Porters Five Forces Model of Competitive Advantage

Porters Five Forces Model of Competitive Advantage The aim of this paper is to critically analyse Porters 5-Forces framework and the concept of the Resource-Based view (RBV) which originated from Wernerfelt (1984) to develop strategy as a source of competitive advantage. A comparative analysis between the two approaches is undertaken. This paper further attempt to contrast the two frameworks taking into consideration what researchers have identified throughout the development of both theories. The methodology applied to approach this paper commences by briefly defining both concepts and their focus of attention. The analysis then identifies common elements found in both theories supported by diverse researchers opinions and views. This section undertakes a critical approach which serves a primary need to reach the objectives of the paper. The paper then proceeds with an essential critique of fundamental differences between the two approaches under investigation. Specific uncomplimentary elements are identified within both framework and which are critically expounded. The paper concludes with a discussion on what could be the future of both theories and their contribution towards strategy formulation for organisations to gain competitive advantage. The Key Elements of Porters and RBV Theories It is pertinent to define briefly the key elements of both theoretical frameworks on which this paper will based to carry out a critical and contrast analysis. Porters 5-Forces The theory originating from industrial economics forms part of the classical perspectives of strategies developed throughout the last fourty years of the twentieth century (Whittington 2001). Porter (1980), specialising on competitive strategy, designed a model of five competitive forces, to assess the attractiveness of the industry via which the corporate strategy can effectively capitalise on both present and emerging market opportunities. This model serves as an indispensible tool in critically analysing both the structure and dynamics of the industry in which the organisation pertains (Fortenberry 2009). These five forces incorporate the threat of new entrants and substitute products or services to the industry on a horizontal dimension and the vertical dimensions of suppliers and customers bargaining powers. Both dimensions intersect on the fifth force consisting of the rivalry amongst current competitors in the industry (Porter 1980:4). The theory claims that profitability is h ighest when competition is lower and that competition erodes profits (ibid). It further sustains that some competition should be avoided and the theorist gives advice on how firms can maximize profits through maintaining or changing fundamental industry structures. However, empirical investigation has failed to support the link between industry structure and profitability (Grant 1991:117). Furthermore, Grove (1996) claims that government strategic forces are ignored in Porters theory. The Resource -Based View The RBV framework designed by Wernerfelt (1984), is essential to assess strength and weaknesses within a business concern so as to engineer a strategic competitive advantage. Wernerfelt (cited in UoL 2009:65) advocated, that Sustainable competitive advantages are conferred by resources which are hard to imitate and scarce relative to their economic value. The RBV strategic theory links resources, capabilities, competitive advantage and profitability and their synergistic combination, ensures a sustainable competitive advantage to the firm (Grant 1991). Theorists such as Fahy and Smithee (1999) remarked that the development of this framework took a step forward when diverse strategists became bored with Porters 5-forces theory, and found possible alternatives in the RBV theory. Grant (1991) claims that this theory can be appropriately applied in the development of robust long tern strategies. Primarily the RBV is focused on the maximisation of resources to economically perform efficie ntly and fulfill customer requirements. It is not surprising that this theory has its critics. Hooley et al. (1998) disagrees with this theoretical approach by arguing that due to its internal focal point it jeopardises the importance of external market requirements. Furthermore, Grant (1991) implies that little effort has been done to provide practical applications of the RBV which brought him to develop his 5-stages approach to strategy analysis. Common elements in both Porters and RBV frameworks Diverse researchers such as Spanos and Lioukas (2001) claimed that both Porters and RBVs perspectives on strategic formulation are similar. Firstly, they both assume that regular higher profits are possible to achieve and secondly both approaches attempt to define the term competitive advantage (ibid). Conversely, one can notice that both theories have contradicting and differing definitions of competitive advantage Grant (1991). This is further supported by claims made by Fahy and Smithee (1999) that both theoretical frameworks could have elements of vagueness and uncertainty in their methodology and both are obscure in their pragmatic approach. Both theorists have been criticised for their stagnant approach towards the strategy development which in its originality is definitely ever-changing (Dickson cited in Fahy and Smithee (1999). Porters and Wernefelts approaches to strategy development for competitive advantage were critised by various researches for their lack of practical applications when strategic managers formulated their strategies to combat competition (Conner 1991; Grant 1991; Foss 1996). Besides, there is little evidence on to what extent both theories assist managers to take strategic decisions (Bridoux n.d.). Fundamental Differences between Porters 5-Forces and RBV The RBV and Porters framework, endorse a number of differences. Porters 5-forces (1980) model adopts a macroeconomic perspective of the industry whilst the RBV approach focuses on the micro perspective of the firms resources. Foss (1996) claims that Porter failed to assess the businesses potential of exploiting their resources so as to effectively implement their strategic