Macro Level Industry Analysis: Porter's Strategy Model
The PEST/PESTEL model suggests that any macro level analysis of an industry must incorporate an understanding of how the government intervenes in the economy. Political and legal frameworks directly influence the stability of an economy. Government’s economic policy will translates downstream to influence a firm’s ability to operate locally and partake …show more content…
Bowman’s Strategy Clock
Bowman’s Strategy Clock (BSC) is a model that elaborates on Porter’s three generic strategies to suggest that a hybrid position of low-cost and differentiation is attainable (Bowman, C. and Faulkner, D. (1997), “Competitive and Corporate Strategy”, Irwin, London). The BSC model expands Porter’s model into eight strategic options and explains the relative cost / value positions for each option. The detailed model is used particularly in marketing strategy to provide companies with additional options for determining their competitive advantage (IMAGE).
Low Price/Low Added Value position is the no frills option usually applied in a high volume, commoditized markets where product quality, customer loyalty and customer value are non-factors. Usually, the strategic intent is to make the price attractive enough to convince customers to try the product once.
Low Price position is used for high volume markets where a firm wants to achieve customer loyalty for return business by being perceived as the low cost leader. At comparative product quality, amongst the competition the firm’s products or services are perceived as the least expensive choice for the …show more content…
Market share loss will ultimately result from this strategy.
The Resource-Based View (RBV) approach to strategy seeks to achieve a competitive advantage through leveraging a firm’s internal resources (Barney, J.B. (1991). “Firm Resources and Sustained Competitive Advantage”. Journal of Management. 17 (1): 99–120.). Resources can be both tangible (e.g. capital equipment) and intangible (e.g. brand loyalty, intellectual property, in-house expertise). Resources are what give the firm its ability to develop and implement a competitive strategy. The RBV model specifies that resources meet “VRIN” criteria.
Valuable resources are those that allow the firm to create value. Valuable resources allow the firm to implement strategies that improve its ability to capitalize on strengths and opportunities or reduce its exposure to weaknesses and threats.
Rare resources are those the firm uniquely possesses that allow it to implement a strategy not copied by the competition, thus providing the firm a competitive advantage. If resources were shared by multiple industry players, then it would not be considered a source of competitive