competitive advantages can help the company rise to such levels.

The first one is either cost management or differentiation. When any firm can keep the cost as low as possible, it will be in a position to charge less and have a broad market base, a factor which is important in improving the long-term profitability levels. The course that is taken by any particular company depends on the leadership focus on either of the two kinds of competitive advantage. The two kinds of competitive advantages lead to four generic strategies that are aimed at ensuring the profitability of the organization rises above average in the long-term. Such includes the broad cost leadership, focused cost leadership, broad differentiation, and focused differentiation. The four Porter’s generic business strategies regarding the business focus affect the human resource planning management of any particular organization in some factors, including in the selection process, screening, training, and compensation among many other factors affecting human resource planning in any specific organization.

Leadership of any organization can decide to focus on any of the two factors of competitiveness depending on the environment in which they are operating as well as their goals. As noted by Pfeffer (2007), any of the generic competitive generic styles that are adopted in any particular organization have and influence on the staffing models adopted by the organization. A choice of one particular style will best fit one staff modeling, which may not be suitable for a different strategy. For example, a choice of one style can result in what Pfeffer (2007) describes as “…disengagement and diminished productivity is the pervasive and growing conflict between work and family…” (117). The style adopted, therefore, influences all the stages of the human resource planning from the selection to retention. The reason is that each style of leadership requires a different pool of employees regarding their qualifications, motivations as well as focus as described by Heneman, Judge, and Kammeyer-Mueller (2015).

Humphrey, Morgeson, and Mannor (2009) describe an organization to comprise of physical, financial and human capital. The three compositions are affected by the leadership choices and focus that are made by any particular organization. Mainly, the generic competitive strategy adopted by different organizations depend and what can be described as “workforce quality” as well as the “workforce quantity” (Heneman, Judge, and Kammeyer-Mueller, 2015). The staffing strategy of an organization focuses on HR planning, recruitment, and selection, employment as well as retention of the employees. An organization that mainly focuses on the reduction of the cost will first of all look at the staffing strategy that will cost the organization the least amount of resources. Therefore, apart from just focusing on the operational cost of the organization, broad cost leadership strategy will include in cost of hiring and retention in the costs of the organization. Given that the staff pool of the organization has a major impact on the total cost of the organization, a broad cost leadership will pay attention to the total cost that goes to its human resource department.

Staffing strategies and staffing models of an organization have impacts on market share, environmental sustainability, deployment, customers’ satisfaction among many other determinants of profitability. Specifically, in the development of the organization’s staffing strategy and models, the leadership pays attention to the effects of these factors on the two kinds of competitiveness which are cost as well as differentiation (Terpstra and Rozell, 1997). For example, broad differentiation business strategy won’t pay much attention to compensation of the employees. This strategy will mainly focus on the quality that the employees bring to the organization without paying much attention to their pay demands. However, the broad cost leadership strategy will focus more on the pay demands of the employees and therefore go for the cheapest means through which they can achieve their objectives. The similarity between the two strategies is that the focus on a wide area as opposed to the focus strategy.

The focused cost leadership and the focused differentiation leadership have some unique characteristics that affect the human resource planning strategies that are adopted by an organization. Rather than focusing on the entire industry, this two generic business strategies pays attention to specific segments of the industry and then pay attention to either cost or differentiation in these particular segments. The main idea as noted by Humphrey, Morgeson, and Mannor (2009) is therefore that these two styles of leadership focus on a narrow competitive scope as compared to the “broad-based” leadership styles. Whether the leadership style in the particular segment focuses on cost or differentiation affects the staffing strategies and models just the same way the broad-based leadership affects this factors, but in a narrow scope for this case.

The cost focus strategy seeks to gains cost advantage in a particular segment of the industry. Therefore, in its staffing strategy, the management and the human resource department will look at the cheapest means to compose its employee’s pool. The screening and the selection process will mainly focus on employees that can help the organization reach its cost limits. Also, the training process of the employees will mainly focus on methods of reducing the cost of operations in the organization. Under this strategy, the organization will be willing to retain a small number of employees that will help in the reduction of the total cost that is incurred by the organization.

