Question

Company A has always pursued a strategy of product differentiation, that is, providing high- quality products and extracting a price premium from the market. During the recent economic downturn, company A has seen its customer base diminish and has decided to move strategically to a cost leadership strategy that is, to try to sell more products at a lower price.

a) What are the implications of this strategy change for the HR management and payroll process?

b) What changes would you expect to see in the HR management and payroll process?

c) What are the implications of this strategy change in terms of the usefulness of historic data for decision making?

Answer 1

Answer:

• During this competitive business environment, everyone is trying to increase his profitibility by applying different different strategy. Differentiation strategy is also ised to increase profitibility by providing unique product and services for some additional price than market.
• Cost leadership is also a different strategy of business in which prices of product and services are generally lower than market or charging relatively low profit just only to increase market share.

1. Due to change in strategy from differentiation to cost leaderahip, HR Management & Payroll process will also get affected because cost leadership can be successfully implemented only with sufficient expertise and knowledge of market and other related factors of business product and services otherwise business may have to suffer heavy losses.
2. In Cost Leadership strategy, we are focusing only on reducing cost & our profit a little bit to increase customer baseline. And HR management & payroll cycle also plays an important role in cost cutting for the company because the are solely involved in handling all manpower of business. And every business firstly focus on reducing internal cost which is due to excess manpower & unproductive hours etc. So HR management and payroll cycle may also be change to achieve the target of reducing the cost.

3. Organization should analysis and evaluates customers and market taste, preface, budget to buy different type of products so that organization can try to produce product as per current and past taste, preface and budget of customers.

   •             Organization should study related competitor product manufacturing policy, pricing policy, marketing policy so that organization can know mindset of competitor and market and can produce and sell maximum quantity of products.

   •             Organization also study current and past market trends like inflation, deflation, economic downturn and upturn so that organization can decide his production capacity, products price, and product quality, which are very important in increase sell.

   •             Organization should use budgetary control, slandered costing and variance analysis for evaluate and analysis each element of cost like Material, labor, overheads etc. These techniques eliminate unnecessary costs and activities of a manufacturing product.