StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Critique of Market versus Resources Paradox - Assignment Example

Cite this document
Summary
The paper contains the debate of market versus resources which may be theoretically different from each other however to their core; both the approaches are linked with each other. Their successes and failures are dependent on each other as one cannot be achieved without the help of the other. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.5% of users find it useful
Critique of Market versus Resources Paradox
Read Text Preview

Extract of sample "Critique of Market versus Resources Paradox"

Introduction The current literature on firm level competitiveness suggests different and new dynamics of facing the competition and surviving in thisnew period of intense competition. What is critical however is the fact that the variables which were considered as essential for gaining competitive advantage have changed due to change in the competitive dynamics Organizations now exploit different and unconventional sources of competitive advantage as new business models allowed modern firms to tap dormant resources. However, researchers, over the period of time, have focused on the assumption that products and resources are basically the two sides of the same coin to judge the competitiveness of the firms. A closer look at the historical facts would suggest that the firm level competitiveness have largely been influenced by a dualistic approach of internal as well as external perspectives. The focus was essentially on either the external environment of the firm or its internal capabilities of the firm define its overall competitiveness within an industry or a particular market. One perspective suggests that the markets have preferences over the resources as firms following such a perspective tend to tailor their strategies according to changes taking place in their external environment. However, on the other hand, the other perspective which emphasizes resources over the market and tend to focus on the internal capabilities of the firm. Though both the approaches may seem parallel to each other however, there is a deep paradox behind whole argument as to which approach can lead to the true nature of the firm competitiveness. Market Based View The basic argument behind the market based view of the firm level competitiveness is based on the outside in perspective. The outside in perspective basically advocates that the firms are largely driven by their external environment and all their strategies and actions are the result of external influences. What is however, important is to note that firms following such an approach are quick to adapt to the changes in their external environment and take lesser time responding to external shocks Outside In perspective also allow firms to take up the opportunities much faster than other firms and develop necessary flexibility to respond to such opportunities in the most appropriate way. It is also critical to be important to understand that a market based view also allow firms to develop abilities to anticipate the emerging changes in their target markets and allow themselves to develop strategies which potentially help them to either withstand the emerging external threats or take up opportunities. Such firms therefore tend to focus more on their customers as the key variables to decide about the potential changes to take place in the market place. (Brooks) and perform well into an environment which is more dynamic and fluid in nature. Firms following such a perspective also need to develop its ability to continuously reposition itself and if a firm has presence in many markets at the same time; it may be required to re-position it according to the market conditions prevailing in each market. Such firms, however, tend to lose sight of their distinctive competencies and rely upon less on their own individual capabilities i.e. strengths to gain the competitive advantage. As discussed above that the firms develop competencies to anticipate external environment therefore they put in place the processes for collecting market intelligence regarding their potential as well as existing competitors and customers. Such capability further allows them to integrate such information into their strategic decision making process to better position themselves into the market. (Hult and Ketchen Jr) Such inflexibility does not therefore, yield a long term competitive advantage for the firms, and they tend to be complacent by focusing on just one aspect of the competitiveness. What is also critical that the market based view can only benefit the firms if the variables underlying such approach collectively produce the desired impact For example, a firm's innovativeness as well as its organizational learning capabilities cannot produce the desired impact until they are not supported by other corroborating elements contributing towards the success of firm's strategy. (Hult and Ketchen Jr). One glaring example of the failure of this approach has been the Customer Relationship Management aka CRM. Numerous research studies suggested that the firms, in a bid to align their strategies with the market, attempted to invest heavily into CRM so that customer can insight could be captured to better understand the external environment however, except few, most of the firms failed to achieve the desired results on their investments made on implementing CRM. (Rosenbleeth). Resource Base View The resource base view or the inside out perspective are a radically different from the market based view of the firm level competitiveness. The resource based view of the firm therefore radically outlines the view that in order to gain competitive advantage, firms must focus on its internal resources rather