Strengths and Weaknesses of Competitive Positioning and Resourced-Based View of Strategy - Coursework Example

Strategic Management Introduction Strategic management is also defined as art of planning the business at all levels in order to de-risk the company. As a part of the responsibility of the higher management, strategic development and providing insights on the path way to lead in the market place, is considered to be one of the important function. It also helps the company for focusing its energies and ensuring that the members in the organization are able work for a common goal. For leading the company towards one energy or force, it is mandatory to develop strategic management. It also makes sure that some of fundamental decisions are taken care of to meet the higher targets. Over the last decade, there have been two contrary paradigms which have been dominating the landscape of strategic management theory. While one of them has been the resource-based view wherein the organisations are constantly looking at sustaining themselves in the competitive environment through the capability of rent earning. The other paradigm being competitive positioning based view of strategy wherein the marketing strategies stress on creating external market orientation for achieving success and scoring over the competitors. This paper therefore critically discusses the similarities and differences between the resource-based view of strategy and the competitive positioning based view of strategy. Further, based on the literature, the paper identifies which school, or which aspects of each school are most relevant to the management of for-profit organisations in developed economies in the 21st century. Strengths and weaknesses of competitive positioning and resourced based view of strategy While the ability to take decisions based on research and analysis has become one of the basic components for any business today, strategy gives added advantage and helps the company move into the right direction by predicting and making plans to lead in the market place. The ability to bring together the types of economic research, industrial organisation, logic of the organisation and the strategy contributes to the resource based view of strategic management. It is complementarily to strategic positioning school, which is based upon the Bain–Mason–Scherer structure–conduct–performance paradigm and culminated in Michael Porter’s (1980) book on competitive strategy (Scherer and Ross 1990) is the main function of resource based view within the limits of its strategy. Resource based view is a fine platform where the strengths and analysis of an organisation can be analysed as per the seminal work on the concept of corporate strategy as per Andrew (1971) while on the other hand strategic positioning approach is the foundation of the threats and opportunity analysis, paying a little or no attention to the firm’s resources to react to the environment is the finest possible way, a point made previously by Wernerfelt (1984) and Barney (1995). While reputation of a business can be maintained with the strategic direction that can be adopted by the firm, some of the combination of strategic insights with competitive advantage as well as organisational insights on firm existence, have been opined by experts to become a benchmark or lead by example(Barney 1995; Wernerfelt, 1984). Most of the contributions made by the resource based perspective focus on are not wide as per the choice of individual resource as related to the unit of analysis, said Foss (1997). As per Foss the reason behind this narrowness is the tendency to logical atomism in economics and the scholars are warned for the possible dander of taking the individual resource as part of the analysis. In the situation that the relationship between complementarily and co-specialization exists among the resources, it is not the resource but the way it is grouped and their chemistry is necessary for the modest advantage. Packages of these individual resources and the way they are fitted are overlooked with the individual resource as part of the analysis. The core logic of resource-based view has a globular reasoning in the description of the relationship between rents and resources Porter indicated this before anybody else in 1994. The resource based view is circular is at its worst was pointed out by Porter being the leader of competing economics perspective. Due to the unique resources the successful firms are successful and should motivate these resources and the other authors also started to support this. Tautology critique was asked to mind and explain its origin by Foss in 1997. To compare the successful and the unsuccessful firms, Rents are often used to define a firm's critical resources and then the critical question appears, whether critical resources generate rents and the answer so heard is yes. According to Foss (1997) such unneeded reasoning is unethical methodology as RBV is made completely infalsefiable. With regards to competitive positioning, it is being defined as creating value for the organisation in the market by placing the products and services in a strategic manner. Further, such a strategy focuses on creating a niche for the organisation within the competitive landscape and delivering as per the strategy of the organisation. An efficient competitive positioning strategy include creating market profiling, understanding the growth and size of the competitors, creating customer segments, conducting competitive analysis, developing positioning strategy and developing value proposition for the product or services that needs to be delivered in the market. Once the market realizes the offerings given by the organisation and compares it with that of the competitor, it becomes easier of the organisation to garner more clients and win the trust of the customers. Such a differentiation helps in saving the money and time of the organisation as well, as the company would therefore not just concentrate on providing low price products to create a differentiation. One of the major elements of positioning strategy is that of value proposition, which essentially has three components, which include product leadership, operational excellence and customer intimacy (Hooley, Moller and Broderick 1997). While the resource-based view focuses on being cooperative to determine the strategic resources which could be accessible within an organisation, it has been found that competitive positioning is based on the differentiating product offerings that