HRM and Resource-Based View

Introduction:

Managing Human Resource in an organisation is an effective strategic approach of that organisation in order to conduct useful management and development of people in the organisation. HRM (Human Resource Management) is mainly associated with the organisation and management of people, system and policies with a company. This assignment is going to discuss the Resource-Based View (RBV), which is one of the most important parts of the HRM policy of an organisation. through discussing the RBV in the organisation, this study will represent that how the resource-based View adapted by the HR of an organisation can develop a highly effective competitive advantage and organisational success. In addition, to this, this study will discuss several HRM theories that are relevant to this context in order to analyse the RSV. Moreover, this assignment will also highlight the two major threats that organisations face in the UK based labour market. The assignment would critically discuss the UK based labour market threats with using proper evidence.

Explaining how the ‘Resource-Based View' can be adapted to Human Resource Management to help deliver competitive advantage and organisational success:

Resource-based view:

Out of many theories on organisational behaviour, one theory ‘Resource-based view of the organisational firm' is aligned with the strategic management of resources in an organisation (Wu and Chiu, 2015). based on the evidence it can be stated that, Resource-Based View is one of the important resource management process in which the HR managers decide which resources can be created, developed and organisation in order to create the competitive advantage. Supporters of this theory management of strategic resources are associated with the sustainable competitive advantage in an organisation. Therefore, the organisation needs to look inside the company to determine and creating useful resources for developing a competitive advantage rather than focusing the outside completive environment.

Competitive advantage:

Competitive advantage is the superiority of a firm which positions it into a favourable market condition. Through developing the competitive advantage organisation can have the ability to pose potential competition on its rival. Effective management of organisational resource plays important roles in developing proper competitive advantage of the firm. As stated by Bromiley and Rau (2016), competitive advantage is associated with the resource-based view of a firm, in which the firm focuses on managing its resources in a well-organised manner in order to develop its strength and potential that is important to deal with ever-changing external environment.

Analysis of the impact of Resource-based view in order to deliver competitive advantage and the organisational success:

Resource-Based Model:

Based on this model. HR managers can adopt the internal perspective of the resource management in which they consider the unique bundle of internal resources of that organisation (Wu and Chiu, 2015). Internal resources of an organisational include its employee, managers, staffs, skills, work culture, brand image, financial status, current financial resource and policies. Based on this aspect Delery and Roumpi (2017) mentioned that the internal resources of an organisational can be tangible and intangible which are associated with creating proper competitive advantage and increasing the organisational production.

This model is the five-step model which describes the user management and development of the company’s internal capabilities and resources in order to create a competitive advantage. In the first step, HR managers would identify and assess the internal resources of the organisation. According to Mao et al. (2016.), in order to use the internal resources in a useful manner, it is important for the HR managers to assess the strength and weakness of each organisational resource, that would assist them to set effective strategy for creating proper competitive advantage. In the second step, the company would set an effective strategy in order to develop the capabilities and uniqueness of that company in order to represent the potential competition towards the rival in the internal market. On the contrary Liu and Liang (2015) argued that, many times only taking effective strategies in order to develop the uniqueness and capabilities of company is not sufficient for developing proper competitive advantage, rather it is also important to implement the strategies in such a manner that would enhance the strength of each organisational resources and eliminate the weakness. The third step of this model is associated with determining the potential and uniqueness of each organisational resource in order to outperform the rivals. In this step, the company can analyse how effectively these resources can be used in order to gain a competitive advantage and promotes organisational access. In the fourth step, the HR manager would locate and compete in such an attractive industry, that would fit with the resources and capabilities of that company. As mentioned by Bromiley and Rau (2016), it is highly important for the HRM to identify the suitable industry in which the company can pose potential competition on the rivals. In the fifth and last stage, organisation archives the useful competitive advantage by using effective strategic management policies.

Resource-based approach to achieving competitive advantage:

According to Nason and Wiklund (2018), Resource-Based View is an important approach taken by companies to achieve competitive advantages. based on this perspective, gaining better competitive advantage, HR managers in a company would determine the internal resources and assets that would be used in an effective manner to develop the uniqueness and capabilities of that organisation. different theories can be discussed in order to analyse the impact of resource-based view on creating proper competitive advantage.

Profit Maximising and Competition based Theory, focus on the fact that the major objective of an organisation is to maximise its profit and develop sustainable competitive advantage, this theory can be applied in the organisation by the HR managers in order to implement proper Resource-Based View. As stated by Hitt et al. (2016), Resource-Based View, prioritises the development of sustainable competitive advantage and create organisational success through maintaining proper strategic management. The Resource-Based View Model support the theory with the fact that through taking the resource-based approach, company focuses on developing the internal resources and capabilities rather than hunting for the new skills and external resources which can not only make complications in the overall strategic management but also can develop the organisational cost. There is two types of internal resources for an organisation such as tangible and intangible resources. Based on the theory, both the tangible and intangible resources contribute to the organisational success and development of competitive advantage.

