Business Strategy Models A Critical Review

3712 words - 15 pages

Business Strategy - Critical Review (Strategy Models)It is the purpose of this paper to critically review several of the most important business models used by strategic managers in SBUs, we will review strategic models and frameworks proposed by the most influential business strategists and scholars and assess their values within today`s operating environment.Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or industries. Alternatively, according to W. Chan Kim and Renée Mauborgne, an organization can achieve high growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost tradeoff by simultaneously pursuing both differentiation and low cost.Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".In other words, strategy is about:
Where is the business trying to get to in the long-term (direction)

Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope)

How can the business perform better than the competition in those markets? (advantage)?

What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources)?

What external, environmental factors affect the businesses' ability to compete? (environment)?

What are the values and expectations of those who have power in and around the business? (stakeholders)

Many scholars, professors and influential figures in the business world have developed models over time; these continue to be vital to the strategic success of managers in the SBU and business as a whole. Professor Michael Porter of Harvard Business School is recognized as a leading authority on company strategy and has developed several strategic models key to this topic."Porter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developing, Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition"."Given the fact that Porters five forces model includes three sources which are...

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