The main argument of this article refers to the effectiveness of ‘leveraging resources’ (Hamel and Pradhalad, 1989) compared to that of ‘maintaining strategic fit’ in achieving competitive advantage. Competitive advantage is generally conceptualised as the implementation of a strategy not currently being implemented by other firms that facilitates the reduction of costs, the exploitation of market opportunities, and/or the neutralisation of competitive threats. Barney, (1991). It argues that basic concepts of strategy such as ‘strategic fit’ and ‘generic strategy’ (Porter, 1979) used by western companies have resulted in their ‘competitive decline’. Hamel and Pradhalad’s (1989). In relation to wider strategic literature there are many elements of the article that draw highlight to its position within the organisation vs. environment debate or more specifically the debate between a ‘resourced based view’ and a ‘positioning approach’ to strategy.
The ‘Resource Based View’ (RBV) emerged as one of the substantial theories of organisational based strategy during the 1980’s. Barney, (1986); Rumelt, (1984). The RBV takes an ‘inside-out’ approach to strategy formulation and suggests that the internal resources possessed by a firm are the primary determinants of its performance not the external market. It sees that organisational long-term strategy should be created around these internal capabilities as they contribute to a sustainable competitive advantage. Hoffer & Schendel, (1978); Wernerfelt, (1984). It extends to both an organisations assets as well as it’s capabilities (Henderson and Cockburn, 1994), such examples include knowledge, skills and culture. Afiouni, (2007).
In contrast to this the environment based view centers on an ‘outside-in’ view of strategy. It stipulates that organisational success is driven by external factors such as industry position. kim et al., (2008). The Five Forces and Generic Strategies Models (Porter, 1996) provide frameworks through which firms can break down industry competition. This allows firms to strategically position themselves where they feel they best ‘fit’. Porter states that ‘the strategist's goal is to find a position in the industry where his or her company can best defend itself against these forces or can influence them in its favour’ (1979). The article acknowledges the role of the environmental view in advantage creation in two ways. Hamel and Pradhadel (1989) provide recognition of the importance in “searching for loose bricks’ to highlight areas of competitor weakness, thus allowing firms to place themselves in the holes. They go on to highlight the need for ‘collaboration’ to strengthen position. The article explains that through collaboration firms can ‘win without fighting, and ‘gain a higher market share whilst hijacking the development efforts of potential rivals’. These ideas help strengthen the view that there is need to look outside the organisation for possible advantage development.
Contrary to the environmental view the article offers many arguments in favour of an organisational approach. It highlights throughout that small firms with considerably fewer resources ‘can compete against and even overtake larger rival firms through the leverage of its resources’. It provides five clear active processes that should be implemented by managers to achieve greater outputs from smaller inputs; ‘focusing organisation’s attention on winning, motivating people by communicating the value of the target, leaving room for individual and team contributions and sustaining enthusiasm by providing new operational definitions as circumstances change’. Hamel and Pradhalad (1989). Essentially these processes aim to create clear and efficient lines of communication up and down the organisation. The article identifies companies implementing strategic intent have a great ability to create...