than being driven by the external changes. (Wernerfelt). Thus by using this approach, firms focus on their internal responsibilities as well as resources to drive strength by using the internal potential of the firm. The firms following such an approach tend to be successful at times when firms following market based view fail to gather up internal resources and capabilities to respond to such changes. This argument is based on the fact that on failure of market based firms, organizations following resource based approaches tend to exploit the emerging opportunities in much better way. Further, since firms tend to develop their internal capabilities over the longer period therefore their internal strengths are developed to such a point where they can be utilized at will to face any given challenge provided it is within the considerable limits. One of the most important aspects of this approach is related with the complete and deliberate ignorance of the constraints imposed by the firm's natural environment. (Hart). Further, if the firm likes to take advantage of its internal resources than its resources must be valuable i.e. must have the capability to produce rent for the firm otherwise internal resources may not provide sustainable competitive advantage to the firm. (Hart). Further, such as internal resources must also not be replicable in nature i.e. the natural barriers such as trademarks, patents etc shall be in place to carefully safeguard the critical internal resources so that they may not be easily copied by competitors to launch Me Too types of pseudo products. Such firms also tend to be inflexible and complacent once they develop certain competencies over the period of time. If market dynamics change, it may become difficult for them to respond timely to such changes and may go out of the business either permantely or for the time being. IBM is the prime example of such a failure as it failed to take into account the changes taking place in the personal computer market despite the fact that IBM was a market leader in computer industry. IBM, over the period of time, avoided the latest trends taking place in the personal computer market and continues to focus on its traditional large scale computing machines. However, due to its resultant ignorance of the market trends, firms like Dell, Compaq and HP emerged to capture the personal computer market and left IBM lagging behind potentially new and nascent firms in the business. It is also important to understand that for firms to develop their distinctive competencies, they need to take into account the external dynamics at any point in time. Thus resource based firms shall have to take into account the outside in perspective before starting to build their internal competencies. This fact therefore, suggests that there is a paradox. If firms with predominantly resources based perspective need to take into account external dynamics at some point in time then what difference it will make if a firm adapts either of the strategic perspectives If firms following market based view need to develop internal capabilities to respond to the external challenges and organizations following resources based view are also required to follow market dynamics than potentially it does not matter which approach is better for the long term success of the firm. This fact further outlines that both the approaches are fundamentally intertwined with each other due to complexity of both the approaches. Conclusion The debate of market versus resources may be theoretically different from each other however to their core; both the approaches and views are fundamentally linked with each other. Their successes and failures are dependent on each other as one cannot be achieved without the help of the other. This paradox may seem complex because it attempt to outline two contrasting views about how the firms may gain competitive advantage however what is critical to understand is the fact that both the approaches can not ensure long term sustainability of competitive advantage and firms has to change and dissolve their traditional boundaries to remain competitive. What set them apart is the perception of their relative external environment as under stable market conditions both the approaches tend to corroborate and support each other rather than overlapping each other. (Makhija). Works Cited 1. Brooks, Geoffrey R. "Defining Market Boundaries." Strategic Management Journal 16.7 (1995): 535-549. 2. Hart, Stuart L. "A Natural-Resource-Based View of the Firm." The Academy of Management Review 20.4 (1995): 986-1014. 3. Hult, G. Tomas M. and David J Ketchen Jr. "Does Market Orientation Matter: A Test of the Relationship between Positional Advantage and Performanc." Strategic Management Journal 22.9 (2001): 899-906. 4. Makhija, Mona. "Comparing the resource-based and market-based views of the firm: empirical evidence from Czech privatization." Strategic Management Journal 24.5 (2003): 433 - 451. 5. Rosenbleeth, M. (n.d.). Capturing Value through Customer Strategy. Retrieved December 17, 2008, from Boozallen: http://www.boozallen.com/media/file/101260.pdf 6. Wernerfelt, Birger. "The Resource-Based View of the Firm: Ten Years After." Strategic Management Journal 16.3 (1995): 171-174. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Critique a Paradox Market v Resources Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.org/business/1522375-critique-a-paradox-market-v-resources
(Critique a Paradox Market V Resources Essay Example | Topics and Well Written Essays - 1500 Words)
https://studentshare.org/business/1522375-critique-a-paradox-market-v-resources.
“Critique a Paradox Market V Resources Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/business/1522375-critique-a-paradox-market-v-resources.
  • Cited: 0 times

