The Models or Schools Of Thought to the Management of Business Essay

The Models or Schools Of Thought to the Management of Business Strategy - Essay Example The present research has identified that the strategic models during the 1980s were predominantly premised upon factors external to the organization. They pertained to elements in the business environment which shaped the manner in which the corporation responded. The advantage of these strategies is that they are market-oriented and therefore are keen to capture opportunities and avoid threats; however, they largely ignore or overlook the internal resources and capabilities of the company and its strengths and weaknesses. As a result, the strategic plans are not always feasible for the company to implement, or the firm may be ill-equipped or their personnel ill-trained to properly execute it.   Porter’s model focuses on five forces that are external to the firm but internal to the industry to which it belongs. The stronger these forces are, the more limited a firm is in building profits; on the other, weak forces indicate that there are more opportunities to earn profits. O ver time, the strength of each of the forces may change, together with changing industry conditions. It is the manager’s task to take cognizance of these risks and opportunities and to formulate an appropriate strategy in response to these forces. Each of the generic strategies adopts a fundamentally different approach in â€Å"creating, sustaining, and combining a firm’s competitive advantage† and deciding on what its specific target shall be. The clear-cut distinctions the model makes among the strategies tend to be simplistic and misleading because a cost leader cannot ignore the basis of differentiation – that is, the cost leader must at least achieve parity or proximity on the basis of differentiation as its competitors for it to realize an advantage over them in cost. Conversely, the firm relying on differentiation must attain a cost structure at parity or proximity to its competitors, by reigning in costs that do not impact on differentiation.