Introduction
Businesses usually perform well if entrepreneurs initiate measures that will help them grow. This is what is referred to as the strategic management. Therefore, any individual envisaging starting his or her own business should make sure that they have a good plan that will act as a guide in the management of such a business.
Some scholars have argued that McDonalds which has been in existence since1937, for example, has managed to be the market leader in the fast food industry because of its strategic management. Many competitors have tried to venture in this industry but have slowly faded out because this company has made a name for itself.
Strengths and weaknesses of the resource based view of strategy
In the contemporary world, there are two main types of strategic management. They include the competitive positioning school of strategy and the resource based strategic management.
The resource based strategic management claims that; businesses possess resources that help them to have a competitive advantage, resulting to a long term performance. According to Gagnon (1999), this implies that if a business utilizes the resources at its disposal in an effective manner, chances of continued existence are high.
He adds that, companies should strive to lay hands on the rare and valuable resources because this will place them ahead of their competitors. In addition he points out that, owning scarce resources is an advantage because such a company will be in a position to deter other companies from imitating, transferring and even substituting their products.
According to Jay (2011), this strategy gives one an exclusive right to what he or she has. As earlier discussed, this strategy is very useful when utilized well because it will bar other people or companies from copying, transferring or substituting a product.
Secondly, this strategy helps in marketing a product and the company producing it. This is according to John (2010), who argues that the exclusivity of certain product to a company makes the marketing of such a product easy. For instance, if a company has produced a commodity unique in the market, selling such a product will be easy. This is because it will not be having other competitors.
In addition, Young (2004) has noted that this approach helps in the improvement in quality of the goods being produced. He says that this is informed by the fact that the company wants to build a good reputation before imitated goods hit the market. This will enable the company to establish its loyal clients who cannot leave its products for the new ones.
However, Jeroen (2010) points out that this approach has its own demerits. He notes that the resource based view has very limited prescriptive implications. In addition, he argues that the world has become globalized and therefore, a company may not enjoy a competitive advantage because, a complete resource configuration may generate similar results for different companies across the world.
Strengths and weaknesses of the competitive positioning school of strategy
Competitive positioning refers to the preparations made by an entrepreneur, prior to joining the business world. According to Gerry (2000), this is meant to help such a person identify the areas that he or she wants to venture. According to Broderick (1998), this method has a number of advantages.
First, it gives an individual a chance to make informed choices before going to businesses which involve investing in areas with high returns. In addition, Christel (1999) points out that this approach helps an individual understand the market well before venturing into it.
Its main disadvantage is that there is a lot of time wastage as one meditates on the business he or she wants to start. According to Kuster (2000) and Daniel (2008), this can lead to lack of such an opportunity as more people start their own businesses which may be similar to what the person had thought about.
Identify common and differing themes between the two schools and suggest reasons for the differences and similarities between the two schools
A common theme found in the two models is that, the objective of setting up a business is the same. Whereas in the resource based system the business owners are trying hard to be the major players in that field, in the competitive positioning, the individuals are looking for areas to set up their business and what they should stock to maximize on their returns.
In addition, both strategies are focused on making maximum returns from their sales. As stated above, the resource based strategy aims at eliminating other players in the field to enjoy the monopoly. It is this monopoly that makes them adjust the prices of their goods as they may wish, hence making huge profits.
On the other hand, in competitive positioning, the entrepreneurs are taking their time before they can venture in business because they want to invest in a business that will realize maximum profits. Both use the resources at their disposal to make sure that they get the huge profits that they had anticipated.
The main differing themes between the two schools of thought are that; in the resource based system, we find that a business is already in place. What the entrepreneur is doing is to look for all available avenues to dominate the market so that other competitors loose the grip on their clients.
In the competitive positioning strategy, an individual has to spend some time surveying the market, so that they can decide what they want set up as their business. This implies that, whereas a business has already been set up in the resource based school of thought, the competitive positioning school anticipates setting up a business in the future.
The other difference between these two schools of thought is that, the resourced based wants to be the only player in the field having eliminated all the others, while the competitive positioning school has no intention of dominating the market.