Human Resource Planning
Human Resource Planning

On the other hand, differentiation focus will seek to achieve differentiation in a particular segment of the industry. The differentiation focus, therefore, tries to make the products of the company look different from those of the competitors and therefore gain market advantage. Differentiation is an important factor in profitability, and therefore any particular organization must pay attention to it. According to Cole et al. (2004), the level at which the organization achieves product differentiation depends on the pool of employees that they have. Therefore, just as it is with the cost focus, the differentiation focus will also influence the staffing strategies and staffing models that are adopted by an organization. The organization will pay much attention to the “quality” of the employees that will help it in achieving the differentiation target rather cost. Since product differentiation can help an organization keep the prices higher but maintain the customers base, the organization using this strategy will therefore not pay much attention to the cost of establishing this strategy.

Human Resource Planning Strategy

The strategy that any business chooses to adopt has far-reaching effects the entire planning process of the organization. More specifically, the cost focus or differentiation focus of any organization will determine the steps and the processes that will be adopted in the human resource planning process. Human resources planning is defined by Clardy (2008) as the process of adjusting the flow of workers in any organization, both in and out of the firm. The goals of the organization will specifically affect the process of human resource planning as well as the aspects that the planning process pays attention to. The role of the human resources planning for this case will ensure that the organization has a workers pool that will help it achieve the kind of competitive advantage that it has chosen to focus on. The planning process will pay attention to the skills that it requires the employees to have, both today and in the future to achieve the competitive advantage that it requires.

The role of human resource planning is ensuring that the organization has the right number of employees as well as employees that have the right skills to drive the agenda of the organization. As defined by Heneman, Judge, and Kammeyer-Mueller (2015), human resource planning aims at ensuring that the right number of employees are at the right place, at the right time and capable of effectively and efficiently delivering the needs of the organization. It ensures that the organization achieves its objectives through having the right composition of employees. Therefore, human resources planning is essential for any particular organization. The process is greatly affected by the strategy that the organization decides to pursue. This includes all the processes of human resource planning ranging from the screening and selection to the retention stage. Whether an organization chooses to focus on cost or differentiation will affect the whole process of human resource planning, staffing planning, and diversity planning.

When an organization decides to pursue the low-cost strategy, the human resource planning will mainly focus or ensure the organization has the right pool of employees that will help the organization keep its costs as low as possible. Under the low-cost strategy, the firm is trying to take advantage of the prices and therefore have to focus on reducing the prices since this will help them in keeping the prices as low as possible. The main objective of this case is to earn a larger market share through specializing in reducing the prices of the goods and services that the organization offers. This is only possible is the human resource planning will be effective in ensuring that the organization a pool of workers that first understands the goal of the organization and secondly have the right skills to pursue this goal. For the cases of the organizations that focus on differentiation, the human resource planning process must understand that the employees in the organization are a key part of achieving the competitive advantage and differentiation that requires. Therefore, the human resources planning for the case of a firm that chooses to specialize in differentiation will focus on accessing the organization with the right pool of employees that will make the products and the services of the organization look different as compared to other competitors in the market.

Succession Planning

Succession management is important as the workers in the organization need to have certain competencies and skills that will help an organization in achieving its objectives. The human resource planning focuses on the succession management by ensuring that the organization gets the right pull of workers depending on whether the organization focuses on lowing the cost or making its products and services look different when compared to the services that are offered by their competitors. The human resources management for this particular case focuses on training and job security as well as employees’ loyalty, depending on their focus (Clardy, 2008).

The staff planning process of any particular organization is also affected by the strategy that is adopted by the organization. What the organization decides to pay attention to will affect all stages of the planning process. Heneman, Judge, and Kammeyer-Mueller (2015) define staff planning as the process of ensuring that the organization has the right skills at its disposal. Just as human resources planning, staff planning seeks to ensure that the organization has the right number of employees and at the right time and employees possess the required skills to fulfill the objectives of the organization. The staff planning takes into consideration both the internal and external factors and therefore is important in ensuring that the organization achieves its objectives. The recruitment and selection process in staffing and human resources planning deals with discovering the manpower requirement of the organization depending on what the organization wants to achieve. For this case, the selection and recruitment stage in the human resources and staffing process will pay much focus on cost for the low-cost strategy and differentiation abilities focus on the differentiation focus. The staffing planning will focus on attracting a large pool of workers so that it can have the liberty to select the best from the pool.

