Management and Organizational Studies 3342A/B Chapter Notes - Chapter 2: Virtuous Circle And Vicious Circle, Cost Leadership

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3342A/B
• Professor: Gail Robertson

Document Summary

Chapter 2 strategy: the totality of decisions. Sometimes different business units within the same corporation will have very different competitive conditions, adopt different business strategies, and thus fit different compensation strategies. A strategic perspective on compensation is more complex than it first appears. Taking a strategic perspective requires a focus on compensation decisions that help the organization gain and sustain competitive advantage. Strategy refers to the fundamental business decisions that an organization has made in order to achieve its strategic objectives. An organization defines its strategy through the tradeoffs it makes in choosing what (and what not) to do. The ultimate purpose is to gain and sustain competitive advantage. A currently popular theory found in almost every book and consultant"s report tells managers to tailor their pay systems to align with the business strategy. Differences in a firm"s strategy should be supported by corresponding differences in its human resources strategy, including compensation.