Question

Which strategic management theory do you think has the greatest value to the practising manager? Resource based view or Industry based view (Michael Porter)? Discuss these two theories before coming to a justified conclusion.

Answer 1

Strategic management theory basically provides the proper system of ideas which intends to provide proper explanation of overall origins, principles, values, targets and overall planning of a strategic management. The basis of strategic management theory include overall contingency of the organisation, overall approaches and information technology regarding the same.

Resource based view in strategic management theory basically include the philosophy that overall resources of the firm which is being include in the firm's competitive advantage is basically lies in its internal resources. Resource based view basically examines how how resources of the firm can be used in order to achieve high and sustainable competitive advantage to the organisation.

Industry based view in strategic Management theory basically examines the overall environment of the organisation regarding everything. The main purpose of the industry based view is to review the external circumstances of the market related to the respective industry and finding out the possibilities which will be helpful in enhancing and maintaining a sustainable competitive advantage. It basically focuses on the the external resources.

Resource based view should be has the greatest value to the practicing manager because it provide a very clear inside out view of the organisation which will have its focus on the internal resources of the organisation. Every organisation should firstly focus on its on available resources and gain out optimum advantage. So manager should focus on resource based view in order to enhance the internal working and processes of the organisation, finding out the reasons behind the success or the field of the organisation in the market, finding out the capabilities which are being residing in the organisation, and formulate strategies accordingly in order to enhance efficiency and effectiveness of the organisation.

It will be much useful and beneficial for the organisation if the organisation will use resource based view as well as industry based view and maintain a proper balance in between these two. Resource based view and industry based view of the strategic Management theory will provide a very clear and balance knowledge about overall internal as well as external circumstances and resources regarding organisation.