Tangible resources:

Tangible resources are the physical things such as land, capital, machinery, equipment and building that can easily be available in the market. As stated by Othman et al. (2018), tangible internal resources contribute little advantage to develop proper competitive advantage in an organisation as rivals can also easily get these resources the market

Intangible resources:

Intangible resources are most important for the organisation which has no physical presence but still owned and assessed by the organisation. Intangible resources are brand reputation, organisation culture, skill and abilities of the staffs, organisational strategies, intellectual properties and trademarks. According to Kumar and Pansari (2016), for organisational success and competitive advantage, internal intangible resources are most important which developed the uniqueness and capabilities of that organisation. Moreover, through developing the skills, capabilities, employee engagement, brand reputation of the company the HR managers can easily make the potential difference of their company from the rivals, that is important for the convincing client, as well as customers to chose their organisation over the other companies in the market.

Two critical assumptions of RSV in order to develop a competitive advantage

There are two critical assumptions on the impact of resource-based view on developing competitive advantages, such as heterogeneous resources and immobile resources. The first assumption of Resource-Based View is managing the heterogeneous resources in the organisation to develop a proper competitive advantage. According to Hitt et al. (2016), the heterogeneous resource of an organisation includes capabilities, skills, employee engagements, organisational strategies and organisational policies. These resources differ from one organisation to the other. According to Othman et al. (2018), if some organisational have a similar amount of the same resources they cannot make potential strategies to outperform each other. Therefore, it is important that the organisation would maintain their uniqueness through having innovative skills, policies and strategies that would make this company superior and different from the rivals in the international market.

For example, Apple Inc and Samsung are two potential companies that work in the same industry and exposed to similar external forces. However, they completely different from each other in their policies, internal strategies, skills, innovative marketing goals and organisational performance. Apple always provides potential competition to Samsung in smartphones, tablets. The second assumption of the Resource-Based View is managing and developing the immobile resource. As stated by the immobile resource of an organisation are the resources that cannot move from one place to another and one company to another. Immobile resources include skills, knowledge, employee performance, brand image, intellectual property and brand equity of a company. As these resources are immobile, they can be used for developing uniqueness and strength of the company (Kumar and Pansari, 2016). For example, as compared to Nakia, Samsung has a greater number of customers across the world. the reason behind this is proper management of immobile resources, which assist the Samsung marketers to position highly potential competitive advantage in the internal market. Through developing, it's brand value, employee skills and intellectual property, Samsung has managed to achieve the huge success and potential competitive advantage in the global electronic market.

Different supporting theories

Different theories can be used to describe the importance of heterogeneous resources in order to develop a proper competitive advantage. Based on the Contingency Theory, the organisation cannot be managed through one-size-fits-all approach, but to work on unique strategic management process in order to develop proper competitive advantage's perspective can be used to describe the importance of Resource-based view in order to develop the strength of heterogeneous resources for achieving proper competitive advantage. As stated by Mao et al. (2016), two companies can work in the same industry, in with the would use the similar external resources and would be exposed to the same external forces. In this aspect, internal heterogenous resources such as own skill, employee structure, organisational policies, innovative strategies and marketing process, of an organisation is important for making the organisation different from the other organisation working in the similar industry. By applying Contingency theory in this aspect, it can be stated that, it is possible that company cannot develop its potential competitive advantage through strengthening the external resources, as these resources are also easily available to the other organisations, but the company can develop its internal strategies and resources in order to represent the potential competition to the rivals. On the contrary Liu and Liang (2015), Human Resource-Based Theory focuses on human elements of a company in order to improve its performance level and develop a competitive advantage. Based on this theory, HR managers of an organisation needs to prioritise the management and development of human resources such as employee, staffs, higher officials, skills of the staffs and their performance level in order to develop a proper competitive advantage. For Example, although KFC and McDonald’s, both are the fast food restaurant chain and work in the same industry, they have different human resource values. In China, KFC has successfully established its market footprint with representing the potential competitive advantage, due to its high organisation employment structure, high skilled staffs and managers, highly organisation working process of the employees and efficient customer care and delivery service. On the other hand, McDonald's is unable to manage and develop the human resources in process manner, in which the lack of efficient staffs and high skilled labours are the main reason behind is the failure in the China market. In this aspect Survival Based Theory has set the new approaches in using the resource-based view in the HRM policies. based on this theory HR managers of a company needs to adapt itself continuously with the competitive environment. As stated by Bromiley and Rau (2016), for dealing and adapting to the competitive environment, an organisation needs to develop its capabilities, performance and resources. In this aspect, internal resources are one of the most important aspects that assists an organisation to set the potential competitive advantage. Through developing strength on internal resources such as skills, staffs, managers, brand image, organisational strategies and policies organisation can position the competitive advantage in a better manner. The human capital aspects of a firm acts as its unique resource that would assist the HR manager to develop its capabilities in order to pose the potential competition to the rival in the internal market.