CHECK THESE SAMPLES OF Critique of Market versus Resources Paradox

EBay Expands around the Globe

The consideration is based on various analyses of cost versus benefit being the major highlight (Davis, 2000).... Describe the pros and cons of eBay's policy of entering an international market by acquisition - as opposed to Foreign Direct Investment (FDI) otherwise known as "green-field investment" -in the context of on-line retail operations. eBay can easily be quoted as the pioneer or the entrepreneurial idea that initiated the concept of online auction not just for B2B clients, but also expanding the circle towards B2C and C2C transactions....
9 Pages (2250 words) Essay

Continuing Education Department

Multiple tiers of research, analysis, theories, hypotheses, and conclusions will be drawn apply the necessary programs as well as the human and other resources to successful serve all areas -- senior level managers/executives and the board of directors, full time employees, professional and paraprofessional staff, as well as the clients from the urban community -- of the organization.... The organizational culture requires thorough research, analysis development and implementation of programs which will address the plummeting enrollments of the Staff Development and Outreach programs, as well as the internal infrastructure of the organization and the market (s) served....
11 Pages (2750 words) Essay

The Millennium Development Goals

Poor countries - the so-called "South" - must be more accountable, utilize its national resources more efficiently, and practice good governance all around.... The UN believes that sufficient resources are available to put an end to poverty.... In 2000, 189 world leaders came together at the United Nations (UN) Summit to make a commitment to "free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty, to which more than a billion of them are currently subjected" (Millennium Campaign)....
14 Pages (3500 words) Essay

Tourism and Corporate Social Responsibility

Tourism and corporate social responsibility (CSR) are issues that have become a focus for the tourism and hospitality industry.... Supported by research highlighting the impact of tourism activities in localities and their potential to support social development initiatives, developing competencies for collaborations between industries and communities has become a strong advocacy....
7 Pages (1750 words) Essay

Paradox in Fop Smith's Company

The case study 'paradox in Fop Smith's Company' is dedicated to the activities of the Dutch towing company L.... This is contrary to the widely held belief during the contemporary times that it is important to first do a strategic analysis of the market to determine if the business would be profitable in the future.... This would take into consideration the strengths and weaknesses of a new market....
7 Pages (1750 words) Case Study

The lauderdale paradox

The problem of ‘nature' as is advanced through the article in ‘Lauderdale paradox' revolves around capital (riches and wealth) where according to the Marxist position, the interchange between humans and the nature brings about materialistic as well as metabolic… The main line of discussion in then paradox is around the private riches and the public wealth.... Maintland James developed the paradox where he stated that there is interrelation between the cause and increase of public wealth with an inverse relation between ‘private THE LAUDERDALE paradox The problem of ‘nature' as is advanced through the article in ‘Lauderdale paradox' revolves around capital (riches and wealth) where according to the Marxist position, the interchange between humans and the nature brings about materialistic as well as metabolic approaches....
2 Pages (500 words) Essay

Hardened/Open Border Paradox

The researcher of this essay aims to pay special attention to Hardened/Open Border paradox.... Hardened border paradox refers to a situation where governments put up physical barriers such as feces and walls on the border to limit movement of people.... … This essay discusses that the hardened border paradox stifles cross-border trade and interactions among countries.... Open border paradox, on the other hand, is a situation in which countries enjoy liberal border policies....
2 Pages (500 words) Coursework

The Language of Paradox by Sherman Alexie

This essay "The Language of paradox by Sherman Alexie" analyzes the poem “On the Amtrak from Boston to New York City” by Sherman Alexie based on Cleanth Brooks' notion of paradox in the language of poetry.... hellip; Poetic language reconciles opposites, according to Coleridge and this is a perfect example of paradox.... According to Cleanth Brooks, “paradox is the language appropriate and inevitable to poetry”, as he explains it in his seminal essays on literary theory and criticism “The Language of paradox” in his “Well Wrought Urn”....
7 Pages (1750 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us