The strategic analysis methodology is largely divided into two schools, namely, the positioning approach and the resources-based approach. Each approach has its own distinguishable merit that assists managers, investors and regulators in analysing a subject company’s strategic advantage. At the same time, each approach has its own downside in that, it omits certain important truth about a company and the environment in which it operates. However, as pointed out by Henry (2008, p127), the two approaches, while different in many aspects, are complimentary. This report, with help of Apple as an example, illustrates the advantages and disadvantages of both approaches in helping companies shaping strategy; at the end, there will be a short discussion on how to reconcile the two and make full use of best of each in analysing strategy.
The positioning approach is the well-known Porter’s five forces framework. The word “positioning” refers to how the company position itself in the environment/industry in which the company operates, whereas the five forces are the five elements that affects company’s performance in an industry. They are:
The threat of new entrants.
The bargaining powers of buyers.
The bargaining power of suppliers.
The threat of substitute products or services.
The intensity of rivalry amongst firms in the industry.
Advantage of the positioning approach
The advantage of this approach is that, it allows an organisation to understand the attractiveness or profit potential of a particular industry by looking at the interaction of the five competitive forces above (Henry 2008, p 69). Let’s examine them one by one.
The threat of new entrants
This means that extent to which new competitors may enter an industry and compete on profit with incumbent firms. This makes intuitive sense. If there’s only X amount of dollars of profit available to firms in the industry, anyone extra player will eat away