plan. Furthermore, researchers such as Bridoux (n.d.:7) claims that In Porters framework, the accumulation of resources is part of the implementation of the strategy dictated by conditions and constraints in the external environment. This is in contrast with RBVs framework where managers apply their resources and capabilities to lead organisations to competitive advantage over their rivals. Therefore, one can argue that Porters theory ignored the potential of the use of internal resources to determine strategies. Although the RBV can be applied tactfully so as to assess both resources and capabilities, however, it focuses simply on the internal infrastructure of the organisation. Conversely, Porters model adopts a wider macroeconomic perspective, capitalising on an outside approach. The nature of performance that an organisation can attain marks also a fundamental distinction when contrasting Wernerfelt and Porters theories. On reviewing the RBV, it transpires that it represents efficiency in terms of how the business resources perform to maximise their over-capacity and in the meantime satisfy customer demand. In contrast, Porters approach focuses on the ability of the firm to exploit the monopolistic benefits of the market that differentiate between industries performance (Conner 1991). Besides the contrasting disagreements between both theoretical frameworks mentioned above, Foss (1996) claimed that the RBV approach is focused on long term strategy and can be applied to identify potential hazards by assessing opponents resources and capabilities. Conversely, Porters framework is oriented towards the external environment in terms of the short run with concepts such as commitment, signaling, the role played by exit barriers (Foss cited in Bridoux n.d:6). Uncomplimentary Elements within Porters 5 -Forces and RBV Frameworks The author of this paper identified various elements within both frameworks and which are uncomplimentary to each other. These are critically anaylsed. This paper approach will contribute to the comparative analysis undertaken and furthermore enhance the contrasting discussion of the two models under investigation. One of the characteristics that is claimed to be found in the RBV by Barney et al. (2001) is that an entrepreneurs can be illuminated through this theory as they can value their resources as a competitive advantage over their rivals. One can argue that the term entrepreneurial knowledge can be by far easily associated with the RBV approach rather than Porters framework. With respect to emerging markets, RBV research has been important in suggesting that local firms are interested in using foreign alliances to acquire advantages over their domestic rivals, in emphasising the importance of network ties as an intangible resource for entrepreneurial start-up and in understanding the changing benefits of unrelated diversification as economic institution develop. (Barney et al. 2001:630). Other diverse researchers advocate that the RBV can assist firms to evaluate competitive advantage through an ethical approach by applying Corporate Social Responsibility in theory strategy formulation (Russo and Fouts cited in Barney et al. 2001). Besides, one cannot ignore what Powell and Dent-Micallef (cited in Barney et al.2001) remarked that the human resource skills combined with the use of Information and Communication Technology (ICT) can play an important role within organisations to enable them to compete. A prominent and complimentary element of the ethics and ICT approaches found in the RBVs framework and which is not found in Porters theory is the contribution towards the appreciation of strategic Human Resources Management (HRM) (Wright et al. cited in Barney et al. 200l). Supporters of RBVs theory claim that the approach towards the perceived benefits of using human resources practices can be used by firms as a competitive weapon. However, Barney remarked that: As yet research has failed to test empirically whether HRM practices are path dependent, casually ambiguous, or imitable. Similarly, there is a lack of evidence that HRM practices impact the skills and behaviour of the workforce, or that these factors are linked to performance. (Barney et al. 2001:628) Moreover, Grant (1991:119) when referring to the association of HRM with the RBV framework remarks that probably the most strategically important resources of the firm can be highly vulnerable because they are mobile and can be attracted by competitors. There are even some conflicting views by different authors whether Porters framework appreciates the role of industry co-operation when determining strategies. For example, Bridoux (n.d.:5) claimed that Porter 1980s work is that it over emphasises competition to the detriment of co-operation. Conversely, Aubert and Morel Guimaraes (n.d.) states that Porters embraces a strategic approach towards co-operation between industries. In fact, quoting Aubert and Morel Guimaraes (n.d.:5) Porter argues that by strategy of cooperation, the companies achieve a stronger positioning together than they would in individual, in isolation. Conclusion Throughout this critical assessment of both theories, it emerged with a degree of certainty that Porters theory greatly differs from the RBV approach as it is focused on industry rather than on the organisations resources. Also, it can be concluded that both strategic frameworks are focused towards achieving profitable maximisation through competitive advantage. However the RBV recommends the use of resources to achieve this goal whilst Porter approach uses the ability of the industry to position itself appropriately within its competitive forces. Surprisingly, this paper found out that theories have been critised for their severe practicality limitations. Imai (n.d.) advocated that Each organisation is a collection of unique resources and capabilities that provides the basis of its strategy and the primary source of its returns. However, from a critical perspective, the author of this paper concludes that although the performance of an organisation is determined by its unique resources and capabilities, the industrys structural characteristics cannot be granted secondary consideration.