Analyse two major threats currently facing organisations operating within the United Kingdom labour market:

Employment in the UK has been changed dramatically over the past few years. Due to Brexit, UK based labour market has faced several theatres and issues that affect the organisation and businesses working in this market. among several issues and threats in the UK based labour market two major threats are:

Lack of skilled labours

Increasing labour cost

1. Lack of skilled labours:

Majority of the organisation in the UK face the scarcity of skilled labour due to the ever-changing trend of the market and Brexit decision. The Office of National Statistics (ONS) report shows that most of the industry in UK such as healthcare industry, constructions industry, IT industry and retail sector face the shortage of skilled workers. the reason behind this shortage can be Brexit decision of the UK government. Before the Brexit, the majority of the skilled workers and labours in the UK are hired by the EU countries at a low cost. According to Polavieja (2016), getting labour easily in the low cost is advantageous for the organisations to develop their profit margin and organisational success. Moreover, due to liberal immigration agreement between the EU government and the UK government, Britain can easily hire low-cost labour from EU countries without facing any geographical barriers. however, after the Brexit, the scenario has been changed a lot, which not only affect the overall UK based labour market but also adversely impact the economy of Britain. For example, Tesco Plc., the UK based supermarket chain has been reported to face the huge scarcity of the skilled technical labours in order to operate the technological functions in the operating rooms. As stated by Crisp and Powell (2017), scarcity of labours increases the labour cost in the market which not only affects overall manufacturing of organisation working in this market but also affect the overall economy of the country. The similar situation is also faced by Amazon and Aldi, the top-ranked UK based retailers. Amazon and Aldi face the scarcity of skilled labours in UK which compel them to hire labours from the UK market at a huge cost. Moreover, due to Brexit, they are unable to hire skilled labours at low cost from EU countries.

Rising unemployment and scarcity of skilled labours in the UK:

Report from the Office of National Statistics shows that after Brexit, UK faces increasing unemployment rates which not only affect the overall economy of the country but also affect the overall labour market. As stated by McCollum and Findlay (2015), rising unemployment in a country can be an important reason behind the scarcity of the skilled labours in the labour market. After Brexit majority of the organisation are put into financial trouble due to the insufficiency of the fund, as the UK government are unable to get any financial assistance from the EU countries. Majority of the small businesses and fund-based organisations that run their business through getting the continuous financial support from the EU government before Brexit, are now compelled to close down the factories due to insufficiency of fund, this leads to an increased level of employment in the UK labour market which forces the skilled labours to fund out job opportunities in the other overseas countries. According to Crisp and Powell (2017), unemployment is the potential reason behind the fact that why skilled labours are completed to leave their home market and find suitable jobs in the overseas market. due to ever increasing unemployment rate UK labour market faces huge scarcity of the skilled labours that affect overall operation and economic status of the organisations working there.

2. 2. Increasing labour cost:

Increasing labour cost is one of the potential threats in the UK labour market that the majority of the UK based organisation face. As stated by Crisp and Powell (2017), scarcity f labour in the labour market can raise the daily wage of labours that affect the overall economy of the country. In the UK, there are several reasons behind increasing labour charges, such as Brexit, rising unemployment and lack of alternative choice in the UK based labour market. Before Brexit, the majority of the labours are hired from the EU countries in the minimum wage which assist the organisation to make proper burgeoning before hiring the labour in justified remuneration. Moreover, during that time, UK gets huge financial assistance from EU countries which assist the UK based organisation to meet the basic needs of all the overseas labours in order to make long term working agreement with them. After Brexit, UK based organisation are unable to get skilled labours from EU countries at a low cost. Moreover, the Brexit also pose geographical and political barriers on the UK and EU countries in order to exchange their resources. Due to unavailability of the EU labours and financial assistance, UK based organisations are compelled to hire the labour from the home market. Even they have lost the bargaining power due to the shortage of labours in the home market which increases the labour cost. According to Coletto et al. (2017), for the large corporate sector, it is possible to hire labour at the higher price from the home market as well as from the overseas market, but in case of the small and medium business, it is difficult to hire such high cost. This is the reason, why the majority of the small and medium-sized companies in the UK are compelled to shut down their stores.

Conclusion:

From the above-mentioned discussion, it can be concluded that the resource-based view is one the important aspect for an organisation which assist the HR managers to make proper strategic management in order to position proper competitive advantage. For developing proper competitive advantage, an organisation needs to focus on managing the internal resources such as skill, organisational strategies, policies, intellectual properties, brand image and brand equity. Moreover, there are two types of resources in an organisation tangible and intangible. The organisation needs to manger the tangible and intangible resources in a proper manner in terms of maintaining its uniqueness in the international market. Moreover, the assignment also concludes that the UK labour market has two potential threats such as lack of skilled labours and rising labour charge that affect the majority of the organisations working in this market. therefore, the organisation needs to focus on developing the innovating HRM policies in order to deal with these threats for grabbing a better competitive advantage.

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