Use Of Industry Structure Analysis And The Resource Based View

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use of Industry Structure Analysis and the Resource Based View of the Firm in analysing firm strategy. This essay will set out to compare and contrast two strategic analytical models: Industry Structure Analysis (ISA) and the Resource Based View (RBV). Firstly, it is imperative to define the key terms in the essay title. The term “compare and contrast” indicates a necessity to both draw out and emphasise the key similarities and differences between the ISA and RBV. At the same time, the term “firm strategy”, as defined by Chandler (1962), refers to the “the determination of the basic long-term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these…show more content…
Thus, based on the ISA framework, the role of management should be in identifying these five competitive forces that shape the industry and developing an appropriate strategy that positions the firm in the industry in such a way that ensures it maintains a sustained competitive advantage. Looking at the example of Southwest airlines, the firm, using the “needs-based positioning” (Porter 1996) framework, managed to identify a consumer segment that other airlines up to that point had failed to service: price- and convenience sensitive travellers (Porter 1996). In this specific consumer segment, competitive forces were not as strong as in other areas of the airline industry: there was a low threat of new entrants due to the capital intensive nature of airline operation, little power jockeying as other airlines had not diversified into budget flights and, thus, a low customer bargaining power with Southwest having a virtual monopoly in the field. Southwest then began tailoring all its activities towards the focus of delivering low-cost and convenient services (Porter 1996), dropping many services and flight paths that would have otherwise encumbered its focus on efficiency and fast turnarounds. Thus, Southwest, through the use of the ISA framework, “staked out a unique and valuable strategy based on a tailored set of activities” (Porter 1996), all the while maintaining a sustained competitive advantage that late-coming entrants such
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