EXTERNAL ENVIRONMENT AND HRM |
FATMA Yasin |
LITERATURE REVIEW 4
Direct Competition 4
Indirect Competition 5
PUBLIC OPINION 6
CASE – THE ONE (Home Décor Company) 8
There are a lot of changes in the external environment which impact human resource management. As a result of this change industries have reshaped themselves to be in the competition (Pritchett, 1994). An overnight demand of new skilled labour has risen drastically. The managerial work has also changed especially at the top level.
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There are some external factors which influence the HRM directly or indirectly in some way or the other way. An organisation does not exist in the void. There is an external environment with a number of people, culture or economy that might influence the organisation. In order to overcome the negative side effects of the factors, HR managers should be highly skilled. They should be able to monitor the environment and they should be proactive in dealing with the situation by implementing new policies in the changing environment (Heilbroner, 1995).
Following are some external factors which influence Human Resource Management:
According to the journal ‘Strategic Monitoring of Competitors on the Market’, Competitor’s actions affect the business directly or indirectly. They continuously challenge the organisation by inventing some new technique, new product or new service. Their basic goal is to produce more profits and gather new customers than the other organisation (Lefter et al, 2009). For this, they try and innovate the product or the service in which they are dealing in. There are two types of competitions Direct Competition & Indirect Competition
When there are organisations which cater to the same group of customers and produce similar products. Example Lulu Hyper Market and Choitram, they cater to the same target customers and also provide similar products related to dairy, vegetables, confectionaries, organic food, etc. These two organisations are competitors for each other. They both have to come with new offers and gifts from time to time to attract customers, as customer will get the same products in both the places, with almost similar prices. Thus, a change in the activity of one can push others to change their activity as well
Indirect competition is the one in which the two organisations are not directly related with each other. They do not offer same products but offer different alternative to satisfy the wants of the customers. Example: Pizza hut and KFC. They both offer different products but are each others competition. They both have to maintain the standard of food, price, and ambience and service because an unsatisfied customer from one can be a new customer for the other. Thus, it is necessary to maintain their standard and quality.
For competitive advantage, it is necessary for any organisation to develop new products and services with time. Many blue collar jobs have been diminished from time to time with the development of computer aided manufacturing & design, new machinery and innovative ideas. This change has replaced normal skilled labour with highly skilled labour. In many organisations where the tasks were done by human operators, those tasks have become automated now. Expectations from an employee have changed. Organisations now need more and more employees who are highly skilled and have knowledge of computers, softwares and new...