Basic Marketing

What roles do the outside environment and competition have in formulating organizational strategy?

Both competition and the outside environment play a tremendous role in the formulation of organizational strategy. Whether competition is local, regional, national, or global effects decisions made by HR, as well as plans and directives that hinge on what the competition does or have the capabilities to do. HR must factor in competition when deciding who to hire, training, and even salaries and wages. Competing firms are constantly seeking quality personnel and if a competing firm pays higher wages or offers better benefits, employees and potential hires will be more inclined to obtain employment with them. Competition can oftentimes set the standard or even the pace to which a specific industry may operate. Human Resource Management must factor in all elements when formulating organizational strategy and competition is a key element to be considered.

According to Anthony, Kacmare, & Perrewe, “The outside environment presents a set of opportunities and threats to the organization in the form of laws, economic conditions, social and demographic changes, domestic and international political forces, technology, and so on” (2010).

Given the fact that so many external forces play a role in a firm’s success, it is only fitting that these elements be afforded great consideration when formulating the strategy that an organization follows. Regardless if it is factors that could present opportunity or hinder current and future success, the outside environment poses many potential differentiating elements to a firm’s survival. The organizational strategy of any successful firm should be constructed to not only be firm in its core beliefs and values, but also flexible enough to adapt to all unforeseen challenges as well as prospects.

Sources:

Anthony, William P., Kacmare, Michele K., & Perrewe, Pamela L. (2010). Human resource management: a strategic...