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ontemporary theorists of strategic management are divided into two groups. One group believes in market-driven approach, while the other believes in resource-based view.

Of the former group, Michael Porter is most renowned for his work on strategic management and competitive advantage. Porter, in his pioneering work - Competitive Strategy (1980), is of the view that strategy formulation is affected by environmental factors. He introduces the concept of five forces model and argues that an organization operates and competes within its industry based on market forces, such as rivalry between the existing firms, new entrants ‘potential, substitutability of products and the bargaining power of buyers and suppliers. The nature of competition is also determined by these forces.

To counteract these forces, he has presented the idea of generic strategy. Generic strategy helps organizations to achieve sustainable competitive advantage through cost leadership, differentiation of products, and focus on niche segments. Porter believes every business, regardless of the prevailing competition, needs to adopt these strategies to effectively compete within its marketplace.

Thus, competitiveness can be defined as the value of products and services of the firm, for which the customer is willing to pay for. Customers have certain expectations of benefits from products and services (Drejer 2002). According to Kotler (1999), they buy products because their basic needs are being fulfilled. For example, the physical properties of the product fulfil certain expectations and/or certain elements of the product meet current or future expected needs. Firms that offer them, either through tangible products or through intangible ones, gain a competitive advantage.

Competitive advantage is further categorized as follows:

a. Advantage through industry structure

b. Advantage through network relations

c. Advantage through brand image

d. Advantage through customer relationships

e. Advantage through government protection

f. Advantage through distribution channels

g. Advantage through market standards (Drejer 2002).

The above categories help firms to exploit opportunities within the industry and gain positional advantage. However, strategic management is about not only gaining the positional advantage but also creating value for the customers in terms of satisfaction, quality standards, and sustaining the same (Drejer 2002).

Conversely, another group of theorists argues that if a firm fails to achieve one or more strategies, then it will not be able to position its product in any segment let alone become profitable. This is because competitive strategies are based on the achievement of the difference between cost and price. This is only possible if strategists drive down costs, as price is limited in scope and extent of the customer’s willingness to pay. Resource-based theorists, therefore, emphasize on the efficient use of individual resources in organizations.

Prahalad and Hamel (1990) along with Ansoff (1965) and many others argue that key resources, skills and technologies, are the core c本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。