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The Competitive Advantage Factors

Paper Type: Free Essay Subject: Business
Wordcount: 2726 words Published: 18th Apr 2017

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This report critically analyzes and evaluates the innocent from its strategic HRM perspective. It is divided into two parts. In its first part, it critically evaluates the key factors, work practices and challenges that innocent should consider if it is to sustain the competitive advantage. Here, a rapidly developing area of HRM, High Performance Work Practices (HPWP), is introduced and its importance is highlighted in today’s competitive business environment. The second part of report discusses the term ‘ Talent Management’ and how it relates to strategic HRM. Here, various issues that could arise with the implementation of talent management programme are also identified and evaluated.

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Competitive advantage factors

Innocent competes in a dynamic and complex environment. Almost every business takes into consideration the external factors such as political, economic, and legal and many others to keep growth and gain competitive advantage. According to Porter (1985) competitive advantage can be defined as “When a firm sustains profits that exceed the average for its industry”. Cost leadership, differentiation advantage identified by Porter as the main types of competitive advantage. Innocent has focused on the healthy fresh smoothie drinks to people spend much hours working and have no time. Innocent had adopted lower cost strategy to add value through activities to meet buyer’s satisfaction, and take position within its industry. It may consider the internal resources and capabilities of the firm as the main bundle to sustain Competitive advantage for long run (Hartel, 2007, Pp. 36).

Resource based view of the firm could be a framework to identify how internal resources have been effected in competitive advantage. RBV depends on two beliefs. First, the resources should be heterogeneous with business strategy. Second, these strategic resources may immobile among organizations. According to RBV, Swain (1999) stated that human capital resource such as skills, knowledge, can be the main driver in future plans within business strategy to sustain competitive advantage. According to RBV, human resources and capabilities of Innocent should be met to create competences. There are four characteristics should be identified in human resource to sustain competitive advantage, create value, rare, immobility, and non-substitutability (Wright et al, 1994).


In order to provide sustained competitive advantage, human resource should add value to the firm. Wright et al. (1994) argued that supply and demand for labor must be heterogeneous to contribute in create value. Human resource could contribute in minimizing cost and maximizing revenues. It also important to take in account that human resource may provide value to the current and potential customers. Barney (1991) stated that human resource may boost efficiency and effectiveness when adding value.


The value of resource could be incomplete to sustain competitive advantage. However, the other firms could acquire the same value, and then it may contribute in competitive parity (Barney, 1991). Firm may seek to select employees with specific skills and knowledge to improve performance and develop new jobs to be fit with high level skills and abilities.


Added value and rareness of human resource may provide sustain competitive advantage not for long run. With time other firms may copy the characteristics value and rarity of human resources. According to Barney (1991) human resource of firm can be not imitable for three basis historical conditions, social complexity and casual ambiguity. The strong firm’s culture and history may contribute in employee engagement

Competitive Advantage

Brand identity is the position that a company want to be, the promise company want to present to its consumers (Temporal, 2002).Innocent Drinks create their brand identity according to their core idea: to be more organic, ethic and natural. The company uses it in many part of their business.

First, a face like company logo was created like children’s drawing with only simple circles, and apparently by its design, it is hard to understand what Innocent Drinks actually do. However, it is surprising that the logo does match the meaning of innocent simple, natural. It is intentionally made to be meaning nothing by the company point of view.

Second, the Innocent Drinks website is organized in asymmetric layouts. The picture on the left, the big knit, is Innocent Drinks latest charity movement. Also the news that it provide on the website is not only traditional information, a sense of humour can also be seen among it.

Innocent Drinks setup of the website is aimed at the visitor and consumer not the employees. The communications inside the company are actively, keeping their web design in the simple, fun and “costumer-oriented” way. The website also sticks on the ethical side of its design culture.

The role of HRM in developing organizational strategy

HRM business strategy emphasizes the importance of individual relationships against collective relations between managers or managers and workers. HRM refers to an activity that depends less on hierarchies, orders and mandates, and stresses the importance of active participation of all employees of the company. The aim is to foster a cooperative relationship between management and workers to prevent frequent clashes resulting from a traditional hierarchical relationship. When HRM is working properly, employees are committed to long-term goals of the organization, allowing it to adapt better to changes in markets (Knox & Walsh, 2005, pp. 57).

HRM involves taking a range of measures which include: the commitment of employees with corporate objectives, the payment of wages according to productivity of each employee, fair treatment to them, continuing vocational training and link procurement policy to other aspects of organizing work and production, marketing and sales. Some companies carry out some of these measures, but few are able to apply them all simultaneously. The implementation of these measures is independent of the industrial sector it belongs to the company. Thus, companies as diverse as IBM, Marks & Spencer and McDonalds apply business policy, as well as several public sector enterprises.

There are three basic kinds of employer-worker relations. In general, collective bargaining is the process of negotiation between employers and labor unions to establish so set wage levels and working conditions, but this kind of collectivism is applied increasingly in countries with ultra-liberal economic policies. The second type is the application of HRM policies. However, the third type is the most common, hierarchical organization in which managers or directors impose their decisions independently of collective bargaining and HRM.

Encourage employee participation in decision-making and organization of the activity involves additional information and consult them on how to develop these activities. The key of HRM is that the top-level communication channels at the bottom and vice versa. Not enough short meetings or with a transfer of orders from managers to workers. The active participation of workers requires the creation of think tanks to solve the various problems and regular meetings between them and the managers of the company. These meetings underscore the importance of controlling quality of goods and services produced by the company. This participation allows the company to make the most of the preparation of their workers and their initiatives. This way, encouraged some cases, a relationship of trust between the employer and his subordinates (Mike & Clark, 2003, Pp. 433).