All they need is to make sure that the business is set in an area rich in customers, so that it can maximize its sales, hence more profits. This means that, the entrepreneurs are willing to set up their business in areas with other businesses, hoping to capture customers without putting the other businesses in the risk of closing down.
Based in the literature, identify which school, or which aspects of each school are most relevant to the management of for-profit organizations in developed economies in the 21st century
Having gone through the arguments of the two schools of thought, the competitive positioning would be best suited for the management of the profit making organizations in the developed economies. This is informed by the fact that, under this school, there is competition for customers who are reasons behind starting a business.
We find that, as the businesses compete for the clients, they are forced to lower the prices of their goods and services. At the same time, the quality of goods and services is likely to go up in order to attract customers. Such a scenario will help the economy earn more money from exporting the excess goods because of the quality in them.
In addition, the competitive positioning may be very useful to an investor who wants to start up a big business. This is because; he or she will have time to survey the market and decide what is not readily available in the market. This means that, more investors will have a chance to invest because they will have studied the market well.
In the end, the government will earn more money through the taxes levied on the business profits. As a result the economy will be moving in an upward trend. Furthermore, the competitive positioning is also relevant to such economies, because it allows for delocalization of businesses.
Many people set their businesses near towns and other densely populated areas to take advantage of the economies of scale. However, the competitive positioning creates room for people to venture in other areas to reduce competition from other rival businesses.
Critically discuss and conclude the similarities and differences between the resourced based view of strategy and the competitive positioning based view of strategy
One of the main similarities between the two schools of thought is that they are both used as a method of marketing. Although the two have taken different approaches to marketing, they have a similar goal.
In addition, the two schools of thought are trying to look for the very best way to make sure that a business makes more profits at all times. Therefore, this is an indication that these two schools are capitalistic in nature and profit minded.
The other similarity between the two schools of thought is their desire to remain competitive in the business world. Whereas the resourced based wants to be the dominant figure in its line of operation at the expense of other players, the competitive positioning school wants to be located in any area as long as profits are being realized.
On the other hand the two schools of thought have differences in terms of their goals. In the resourced based school, other players in the field are disregarded. This is because of the desire to control all the scarce and valuable resources.
Once such resources are come under their control, they will make sure that the others in that field are denied so that they can opt out of business. On the other hand, competitive positioning takes into consideration other players.
Conclusion
The aim of starting a business is to make profit. Therefore, an individual needs to act and think carefully to make sure that the goal is achieved. No matter the school of thought one wishes to follow, the customer should always be in mind because without them, the business would close down.
In addition, people venturing in business should remember to do a market research so that they do not start a similar business operated by others.
Reference List
Broderick, K., 1998. Competitive positioning and the resource based view of the firm. Journal of Strategic Marketing, Volume: 6, Issue: 2, 97-116.
Christel, B., 1999. Developing a Revised Competitive Position for Sun/Lost City, South Africa. Journal of Travel Research, vol. 37 no. 4 341-352.
Daniel, S., 2008. The Accounting Assessment of Competitive Position. European Journal of Marketing, Vol. 20 Iss: 1, pp.12-16.
Gagnon, S., 1999. Resource-based competition and the new operations strategy. International Journal of Operations & Production Management, Vol. 19 Iss: 2, pp.100-112.
Gerry, M., 2000. The Influence of Competitive Positioning and Rivalry on Emerging Market Risk Assessment. Journal of International Business Studies, 2000. 31, 337–347
Jay, B., 2011. The Future of Resource-Based Theory Revitalization or Decline? Journal Of Management, September 2011 vol. 37 no. 5 1299-1302.
Jeroen, K., 2010. The Resource-Based View: A Review and Assessment of Its Critiques. Journal of Management, vol. 36 no. 1 349-372.
John, M., 2010. Lachmannian Insights into Strategic Entrepreneurship: Resources, Activities and Routines in a Disequilibrium World. Journal of Organization Studies vol. 31 no. 2 219-244.
Kuster, B., 2000. Competitive positioning and market orientation: Two interrelated Constructs. European Journal of Innovation Management, Vol. 3 Iss: 4, pp.190 – 198.
Young, R., 2004. Entrepreneurs’ Decisions to Exploit Opportunities. Journal of Management , June 2004 vol. 30 no. 3 377-395.