HRM is about the competitive advantage to be gained from making the most of an organisation's human resources. But ,it is obvious that there are constraints of availability of suitable people which is heavily dependent on environmental variables like the effects of world and national economic conditions for business growth , the effect of inflation on the perceived value of wages ,traditions of local business culture and a particular nature of national employment markets. These variables have a 'macro' effect on the utilization of human resources. Identifying the relationship between HRM and strategy is simpler in theory than in practise. Organisations may take a variety of approaches towards HR and strategy ,ranging from those which give no consideration whatsoever to human resources to some where HR becomes the driving force. The significant issue in HR strategy is that of integration with overall business strategy. The idea is to emphasize the need for human resource practitioners to achieve an understanding of how business strategies are formed.