A COMPARISON OF THE POSITIONING APPROACH AND THE RESOURCE BASED VIEW (RBV)

A Comparison of the Positioning Approach and the Resource Based View (RBV)

A Comparison of the Positioning Approach and the Resource Based View (RBV)

Introduction

The rise of capitalism as a preferred social system leads to the emergence of the profit making enterprise. In the beginning, strong demand for goods and services ensured that each firm in the marketplace was able to sell as much as it wanted to produce. However, two events - the Great Depression of the 1930s and the Second World War (1939-1945) - that happened in quick succession completely changed the whole competitive landscape.

These two events severely dented consumer confidence and negatively impacted market demand. This period was also characterized by an exponential increase in the absolute number of market players in nearly all major business arenas. Firms slowly started realizing that they now needed to do much more than just produce goods. And their task was twofold. They not only needed to differentiate their product from that of competitors, but they also needed to convince the customer - who by this time had no dearth of options to choose from - that their offering was better than the rest. It is against this backdrop that strategic management started gaining prominence.The Emergence of Positioning based view (PBV) as a dominant school of thought. (Barney, 2001, 123-127)

Although strategic management had started to increase distinction from the time of early 1950s, the initial (organized and popularly accepted) key school of thought was recognized in this area in 1970s. This viewpoint, also known as the conventional vision, was formed during the end of 1970s and beginning of 1990s. An overview historic development of Positioning based view (PBV) is discussed below.

Miles and Snow (1978), in their book, 'Organizational Strategy, Structure and Process' argue that competitive organizations can be grouped into 4 diverse groups on the foundation of the strategy they use. These are prospectors, defenders, reactors and analyzers. The prospector's strategy is pertinent to organizations that are investigating the opportunity of entering new product segments or markets by means of ground-breaking practices and new expertise to grab market share. This strategy is also distinguished by companies espousing aggressive stances in a speedily varying atmosphere consequential from features like new expertise, variable consumer requirements, or both. Conversely, the defender strategy is demonstrated by companies who are more recognized in their market place. Firms utilizing this strategy display constancy in terms of how they carry out their business and due to their strategic main concerns, which are driven towards situation, are believed established. The other 2 strategies explained by Miles and Snow (namely the 'reactor' and 'analyzer' strategies) fall somewhere in between.

Michael Porter has also made a significant contribution to the PBV of strategy. According to Porter (1980), the industry to which a company belongs comprises five competing forces that determine the industry's overall competitiveness and profitability. The role of a corporate strategist in such circumstances is to find the proverbial 'sweet spot' that ...