Source-Based and Competitive Positioning Based Views of Strategy - Similarities and Differences - Essay Example

Heading: Similarities and Differences between the Resourced Based View of Strategy and the Competitive Positioning Based View of Strategy Your name: Course name: Professors’ name: Date: Question 1 Strengths of Resourced Based View of Strategy A company’s resources that are of value and in-imitable can contribute to the effectiveness and efficiency of a firm if properly utilized (Becerra 2008, p. 1111). The other strength of a resource based view as a form of strategy is its reliability and non-substitutable in nature and thus contributing to business success. According to Acedo (2006, pp. 622), RBV creates a lasting competitive advantage to a firm and thus making a firm sustainable in its market niche over a long time because of its resources that cannot be imitated nor substituted. Weaknesses of Resourced Based View of Strategy It is usually hard to determine and protect company’s useful resources that can lead to competitive advantage in the market place. As stated by Connor (2007, p. 312), company’s resources can only qualify as strategic resources if they can be converted to create a substantial competitive advantage to a firm. It is however not all the assets of a firm can meet the requirements of a RBV and hence difficult for a firm to know its RBV status. According to Connor (2002, p. 308) different firms have different RBV even if they are in the same market niche and hence difficult to determine the relevance of RBV in a given firm. For resources to be useful within the organization such as a manufacturing firm, it must be properly aligned with the business processes and goals to optimize the firm’s competitive advantage (Hoopes & Madsen 2008, p.399). Strengths of Competitive Positioning Based View of Strategy This form of strategy focuses on creating quality and hence increased customer value which makes the product in the market sustainable. The customer focus orientation of this strategy is its major strength since any business continuity is highly depended on the clientele. The other strength of this strategy is also increased sales and hence increased profits for the business in the long run (Denrell 2003, p.977). When the company’s profits increases, the business can expand hence making the competitive positioning strategy more demanding for the business in order to maintain the growth trend while maintaining the profits (Kraaijenbrink 2008, p.280). Weaknesses of Competitive Positioning Based View of Strategy This strategy focuses solely on the customer value and how to enhance it but gives less regard to the company’s resources and hence making the strategy less effective if the company has fewer resources to utilize (Makadok 2002, p.13). The other weakness of this strategy is its tendency to create more liabilities in the process of differentiating its products and services. As elaborated by Langlois (2007, p.1110) if the strategy does no succeed due to increased competition or failure of the strategy, the company may plunge into financial crisis that may end up hampering the business progress. Question 2 Common themes of the strategies The two strategies objectives are creating sustainable competitive advantage by utilizing the either unique resources that the company has or by utilizing competitive positioning that the company can formulate. The two strategies aims at creating value in the products that the company deals with, they usually work hand in hand in the process of ensuring value and thus profitability of the products that that company is dealing with (Fiol 2001, p. 696). According to Hoopes (2003, p.889) these two strategies forms a critical part of marketing strategy that a company can utilize in ensuring sustainability. Additionally these two strategies can only be optimized through human resource intervention by means of knowledge management process. Without adequate knowledge through the firm’s human resource, these strategies cannot be successful. The other similar theme is the need to align both of these strategies with business goals that includes both the long-term and short-term goals. Differing themes of the strategies Resourced Based View of Strategy focuses on the resources that are unique and in-imitable to a firm while Competitive Positioning Based View of Strategy focuses on what can be done to create value for the customer. Competitive positioning implements value creation, price reduction and differentiation in order to enhance competitive advantage while resource based strategy uses resources that cannot be imitated to create better ways of enhancing production of the firm. One can determine the value of the firm’s resources through carrying out feasibility research on whether the resources of a firm meet the threshold for consideration as strategic assets for Resourced Based View of Strategy (Lado 2006, p.120). On the other hand competitive positioning is determined by the value and the perceived customer perception on the quality of the product. Question 3 According to Halawi (2006, p.390) firms can benefit from utilizing both aspects of the two schools in order to ensure competitive advantage. As an example, Apple has been successful in differentiating its products like iPhones, iPod and Mac computers in its market because of implementing both aspects of these two schools RBV and competitive positioning. Some of the unique company resources are its customer base, brand equity the know-how of its proprietary and patents and trademarks of its products. In order to fully utilize its resources, the company has a developed human resource body of knowledge that has continuously converted the company’s resources into competitive advantage (Teece 2007, p. 1320). The company has also focused on addressing the customer needs through several innovations that have consistently made the company appear in news headlines with their innovative products like the current iPhones. The success of Apple has thus been based on competitive positioning and creation of competitive strategy through the proper use of both schools. In the 21st century economies, no single strategy can succeed and remain sustainable in the market because of the stiff competition and increased innovation as are result of globalization (Kor 2004, p.971). In most cases, customer focus has been the major market controller in the recent past. With increased surge of technology through the internet, it is hard to determine the size of a firm since even small firms can pose as large firms through the internet and in the process compete with firms far larger than themselves (Kor 2004, p. 187). Small firms in terms of resources can thus optimize their strategic positioning in the market and leverage on it to create competitive advantage over its far resourceful competitors in the market. Strategic placement and customer value are the basic competitive advantages that firms ought to have in order to be relevant in the 21st century market (Stieglitz 2007, p.11). Because of the increased information through the internet, consumers have changed their habits in the market as compared to the 20th century. Because of this, companies have continually adjusted their strategies to meet the customer expectation in the ever changing market place. Question 4 Similarities of the two strategies The two strategies focus on increasing the sales of the company through creation customer value and competitive positioning. Resourced based view of strategy implements customer value using the unique resources that the company has in order to enhance its competitive advantage (Levitas 2006, p.139). On the other hand, competitive positioning strategy uses value creation through product differentiation and customer needs understanding in order to enhance competitive advantage. In essence, both strategies seek to increase competitive advantage over other companies by use of unique resources and customer value creation. Both these strategies go hand in hand since for a company to be strategically placed, it must use its unique resources in order to create competitive advantage. To be competitively positioned, the company must use its unique resources such as brand name and its financial capability in order to be competitive in the 21st century market place. More so, both these strategies aim at creating a sustainable market for the company through different means of attracting customers to the company’s products. These strategies also ensure that the company continually make profits that sustain it in the market for a long time. Differences of the two strategies Resource based strategy is focused primarily on the unique resources that a company has which can be successfully converted to create competitive advantage over the other companies in the same market. These resources unique to the company include brand name, customer base, assets and intellectual property among other resources. The resources that a company has should also be unique and thus different from other similar companies hence creating a sustainable competitive advantage (Lockett 2009, p.11). On the contrary, competitive positioning focuses primarily on the creation of customer value through different marketing strategies such as product differentiation and cost variation with improvement in products quality. This strategy gains competitive advantage through customer satisfaction and not the resources of a company like the case of resource based strategy. Resource based strategy can be determined by consideration of the unique resources that a company has which other companies in the same field lack. These resources also need to be distinct and strategic enough to create competitive advantage (Becerra 2008, p.1111). On the contrary, competitive positioning advantage can only be achieved if the company produces products that are of quality and thus enhance competitive advantage of the company. The primary focus of this strategy is on the magnitude of customer value rather than the resources of an organization Conclusion As discussed in this essay, there are number of similarities and differences between the two strategies used by companies in order to enhance their competitive advantage. The primary focus of these two strategies is to create competitive advantage. They however differ on the ways of enhancing their competitive advantage one focuses on resources as a means of creating competitive advantage while competitive positioning strategy focuses on customer value as a means of acquiring competitive advantage. Read More