Comparison of the Resource-Based vs Market-Based View Approaches to Competitive Strategy

3.How these strategies are related the performance of these companies over time? Why? What is going on in terms of industry competition and markets that makes one strategy outperform the other at any point in time?

Secondly, the author highlights the way how business entities can achieve sustainable competitive edge through improving strategic planning practices in a fundamental manner. It has to be acknowledged that one and half decade has passed since the publication of the article and the principles outlined in the article are not revolutionary by today’s standards, however, there are solid reasons to believe that the article has contributed to the emergence of companies with revolutionary approach to business.

Argyres, N. & McGahan, M. A., 2002. Introduction: Michael Porter's "Competitive Strategy". The Academy of Management executive, 16(2), pp. 41-42.

Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources.

Porter (1980) created a model which considers five important forces (Porters five forces) which aims to establish a profitable and sustainable position against the forces that determine industry competition, therefore position themselves within it and differentiating themselves where necessary in order to strategically gain a competitive advantage - this model gives vision of: Threat of new entrants, Threat of substitute products or services, Bargaining power of customers , Bargaining power of suppliers and Intensity of competitive rivalry (Porter 1980). Using models and academic theory like this allows strategy to be formed through a rational and an analytical process. Chandlers (1962) cited in (Lomash 2003) suggests the analytical process is about the determination of long-term clear goals, adopting actions to achieve these goals and then building the resources within the organization around this strategy in order to ensure it succeeds. Johnson (2005), likewise, simply suggested a three step approach to strategy - analysis, choice and implementation which goes hand-in-hand with intended strategy.

The resource-based view (RBV) emphasizes the firm’s resources as the fundamental determinants of competitive advantage and performance. It adopts two assumptions in analyzing sources of competitive advantage (

“Generic strategies” was first set out by Michael Porter in 1985 in his book “Competitive Advantage: Creating and Sustaining Superior Performance.” Academic work in the field of strategic management, Porter (1980, 1985) typology of general competitive strategies: cost leadership, differentiation and focus. The three virtually divided into two basic categories. Focus strategy requires a niche or narrow segment concentration. But Porter said, can cost leadership in the success of this strategy or differentiation to achieve. Therefore, cost leadership and differentiation are two basic strategies Porter 's typology. These two topics are discussed in this article.

In other words, by appraising and exploiting such resources and capabilities, the blueprint on developing a strategy for competitive advantage will be ready and profit is guaranteed by RBV analysis.

It is never doubted by academic circles and business environments that the strength of competitive analysis, if not the top, is one of the most important critical success factors in creating and managing marketing strategies. The way a business adapts to competitive environments, characteristic of its focus being self-centered, competitor-centered, customer-driven or market driven (Day and Nebugandi, 1994), will define its place in the complex marketing arena.

Firms need to adapt themselves to market developments they need to build on strengths of their resources base and activity system. Immediate action in developing the products/services and resource base is required to remain in constant alignment with the fluctuating external environment (De Wit, Meyer, 2010, p.250). The process of generating knowledge and applying it in ways that support delivering superior customer value helps the firm develop the basis for a competitive advantage (Vorhies, Harker and Rao, 1999).

This is an excellent model to analyze the industry. The analysis of the industry is essential for choosing the strategy. Factors that influence an industry influence all companies within that industry and every company reacts to those factors. The attractiveness of an industry is measured with the average profitability. According to Porter, the competitive rivalry has great impact on the profitability of an industry. Different intensity of the competitive rivalry causes the differences in the profitability degree. The biggest profits are realized in industries with moderate performance of competitive rivalry while the industries with the extreme acting of competitive rivalry, like monopoles, suffer from the profitability crisis.

We study competitive strategy within the overall context of technology firms, which operate within a so-called industry, e.g., the computer industry, the consumer electronic industry, the cellular phone industry. Each industry, ideally, serves a market, which denotes the buyers or customers of the products and services offered by the industry.

The main goal of strategic management research is to underline how competitive moves help firms develop long-term advantage and improve performance (Hitt, Boyd & Li, 2004). But each move does not take place in isolation. Each move must be coordinated with other moves and must evaluate the response it will generate from competitors. The authors then indicated how competitive interactions could be both destructive and threatens survival, as well as constructive and enhance firm success. The authors then defined each research streams. Competition action and response means how a firm’s action will affect their customers and can generate rival’s reaction too. First-mover advantage considers the role of timing and order of actions and responses. Co-opetition is the process wherein two or more firms compete and cooperate with each other simultaneously. Multipoint competition refers to a situation

Critically discuss the proposition that a firm 's choice of strategy depends on the competitive environment rather than the resources under its control.

There are five generic business strategies that companies choose from when trying to successfully compete within their respective industries. This is the first choice a company must make, even before deciding an overall strategy. These generic business strategies include low-cost provider strategy, broad differentiation strategy, best-cost provider strategy; focused strategy based on low costs, and focused strategy based on differentiation. These strategies have many advantages as well as disadvantages. Choosing which one to use depends on what market position a company wants to pursue. Deciding to be more offensive or defensive also plays a role in choosing a