Development in SHRM thinking, charted here is through the development of the best-fit approach, the configurational approach, the resource-based view approach and the best-practice approach, have a profound impact on our understanding of the contribution SHRM can make to organizational performance, through increased competitive advantage and added value. Indeed, it becomes clear that whether the focus of SHR practices is on alignment with the external context or on the internal context of the firm, the meaning of SHRM can only really be understood in the context of something else, namely organizational performance, whether that be in terms of economic value added and increased shareholder value, customer value added and increased market share, or people added value through increased employee commitment and reservoirs of employee skills and knowledge.
The classical or rational-planning approach, This view suggests that strategy is formed through a formal and rational decision making process. The key stages of the strategy-making process emphasize: firstly, a comprehensive analysis of the external and internal environment, which then enables an organization to evaluate and choose from a range of strategic choices, which in turn allows for plans to be made to implement the strategy. With this approach, profitability is assumed to be the only goal of business, and the rational-planning approach the means to achieve it.
Strategy has been defined in other ways by the many writers on this subject, for example:
“Strategy is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” (Chandler, 1962)