The Secret to Raising Smart Kids

Everyone wants a child that does well in school. Teaching your child to have the right mind-set for success is crucial to helping your child succeed. The two mind-sets (according to Carol Dweck who wrote an article on â€Å"The Secret To Raising Smart Kids†) can change the way your child learns. These two mind-sets can be applied to any student which would be carried out to the child’s athletics and working career.To have a fixed mind-set, Carol says that students who believe that they only have a certain amount of intelligence and that’s it. They want to look smart without being smart. Dweck insists that, â€Å"They had a negative view of effort, believing that having to work hard at something was a sign of low ability. They thought that a person with talent or intelligence did not need to work hard to do well.†This thought can prevent bosses from getting along with workers. Scientists have discovered that managers tend not to take advice from their emplo yees with a growth mind-set because they already feel as if they are smarter than the employees and know better than them, causing the workplace to decline. Athletes who think they know better become unteachable later on. They, â€Å"value talent more than hard work† causing them to not get any further than what they are praised for.The kids with a growth mind-set are taught that intelligence can be developed through education and hard work. These students are, â€Å"†¦destined for greater academic success and were quite likely to outperform their counterparts,† even with no greater skills. They use challenges as opportunities. This can register to workers as well. When dealt with a problem, workers that, â€Å"believe people can change and grow, however, are more confident that confronting concerns in their relationships will lead to resolutions.†The workers see that there is a problem and work to take care of it in the idea that they will grow and get mor e knowledge while resolving the problem. After doing so, they have stronger relationships and more confidence to conquer the next difficulties that lay ahead. Athletes with a growth mind-set take this into consideration. Athletes who want to learn and  perfect the technique will have more confidence in playing a tournament; â€Å"Believing that the more you labored at something, the better you would become at it.† Working and being athletic are very similar in the state of resolving the problem.As Dweck said, â€Å"Our society worships talent†. What people don't understand is that talent can be a very negative thing when people are praised and encouraged too much for motivation. In doing that, they get little work done. Praising your children for their hard work creates a growth mind-set and goes a farther distance than praising them for their smartness which in contrast does the opposite by teaching them the fixed mind-set. Which shows in their progress in athletics , grades in school, and success in work.

