Question

Human Resource Strategy

Discuss human resource strategies that support a Cost Leadership competitive Strategy. Provide examples to illustrate your answer.

Answer 1

Solution

Cost Leadership means when the company is delivering better goods or services at a price lesser than its competitor than the company is said to be a cost leader in its domain. Cost leadership concept is given by Michael Porter. It explains the strategies through which a firm can gain a competitive advantage over the other through cost management.

But Human Resource can also be very helpful and can support the company to attain the goal of cost leadership in the market.

To reduce the cost so that the company can gain better profit, some companies give very less salary to their lower level employees, they do not care much about their employees, their only motive is to increase the company's profit which is a wrong strategy it will not help company in long run because the employees are real assets of the company which will help the firm in achieving their goal.

HR strategies which will support the company in achieving cost leadership

1 Higher the right employees - Recruiting the right employees and in the right number who have proper skill and knowledge which will help them achieve the firm's goal is an important step.

2 Proper training - Proper training is needed for the employees from time to time to understand the competitiveness of the market and mechanism of the company, what company is trying to achieve and it should be applied in the business system.

3 Proper caring of employees- It is very important that the company should take care of their employees and give them an eco-friendly environment. It includes everything from ergonomics, motivating, mentoring, timely payment, etc. Because employees are the real assets of the company if there are happy and motivated then they would sustain for the long run and the company does have to recruit employees very often and spend money on training which in turn will also save the company's budget.

4 Promote Talent Mobility- It is very important that the company promotes bright talent and give a promotion or make them expertise in a particular domain rather than hiring externally which will cost higher than promoting internal talent which in turn will cut the overall cost of the company.

5 Proper financial benefits - Payment system of the company should be fair. There should not be much gaps between higher level employees and lower level employees because it can create a rift between the employees if they are underpaid for their work. Also, it is important that the salary should be decent enough to meet the requirements of the employees because if the salary is low their morale also will be low.

6 Work culture - It is very important that the company should have a good work culture and environment. Every individual should be respected equally.

Example- One of the best examples of cost leadership is wall-mart. It has used its strategy of low price to attract customers. They have one of the best HR norms. wall-mart is operated by three core beliefs

1 service to their customer.

2 Respect for the individuals

3 Striving for excellence.

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