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Limitations of the Porter's Model
The new era of rapid,
systemic and radical change requires more flexible,
systemic and dynamic approaches to strategy formulation.
Thus today, corporate
strategy formulation should be a combination of
different currently practiced approaches – judgmental
designing, intuitive
visioning, and emergent learning; it should be about
transformation as well as perpetuation; it has to
involve individual cognition and social interaction,
co-operative as well as conflictive; it must include
analyzing before and programming after as well as
negotiating during; and all of this must be in
response to what can be a demanding
environment.
Traditional strategy
models, such as Michael Porter's five forces model,
focus on the company's external competitive environment.
Most of them do not attempt to look inside the company.
In contrast, the
resource-based perspective highlights the need for a
fit between the external market context in which a
company operates and its internal
capabilities.
In contrast to the Input /
Output Model (I/O model), the resource-based view is
grounded in the perspective that a firm's internal
environment, in terms of its resources and capabilities,
is more critical to the determination of
strategic
action than is the external environment. |