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The second element of HRM involves relating wages to productivity for each worker. Instead of paying a uniform wage based on work to be done, as when implementing collective bargaining, wages are set according to the productivity of each and for the smooth running of the company. Workers are paid for work or performance. The sharing of the benefits and actions among workers ensures the linkage of labor remuneration with the proper functioning of the company. When profits are distributed among the workers is paid a supplement depending on the company’s financial situation may be actions that are not to be sold before a certain period. This helps employee’s worry about the situation of the company. These two policies imply that both parties share some of the risk and benefits of the company.

Organisations applying HRM devote part of their resources to recruitment and training of it. Seeking to recruit people who can occupy different positions rather than applying strict boundaries of each type of work. Workers should be able to adapt to changes in working conditions, negotiating on a regular basis the number of working hours. These organisations seek to eliminate the traditional hierarchies that distinguish between workers and white collar workers or laborers. Employees should receive equal treatment in respect of payment arrangements, targets and other benefits such as food stamps or restaurant vouchers (Griffiths & Lloyd, 2007, Pp. 98).

The last element of the GRH implies that the relations between managers and workers do not only depend on the personal responsibility department. It also underlines the need to link the relationship of workers with the business. To analyze the performance of HRM must be asked three questions: apply all policies of HRM? Unions can they survive in this type of organization, is it the HRM in a strategic way of elimination of unions and their bargaining power? This method does it improve the management of the company? The various aspects related to the HRM-employee participation, wages linked to productivity, the importance of selection and training of staff-affect the entire company’s business, but not usually apply all simultaneously. Indeed, companies with union representation are more likely that there is good communication between managers and workers who can apply a profit sharing system in which there are no unions.

Their role is very different when applied to all policies inherent in the GRH that if collective bargaining operates a traditional type. For example, if you implement all the measures it is easier for the employer to communicate directly with its employees without having to mediate unions, wages will not negotiate, but that union representatives would be established individually. All this suggests that the future of unions in companies implementing HRM is uncertain. Some analysts believe that HRM is a fictional element of strain between managers or managers and employees aimed at eliminating the existence of trade unions (Dessler, 2004, Pp. 39).

Experience suggests that companies that employ HRM better results and higher levels of production and productivity as they apply in a traditional hierarchy or where labour relations are made ​​through collective bargaining. However, it seems that HRM does not result in an improvement in personal relationships: there are more layoffs or resignations, increased absenteeism (absenteeism) and blur the links between managers and workers. Apparently, this management system is designed to maximize the qualities of each employee and their capacity to engage with the evolution of the company. Those who cannot resist the pressure is removed or absent, relations between workers and managers are more strained than it sounds. But ultimately, the politics associated with HRM seems to be positive as long as it generates better economic results for businesses.

Corporate and HR strategy

Strategic Human Resource Management is a broad concept which is designed to facilitate companies to best meet the requirements and needs of their workforce and employees as promoting goals of the company. Human resource management is an arrangement which deals with every aspect of business that influence and has its impact on employees, for instance recruiting, hiring, firing, benefits, pay, administration and training. It also presents work incentives, sick or vacation days and safety procedure information (Carlos, 2006, Pp. 21).

Corporate strategies basically deal with the purpose and scope of the business as a whole in order to meet the expectations of the stakeholders. It is very important as it is highly affected by investors and stakeholders in the business and behaves to direct strategic decision making in business as a whole. Whereas, human resource strategy is applied on the organizational level and supports a common approach to the strategic human resource management which mostly focused on the long term issue of people and comprehensive concerns about values, culture, quality, structure, commitment and the future needs. Integration between the elements of corporate strategy and HR strategy has its significant importance for an organization in securing and developing its human resource and planning to deliver the best and meet the expectation of the stakeholders and achieving sustainable competitive advantage (Bennis et al, 2000. 152).

Key concepts and models of SHRM and SHRD

Human resource management in organization has mostly emerged to be inarticulate and indiscriminate without any connection with the organizational strategy. Later on the studies and debates on the issues recommended that there an immense need exists to discover the linkage and relationship between strategic management and human resources more extensively. The need to synchronize the SM and HRM process direct to the appearance of SHRM. (Beatty et al, 1997. 29)The literature in late 1980s indicates escalating emphasis on SHRM, and later on the idea of SHRM gains popularity with the growth of two models, the Harvard model and the Matching model that anticipated integrated strategy and human resources management.

The role of HRM and HRD policies and practices

Today, most progressive companies recognize that human resource management plays a key role in developing a viable competitive strategy. In 1987, it was recognized that the need to integrate human resource plans with their quality processes, when the executive staff instructed the human resources staff to design a personal strategy to support the business plan and quality. The ability to consistently deliver a value added service requires superior performance in areas such as recruitment, training, educating staff, measuring and monitoring performance besides monitoring customer satisfaction.

The eight areas are related to issues of quality excellence in the recruitment and retention, internal performance, customer service and continuous improvement, five of them, however, involve issues of human resource management. Therefore, to achieve the goal of superior service company, it needs to ensure that human resource strategies are supportive of this goal. The human resource plans generally focus on the development of employees, the organization of work, awards, recognition, benefits and compensation, and recruitment.

High-Performance Work Practices (HPWP)

High-performance work practices have been shown to work in three different ways: (1) fostering development of human capital, creating a performance advantage for organizations through processes such as increased employee skill development and improved customization by employees in service industries; (2) enhancing the motivation and commitment of employees, creating an organizational and labour-management climate that motivates and supports employee engagement in problem solving and performance improvement;17 and (3) building organizational social capital, which facilitates knowledge sharing and the coordination of work, and thus improves performance. Research in settings ranging from public schools to airlines has demonstrated the added benefits to be realized when work practices encourage the simultaneous development of human capital and social capital among employees (Boselie, 2001, Pp. 07).


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