Comparison of the Resource-Based vs Market-Based View Approaches to Competitive Strategy
Competitive strategy, after Porter, came to be defined as the strategy of a business unit which seeks to achieve sustainable Competitive Advantage (SCA). The literature on strategy deems the market-based view (MBV) and the resource –based view (RBV) as two approaches to giving businesses the competitive edge they need to compete in their industries. Aside from having competitive advantage as their ultimate goal, the two approaches are also similar in the sense that they both make use of particular tools and models in their undertakings. They also differ in numerous ways, …show more content…
Furthermore, the fact that Southwest’s competitors Continental and United Airlines managed to rival its low cost strategy and not its differentiation strategy, comes down to the RBV concept of key competence. For in pursuing the differentiation route of Porter’s Generic strategy of the MBV approach, a firm need to first and foremost have as Kay (1993) suggests, the internal technological innovation, structure of relationships with or between its suppliers or customers; reputation or strategic assets which are unique to the firm. In other words, in order to be different, firms must have something different to customers, or must be able to do something differently that their competitors are unable to.
In addition to that, although Porter (1980) advocates either a low-cost or differentiation strategy to competitive advantage, vital to that is the resources available to the firm upon choosing either strategy. For example, the ability to