Human resource strategy and competitive advantage in modern business

HRM Strategic

Strategic Human Resource Management

Today's news cover the internationalized economic crisis emerged within the American real estate sector and expanded throughout the entire globe. Yet, the crisis has only recently become the buzzword, having been long preceded by globalization. The phenomenon by which economic, political, technological or cultural values transcend boundaries from one country to impact the other global regions has created a myriad of effects upon all features of life. Within the economic sector, it has primarily manifested in an increased competition not only for customers, but also for the best skilled staff members.

It is without any doubt then that the modern day business community places an incremental emphasis on the human resource. In this order of ideas, the organizational staff members have metamorphosed from the force operating the machines into the companies' most valuable assets. There are numerous points that could be forwarded as evidence to support this realization, such as the growing role of the human resource in satisfying customer needs (especially within the services sector) or the greater focus placed by the employer on increasing employees' satisfaction within the workplace.

Another major change that is obvious within the contemporaneous business community is given by the growing role of marketing efforts. These have emerged from the realization that the customers are no longer the force purchasing whatever the company sells, but the force which tells the company what to produce and sell, and consequently the force deciding the revenues sustainability of the economic entity.

In this context of an incremental emphasis on marketing and human resource efforts, a conflict has aroused between the promoters of the two groups, who fail to recognize the superiority of one over the other. The aim of this report then is to comment on this conflict, best summarized by following statement:

Marketing-oriented models of strategic management, such as Michael Porter's competitive strategy, in the context of best-fit theory have has been challenged by other HRM strategic theorists who suggest that HR strategy can be usefully understood as building unique 'clusters' of human and technical resources that generate enviable levels of performance' which can provide a sustained competitive advantage (p.87).

2. The Competitive Advantage

Given the information presented throughout the introductory section, it is safe to say that the purpose of this report is that of revealing which of the two types of endeavors -- marketing strategies and human resource strategies -- are better able to create competitive advantages and as such support the sustained development of the respective economic agents.

Before launching such an endeavor however, it is necessary to reveal the actual meaning of a competitive advantage. In a most simplistic formulation, a competitive advantage is represented by any element which can be used by the company in a battle against the competition, such as low retail prices, an increased commitment to customer satisfaction or the high quality of the products manufactured and sold. In a more formal presentation however, a competitive advantage is depicted as the "unique source of value that the organization offers its customers. It explains why an identifiable group of customers […] will prefer its products or services to those offered by other organizations" (Phills, 2005, p.57). The importance of the competitive advantages is given by the fact that these elements represent the core of the competitive strategy, or the efforts undertaken by the entity in overcoming the competition and ensuring success.

The report continues with the analysis of representative models of both marketing as well as human resource strategies. It then includes the findings in a table which assigns points of importance to each of the models. The category registering the highest score will be considered the most adequate strategic approach to creating competitive advantages, and as such increasing the company's chances of succeeding in this highly dynamic business environment. Based on this analysis, the final conclusions will also be drawn.

3. Strategic Marketing

In its most generic form, marketing is understood as a set of sustained efforts that strive to identify and serve customer needs in a means that generates revenues for the organization (Kotler, Armstrong, Wong and Saunders, 2008). The client's needs are identified and satisfied through a series of marketing efforts, all which reveal abilities to generate competitive advantage. The following lines strive to reveal some of these models.

Market research is probably of the utmost importance for the company in generating competitive advantage. The research conducted by the marketing team plays the pivotal part of identifying new needs as they are manifested by the current and prospective customers; the research can also reveal means by which these needs could be satisfied. Additionally, the research of the market identifies marketing strategies implemented by the competition and as such constitutes the basis for the future development of even more competitive actions. The modern challenge of market research is that the actions include far too many technologies, due to which customers are required to press several buttons or "jump through voice-activated hoops" (Rylander and Provost, 2006); this feature significantly reduces its benefits in the meaning of increasing the frustrations and dissatisfaction of the customer base.

Secondly, there are the media campaigns. A media campaign has the ultimate goal of enhancing the company's communications with the customers, but the particularity that only the message of the company is send throughout the campaign; nevertheless, the message sent by the organization is a strong one and appeals to the customer base through the fact that it states the company's ability to serve the particular needs of the clients (Bartels and Nelissen, 2002). Better put then, the media campaign strives to familiarize the current and prospective clients with a new product or service of the organization which has the ability to satisfy their needs. Supported by the technological revolution, the media campaign has expanded its presence and some examples in this sense refer to advertising on multiple media channels, such as television, radio stations, the internet, street banners and so on.

Interactive marketing is also the result of the technological revolution and it is generally applicable within the virtual environment. Several companies have implemented such endeavors in the form of television aired advertisements that leave the viewer wondering what happens next in the commercial; examples of companies which used this technique include Nike or Schweppes. The viewers were invited to log on to the website to find out what happens next. Once here, they would also be introduced to other advertising materials. The applicability of interactive marketing remains reduced, but is expected to increase throughout the next years (McQuade, Waitman, Zeisser and Kierzkowski, 1996).