As explained by MacKenzie, Klaas, and McClendon (2012), the organizations that focus on low cost will focus less on the selection and recruitment process. The organization will try as much as possible to keep the recruitment budget as low as possible. The recruitment processes will mainly use the mouth to mouth and online application to try and reduce the cost of recruitment and selection. However, when the organization decides to focus on differentiation as its tool of differentiation, the recruitment and the selection process will pay attention to different factors. The process will focus on employees that have a large pool of skills and competencies, a factor that is essential in ensuring that the products and services of the organization are slightly different from those of the competitors.

Diversity planning is also important in an organization. The diversity planning focuses on ensuring that the organization has the right mix employees. The process is vital in ensuring that the organization achieves its current and future objectives. Diversity planning will pay attention to the composition of the workforces on numerous factors including the skills mix, sustainability as well as flexibility of the workforce. The diversity palling process is directly affected by the focus of the organization. Whether the firm decides to either focus on cost or differentiation will affect the mix of the employees that the organization would like to have (Highhouse, 1997). For example, for an organization that chooses to focus on differentiation, it would wish to have a more diversified workforce as compared to an organization that pays attention to cost. The low-cost strategy will focus on a mix that that lowers the cost while the differentiation strategy will focus on developing a diverse workforce that will ensure that the organization achieves either perceived or real differentiation.

Under Porter’s generic business strategies, the firm chooses either to focus on cost or focus on differentiation. Also, the firm chooses whether to focus on the entire market or a specific section of the market. The focus of the organization has major influences on the human resource planning management and staffing policies that are adopted by the organization. More specifically, whether an organization decides to focus on a particular segment of the market or the entire market affects that assessment processes as well as the reliability and validity of the assessment process.

Broad differentiation leadership target a large market area and aims at gaining market advantage through differentiation across the entire industry. The strategy concentrates on one or more criteria in the market, and the strategy is always related to creating a premium price in the market. The differentiation strategy is about creating a premium price and then convincing the customers on why they should prefer such products as compared to the products of the other producers, through their prices may be low. This focus will affect the selections process as well as the reliability and validity of the selection assessment processes (Heneman, Judge, and Kammeyer-Mueller, 2015). The selection assessment process for this case will focus on creating differentiation in a large area, and therefore the selection process will mainly focus on skills and competencies that will enable the organization achieves this objective. The differentiation criteria that can be used include superior products, branding, wide distribution channels as well as constant promotion, specifically focusing on a larger area for the case of broad differentiation leadership.

HRM Dissertation Topics
HRM Dissertation Topics

Under the differentiation focus, the organization divides the market into segments and decides to focus on one segment of the market. Therefore, for this case, the organization would both pick a small area in the market or a single product and then decide to focus on that area or product. The choice of the company will influence the selection assessment methods that will be applied by the firm. The organization will focus on the segment since they have seen an opportunity in the provision of goods and services in such an area and believes focusing on differentiation on the region will help the organization achieve competitive advantage. The difference between the broad differentiation and focus differentiation leadership is the target market, with the broad differentiation focusing on a large market while the focus differentiation pays attention to a segment of the market. Such specialization will have an impact on the employees’ assessments methods in the selection process (Clardy, 2008). The methods are mainly affected by what the methods decide to concentrate on. The concentration of the particular selection assessment methods will dictate how valid or reliable the methods used are.

As noted by Highhouse (1997), the organization is in fierce wars of getting the most talented workers from the labor market. They invest large sums of money with the aim of getting the best employees from the available pool of employees in the labor market. The strategies used include job advertisements and recruiting strategies. This is due to managers understanding that the pool of employees is essential to achieving the objectives of the organization. On this note, depending on the strategy of the organization, the organization will select a selection assessment that they feel is best for identifying employees that best fit what they are looking for. Numerous selection methods can be used by an organization depending on whether the organization has decided to focus on a larger market or specialize in a single segment of the industry. For organizations that mainly focus on differentiation, formal assessment methods are used. This is because the firms are keen on getting the right pool of employees that will push the agenda of the firm forward.

