Strategic Hrm: Case Study of Luxury Cars

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  • Topic: Strategic management, Human resource management, Car manufacturers
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  • Published : March 30, 2008
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“Strategic HRM is the process of linking the HR function with the strategic objectives of the organization in order to improve performance.”(Bratton & Gold 2007) Strategic Human Resource (SHRM) management is human resource management with a strategic edge, linking both business strategy with human resource (HR) strategy of an organization. Human resource management has become an integral part of almost all the companies all over the world. Human resource management concerns not only how peoples are managed but also how managing people could maximize the competitive advantage in that market sector (Tyson, 1991 p2). Business strategies are defined as a strategy of a particular business unit (Tyson 2000, p66). Human resource(HR) strategy is a series of policies and programs designed to achieve a people management objective (Tyson, 2000 p66) .SHRM on a broader term is a overall sense of mission and direction, an appreciation in general terms of where the company is going and why. This may include articulation of core values, distinctive competencies and corporate vision. SHRM also focuses on translating the complex and dynamic set of internal and external variables, which an organization faces, into a future oriented framework which can then be implemented on a day to day basis (Watson, 1999). In the subsequent paragraphs, This study tries to explain why and how different automobile companies adopt different business and HR strategies. For this study focuses on works of two authors Porter (1980) who has classified business competitive strategy into three types: cost leadership, differentiation, and focus and of that of Schuler and Jackson (1987) who has classified business strategy into three types: cost reduction, innovation, and quality enhancement (Huang 1999). At the end it would try to reach at an particular point where by the help of the practical and secondary data it can identify the best HR and Business practices.

Assar Gabrielsson and Gustaf Larson founded Volvo in 1924, but it was officially founded on April 14, 1927, when the first car left the factory in Hisingen, Göteborg. Till then the Volvo Group has become one of the leading Swedish automobile manufacturing company offering products such as buses, trucks, construction equipment, drive systems for marine and industrial applications as well as aircraft engine components (Volvo annual Report 2006). Key Business Strategies:

One of the Groups HR statement is “Our customers’ needs govern our strategy” (Volvo annual Report 2006), which clearly indicates that the Group is customer centric. Volvo Group pursues a differentiation strategy. The bases of differentiation are superior quality, brand image, quick product delivery. A key feature of the Volvo Group’s growth strategy is to increase its presence in emerging markets, primarily in Asia and Eastern Europe thus spreading its brand image. Another, key long term business strategy which Volvo Group adopts is business by acquisition (Volvo annual Report, 2006).

Key HR Strategies:
Volvo’s HR Vision:
“The Group’s employees and their knowledge and competence are a crucial prerequisite in achieving the corporate vision.’’(Volvo annual Report, 2006). The above statement clearly depicts the company’s intentions to involve employees knowledge and competence in developing their corporate and business strategies.

Recruitment: Recruitment of personnels takes place in all a similar fashion in all business units for both managerial and executive level. Recruits skilled and competent workforce at all levels and institutes various promotion activities aimed at giving employees every opportunity in fully utilizing their skills gifts at work.

Training and development strategy: Along with the basic training, the Group also believes in continuous competence development, which involves an internal training, this offers employees a wide range of courses and training...
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