Vital Pieces of Language B Extended Essay Topics

Vital Pieces of Language B Extended Essay Topics What You Don't Know About Language B Extended Essay Topics Writing will stay an essential part of academia. Some teachers might just take on students since they have to and might not be passionate about reading drafts and might not offer you a good deal of feedback. Is one particular question that a number of students ask themselves. You're a student free of access or liberty to do experiments and neither have the vital resources to achieve that. You may also find different discounts on our site which will help you to save some more money for future orders or anything you want to spend them on. Extended college articles vary from numerous pages to numerous pages based on the total amount of information an individual will have gathered. If you've already decided on the most suitable topic of interest, be certain to include that while placing the purchase. Make certain you ask your IB coordinator if there's any necessary paper work. What Does Language B Extended Essay Topics Mean? At exactly the same time, make certain each new point logically contributes to the subsequent one. One of the very first things you have to understand in earning your topic choice is that there's a difference between history and current affairs. Of course, you can't just produce an appropriate issue to develop on the go. One of the most usual reasons people search for assistance with essay writing is they realize they're running out of time. Therefore, if there's any reason why you cannot have your extended essay written on time yourself, all you have to do is place your order on our site, and leave the rest to us! In the event, you still face the difficulty by means of your paper, you can get in touch with the professionals from Primewritings and find the immediate help with any kind of essay on any topic. It's up to 4000 words in length and will want to get discussed in detail by means of your teacher or supervisor. D escribe your problem in terrific detail. Whether there are only two books that have any connection to your topic, it might be too narrow. If you're really stuck trying to discover a not too broad or narrow topic, I suggest attempting to brainstorm a topic that employs a comparison. Be sure to select an intriguing subject. To begin with, try to pick out a very specific topic question and adhere to it in your paper. New Ideas Into Language B Extended Essay Topics Never Before Revealed A protracted essay is one which you won't finish overnight. The essay introduction should clearly recognize the value of the essay topic. Writing a long essay may be an issue, particularly once you do not understand how to compose a lengthy essay professionally. What should and ought not to be in your essay. There is an extensive array of definition essay ideas a student could utilize to compose an essay about. If you like it is possible to look online and find one which you like. The selection of topic is all-important in regards to writing an elongated essay and certainly in the topic of history. The next issue to discuss is a lengthy essay format. The ideal method is to check through some terrific extended essay examples. Using Language B Extended Essay Topics If your school isn't one already, learn to develop into an IB World School to be able to implement the DP. It makes an IB extended essay stick out from the remainder of the academic assignments. So far as the students are involved, writing a research paper is among the toughest and frustrating endeavor in their opinion. Say, by way of example, you're a high school student, and you should compose a 3-page essay. The Advantages of Language B Extended Essay Topics Remember that events of the previous 10 years are thought to be current affairs, so focusing on them is going to be a waste of time. It's practical because the focus is on exactly what you should do. Psychology is a significant util ity in regards to helping people jump over hurdles in virtually any life situation. As such it's a fantastic opportunity to generate a mature academic study on something which you might never again have the opportunity to research. Culture and Society The essay ought to be a cultural analysis describing the effect of a specific issue on the shape or usage of the language. Extended definition essay outline recommendations can help you improve the caliber of your work. Usually, an elongated essay is going to be 4,000 words long. It is a type of academic writing assignment, which success depends on the structure.

Positive And Negative Impacts Of Daily Moods - 1138 Words

Hypothesis In their study, Yao Zheng, Robert Plomin, and Sophie von Stumm measured the positive and negative affect, or essentially one’s mood over time; the three professors postulated that daily moods can be affected by both nature and nurture, with a degree of separation between positive and negative. To test their hypothesis, they conducted twin studies through a daily, 10-item online questionnaire over the course of one month (30 days). Twins were chosen through an earlier â€Å"Twins Early Development Study† (TEDS) conducted by Plomin and others, who had previously affirmed the status of the twins and had sufficient prior data on the sample subjects. The results, after some correction, were separated based on sex and degree of relation†¦show more content†¦The official start of the study took place over a 1-week period when participants were instructed to begin daily surveying; any who failed to do so during the time limit was excluded from any data analy sis. Those whose first language was any other than English, and those with significant medical conditions preventing reliable reporting were excluded as well. For 40 days twins completed the online survey â€Å"after school,† a time period considered to be from 3 p.m. to 2 a.m., at about the same time each day. As a final precaution against spurious findings, only those who answered the survey for 30+ days with genuine answers were considered in the final analyses. 15,000 total questionnaires were gathered from these efforts (Zheng et al, 2016, 1612-1613). Positive and negative affects’ results were quarantined for computation, which began with simple mean and standard deviation calculations for the sample. The results were used to create a score for specific means and deviations for each participant. A standard twin-model â€Å"ACE†, which â€Å"decompose[s] the variance of a trait into additive genetic, shared environmental and non-shared environmental compon ents,† was the basis of most following correlational measurements (Purcell, 2007). The program OpenMx was used to model: structural equations at 95 percent confidence intervals, goodness of fit at negative 2 times the log likelihood, and chi-square tests toShow MoreRelatedCoping With Stress And Stress1434 Words   |  6 Pagesstressed’. (Statistics Canada, 2014) (Statistics Canada, 2014) Strategies currently in place to address this issue There is no official way yet definitely more than one way of coping with stress. Since coping with stress is a personal issue, and the impact of stress on individuals are different. Methods or means taken to deal with stress are considered a rather personal measure. 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