has been provided in the market to create a value for the organisation. An efficient strategy focuses on including components such as competitive analysis, value- proposition, market profile, positioning strategy and customer segmentation. All these strategies help in assisting the organisation for deploying limited resources to leverage opportunities that would help the firm to create a competitive edge in the market, which is also sustainable in nature. Further, resource-based view focuses on creating low-price strategy that helps in initiating resources such as Total Quality Management (TQM) and cost-control system. On the other hand, the positioning strategy focuses on creating superior quality branding for the organisation and requires different resource sets that include quality control, market sensing and supply chain management. Further, such a strategy is based on the concept of rapid innovation, which makes it essential for organisations to invest into product development, research and development and technical skills as well (Hooley 1988). Common and differing themes between the two schools Based on the review of the literature discussed in this paper, it has been found that the tussle between the resource-based school and competitive positioning school is not very rigid as being perceived. In fact, it could be stated that in order to create effective strategies, not only positioning is required, but it needs to be supported through relevant resource-based strategies as well. Recent studies have indicated that price leadership strategy needs resources that necessitate various cost-effective strategies and management theories, such as efficient workforce, total quality management (TQM) and manufacturing facilities (Hooley, Moller and Broderick 1997). As far as brand or product positioning is concerned, it has been found that it is one of the important core strategic marketing activities and organisations need to establish various different and distinct positions within the marketplace as well (Ries and Trout 1982). These positions might be based on premium quality, price, innovativeness and superior service (Hooley 1988). The resource-based view on the other hand focuses on the organisation’s ability for delivering as per the positioning strategy that has been developed. For instance, if the organisation is planning to become a leader in the field of customer service, it is required to develop resources that would help it in enabling or establishing its position prominently in the market. For instance, the renowned position enjoyed by the Marriott Hotel is based on the superior customer services provided by the hotel, which puts it above all in the league of hotel business. The hotel has been able to achieve such a standard through the accumulation of resources by codifying and standarising its practices over time. Some of the most prominent strategies adopted by the hotel to provide superior customer services include creating a customer oriented organisational culture and developing detailing at even the operational level of the organisation (Stalk, Evans and Schulman 1992). The resource-based strategy helps in enabling to understand the requirements of resources which further supports the positioning strategies that the organisation may focus on adopting to strengthen the firm’s position in the market. For instance, it is important to consider strategies such as implementing low price to help in focusing on TQM processes, information systems, cost control systems and skills in procurement (Hooley, Moller and Broderick 1997). On the other hand, it has been found that positioning strategy is mostly focused on superior quality and needs different sets of resources that includes quality control and assurance, reputation management, market sensing, brand management and supply chain management (Hooley, Moller and Broderick 1997). While, it has also been seen that with regards to positioning strategy it is generally based on rapid innovation which also means developing newer products and services, harnessing creative and technical skills and investing into research and development. Thus, for making a positioning strategy successful, it is required to identify resource sets that could help in growing the organisation as per the resource-based view of the firm (Grant 1991). Conclusion As discussed above, Strategy development is able to create and affirm the purpose for the organization and give it an environment and data driven facts that helps identify the critical issues at the onset. It becomes a critical path to develop a strategy that can help the company in leading into the right direction per the path envisaged and guard itself from market pressures. While, external market data and program evaluation provides data which is able to give sound decision making ability, it also helps in providing strategy that can help the company to move into the best direction possible. If no information and insights are to be provided or looked after, the business may not be able to alignment itself from the market pressure and may not be able to sustain the business in the long run forcing it to look for alternatives. Thus, an effective channelization of thoughts and strategy can lead the company into the right direction and help them to envisage the path in the industry by planning and forecasting correctly (Grant 1991). References Andrews, K. (1971). The Concept of Corporate Strategy. Dow Jones-Irwin: Homewood, IL. Barney, J.B. (1995). Looking inside for competitive advantage. Academy of Management Executive 9(4): 49–61. Foss NJ (ed.). (1997). Resources, Firms and Strategies. Oxford University Press: Oxford. Grant, R. M. (1991). "The resource-based theory of competitive advantage: Implications for strategy formulation." California Management Review. 33 (Spring): 114-135. Hooley, G. (1988). ‘Competitive positioning.’ in The CIM Handbook of Strategic Marketing. Oxford: Butterworth-Heinemann. 121-139. Hooley, G., Moller, K and Broderick, A. (1997). "Competitive positioning and the resource-based view of the firm." Aston Business School Research Paper Series. Porter M. (1980). Competitive Strategy. Free Press: New York. Scherer, F. and Ross, D. (1990). Industrial Market Structure and Economic Performance. Houghton-Mifflin: Boston, MA. Stalk, G., Evans, P. and Schulman, L. E. (1992). "Competing on capabilities: The new rules of corporate strategy." Harvard Business Review. 70 (March-April): 57-69. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal 5(2): 171–180. Read More