Strategy Content
Failure Three – A Paradox Between Markets & Resources in Strategy
What is the true source of competitive advantage? Whether a firm should reposition itself to take advantage of a changing marker, or whether it should hold firm to its natural resource base is a question of much strategic debate with two major confliction views – the Resource Based View (RBV), or the ‘inside out perspective’ and the Market Based View (MBV), or the ‘outside-in perspective’.
The idea that firms compete on resources and not their market positioning was developed as early as 1959 with Dr. Edith Penrose’s initial work supporting the RBV on the basis that firms consist of historically received resources that could be as unassuming as the idiosyncratic habits of managers, or the tacit knowledge held in the minds of managers and their abilities – or even luck – at correcting issues and identifying strategies.
This is contrasted against the MBV, particularly following Michael Porter’s landmark Competitive Strategy that suggests firms should instead continually take their environment as the starting point when determining strategy, whose market driven and customer centric approach is successful ultimately as a result of creating a product offering that follows shifts in consumer demand. Prahalad and Hamle, who suggested that resources that are valuable, rare or are in some form difficult to imitate form the core-competencies that enable an organization to compete successfully, questioned this theme.
The paradox is developed further by Sckatzki, suggesting that organisations should be analysed with respect to the multiple levels of relationships between resources and practices that exist within a business. The following case study analyses how Kodak failed to recognize its strategy in reference to these two divergent views of strategic content.