The specialization that the firm chooses to focus on regarding differentiation affects the job analysis in the selection process. There are procedures as noted by MacKenzie, Klaas, and McClendon (2012) that are used in the development of the selection criteria. The procedures are affected by the size of the market that the organization decides to focus on. The competencies and skill that each strategy looks for are different, a factor that affects the selection assessment procedures. One of the most used assessment methods is the Cognitive Ability Tests. The methods mainly focus on measuring the mental ability of the prospective employees.

Other criteria measured under the test includes the reasoning ability, reading comprehension as well as mathematical abilities. The cognitive selection assessment criteria have been used as a predictor of the job performance of the employees. For the case of this test, the broad differentiation leadership will focus on employees with higher mental abilities that can help the organization achieve competitiveness through differentiation in a larger segment of the market. On the other hand, as observed by Heneman, Judge, and Kammeyer-Mueller (2015), the focus differentiation leadership style will focus on abilities that will help the organization focus on a particular segment of the market. Whether the organization focuses on the larger area or a segment of the market will also affect the applicability of this selection assessment method. The broad differentiation strategy mainly relies on this selection criteria since it focuses on the ability of the employees to deliver the competitive criteria of the organization. The reasoning, mathematical and verbal abilities of the employee are essential for this strategy.

Other selection test Personality Tests, Biographical Data test, Integrity Tests, Structured Interviews, and Job Knowledge Tests. The job knowledge test is another selection test that is influenced by the strategy that is used by any particular firm. This selection assessment method measures the knowledge area that is required for a person to perform a certain job effectively. For this case, the broad differentiation technique will be paying attention to employees that can deliver differentiated products focusing on a large area.

For the case of focus selection assessment methods, it will pay much focus on the ability of the employees to focus on a given section of the market. The reliability and validity of this selection criteria are also affected by the strategy that the organization seeks to pursue. This criterion is mainly used by firms that seek to focus on a given region (Kulik, Roberson, and Perry, 2007). The firms under this test look for the best employees that know the particular segment. Therefore, this method is more valid and reliable under the focus differentiation leadership as opposed to broad differentiation leadership. When used under the broad differentiation leadership, the test focuses on employees who know a bigger segment of the market, which the firms seek to sell the differentiated products and services. Therefore, as shown by the analysis of the cognitive selection assessment and the job knowledge test, the focus of the organization regarding differentiation significantly influences the selection assessment methods as well as the reliability and validity of the methods.

References

Clardy, A. (2008). The strategic role of human resource development in managing core competencies. Human Resource Planning Development International, 11(2), 183-197.

Cole, M., Field, H., Giles, W., & Harris, S. (2004). Job type and recruiters’ inferences of applicant personality drawn from resume biodata: Their relationships with hiring recommendations. International Journal of Selection and Assessment, 12(4), 363-367.

Heneman III, H., Judge, T., & Kammeyer-Mueller, J. (2015). Staffing Organizations (8th Edition). Middleton, WI: Mendota House/McGraw-Hill.

Highhouse, S. (1997). Understanding and improving job-finalist choice: The relevance of behavioral decision research. Human Resource Planning Management Review, 7(4), 449-470.

Humphrey, S., Morgeson, F., & Mannor, M. (2009). Developing a theory of the strategic core of teams: A role composition model of team performance. Journal of Applied Psychology,   94(1), 48-61.

Kulik, C., Roberson, L., & Perry, E. (2007). The multiple-category problem: Category activation and inhibition in the hiring process. Academy of Management Review, 32(2), 529-548.

MacKenzie, Jr., W., Klaas, B., & McClendon, J. (2012). Information use in counter-offer decisions: An examination of factors that influence management counter-offer decisions. Journal of Labor Research, 33, 370-387.

Pfeffer, J. (2007). Human Resource Planning from an organizational behavior perspective: Some paradoxes explained. Journal of Economic Perspectives, 21(4), 115-134.

Terpstra, D., & Rozell, E. (1997). Why some potentially effective staffing practices are seldom used. Public Personnel Management, 26(4), 483-495.

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