More and more economic agents allocate incremental budgets to marketing efforts within the virtual community. This marketing model is constructed on the implementation of technological advancements within the business life and has the major downside of not appealing to all categories of consumers. Yet, its popularity is significantly increasing. Online marketing improves the communications with customers and appeals to customers all around the globe, regardless of geographical or temporal limitations. Today, online marketing practices are becoming more aggressive and are beginning to bother the customer, meaning that future actions will have to introduce ethical decisions within the practice (Gauzente and Ranchhoh, 2001).

5. Marketing and HRM as Generators of Competitive Advantage

The previous two sections reveal findings according to which both marketing and human resource endeavors are pivotal in generating competitive advantages. Yet, in order to settle the dispute and reveal which of the two is better in creating competitive advantages, it is necessary to clearly present which type of advantage is revealed by each model. The data will be organized within a table, which will also contain a column on score. The scores are established from 1 to 5, 1 being the least important and 5 being the most important competitive advantage necessary for business success within the contemporaneous business community (the assigned points also consider the limitations of each model). The model which will be assigned the most total points will be considered the winner of the dispute.

Competitive Advantage Generated

Disadvantage

Score

Marketing Models

1. Market research

Identifies customers' needs and wants; identifies the strategies implemented by the competition and offers the firm an ability to top the respective actions

Becomes highly technological and creates customer frustrations

4

2. Media campaigns

Tell the customers that the company understands and has the ability to satisfy their particular needs; sends this message on multiple channels

They are extremely costly and an increased efficiency achieved through simultaneous airings onto various media channels is only accessible to financially strong companies

5

3. Interactive marketing

Raises the interest of the consumers not by pushing the product, but by pulling the customers towards it; can also promote other marketing efforts aside the principally indented one

It is still new and does not attract as many visitors to the website

3

4. Online Marketing

Enhanced customer communications

It only appeals to the customer market of individuals who can operate and have access to computers and the internet

5

Total Score

17

HRM Models

1. The organizational culture

It creates pleasant working environments in which employees are motivated to increase their performances; it can foster an environment in which change is accepted, meaning that the firm will easily be able to adapt to new market requirements in order to satisfy the customers and overcome the competition

It requires company wide efforts and it may be difficult to implement and change

4

2. Employee incentives

Create a satisfied personnel, which is then willing to overcome its limitations, increase its performances and support the company in reaching its overall objectives

Offering both financial and non-financial incentives translates into increased costs for the organization; this is even more so negative when the investment in increasing employee morale does not generate a satisfactory return

4

3. Training programs

They generate employee motivation and satisfaction, leading consequently to incremental levels of productivity

Training programs generate additional expenditures

5

4. Tele-commuting

Leads to increased employee on-the-job satisfaction, materialized in higher levels of performance; also reduces facility costs

Loss of control and poorer levels of organization, generally pegged to the decentralization of the workforce

3

Total Score

16

The analysis previously conducted points out to the superiority of marketing efforts over human resource strategy in terms of ability to generate competitive advantages. The result inclines the balance in favor of marketing due to the direct impact marketing has on customer satisfaction. Nevertheless, it has to be noted that the difference in terms of score is minimal, meaning then that both HRM as well as marketing are almost equally important. What must also be remembered is that this report is not exhaustive and has only revealed some models of HRM and marketing implementation. Was a researcher to focus on other elements, he could come to a different finding. Based as well on this argument, the final conclusion is that both human resource management and marketing are important in creating competitive advantages. And despite the reduced difference in the superiority of one over the other, the debate between the supporters of marketing and those of HRM could continue for years to come.

6. Concluding Remarks

The growing forces of globalization materialized in a multitude of impacts on all features of life, the economic sector being one to feel intense effects. Two of the most important outcomes have been those of incremental fights to hire and retain the best skilled staff members and to attract as many customers as possible. In order to respond to these challenges, the organizational leaders are striving to implement several strategic courses of action that lead to the ultimate creation of competitive advantages. In this order of ideas, managers use both marketing as well as human resource management strategies to create competitive advantages. A question is being posed relative to the superiority of one of these two techniques in the creation of competitive advantages.

A competitive advantage is generically understood as any organizational feature that can be used within a competitive battle, such as a lower retail price or an increased product quality. Marketing endeavors create competitive advantages by identifying customer needs or familiarizing the customer base with the products. HRM strategies create competitive advantages by delivering a high quality of the products and/or services and as such sustaining organizational revenues. This assessment has concluded with the slight superiority of marketing endeavors over human resource efforts, but the different results of other studies are entirely understandable.

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