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Beyond porter a critique of porter marketing essay

The main purpose of this article is to qualitatively scrutinize work of Michael Porter from the ground of two main theories proposed by him; competitive advantage and competitive strategy.

The main methodology used is literature review of secondary sources and data. Authors mainly relied on sources of high quality material such as books of Michael Porter, articles published in well-known journals as well as opinion of experts in the field such as Joan Magretta, Jack Welch and others. Furthermore books entitled in the same way as theories that are point of interest were used as main theoretical framework. Michael Porter, Competitive Advantage, Competitive Strategy Introduction Management can be traced back to the far roots of human history.

Yet, it was not defined in the frame that it has presently for a long time. Somehow the way of defining development of management took retrospect approach. There is one clear reason for that; after defining basic implications, roles and theories of management, scholars were able to recognize that the same practices were used in the past.

On the other hand, historians stated that Socrates discussed management practices and concepts in 400 B.

Beyond porter a critique of porter marketing essay

However, there are prominent scholars whose work influenced modern management too. Therefore this article will be dealing with work of Michael Porter precisely due to his immense contribution and theories that gave answers to the management science as well as practice in the time of change.

In order to briefly elaborate why Porter is the subject of this article, there will be presented short overview of his work. Porter is a university professor at Harvard Business School, bearing in mind that this is the highest professional recognition that can be assigned to the faculty member.

He is the author of 16 books and more than 85 scientific articles and has served as an advisor on competitive strategy to many companies. Furthermore governmental counseling is one of his contributions where he advised governments around the world on the issues of economic development and national competitiveness.

Professor Porter has been awarded with eight honorary doctorates by universities around the world who recognized the great value of his work Michael E. The main goal of this article is to qualitatively explore contribution of Michael Porter to management science through three main areas: Furthermore it is important to mention what contribution will it make, or difference will provide once it is written.

By the end of reading a reader will find comprehensive, accurate and first-hand information beyond porter a critique of porter marketing essay the work of scholar who gave most important theories for the management in modern world.

Methodology Methodology used in writing of this article is based mainly on qualitative exploration of secondary sources and data. The main sources are articles and books written by Michael Porter, out of which one will extract leading points and ideas. Secondly there will be examination of articles written by different researchers and authors as a response on the theories of Porter.

Finally point of interest was given to those sources that are criticizing and finding space for improvement in the ideas that were proposed by Porter. Literature Review There was a plenty of literature available on this topic. What one can notice is that the topic was extensively covered in different kind of literature since Porter himself was from the beginning of his writing career very interesting to the scholarly world.

However, in the following part there will be representation of the main ideas introduced in the literature being used. However in 1979, Porter underlines the importance of five competitive forces and argues that strongest competitive force or forces determine the profitability of an industry and consequently play a major role in strategy formulation Porter, 1979, p.

Supports and Critiques on Porter's Competitive Strategy and Competitive Advantage

Speed in his article states that O'Shaughnessy criticizes five environmental forces for two reasons: He emphasizes the richness in depth and detail of Porter's work, which many could underestimate Kippenberger, 1998, p.

In his book he introduces the model of value chain and contributes through two main competitive approaches of cost and differentiation as channels for reaching competitive advantage Porter, 1985. However other scholars were writing on this topic as well. Best practice of a company is competitive advantage per see Welch, 2005but also competitive advantage can be derived from internal or external forces; making resource and environment based view of competitive advantage Barney, 1991.

Finally many were questioning viability of Porter's models and theories Downes, 2010, Recklies, 2011. The main contribution was given by another professor from Harvard Business School, Joan Magretta who argues that Porter became victim of his own success Magretta, 2012, Robert J. Finally merit of Porters' work cannot be denied, however one cannot rely solely on it when deciding upon strategy and competitive advantage Recklies, 2011.

Porter's Competitive Strategy Companies are operating in a highly turbulent, changing and competitive environment. Therefore in order to outperform competitors one has to do many things better than others. This concept was explained and named by Michael Porter as operational effectiveness, which stands for doing the same thing in a better way Bachmann, 2002, p.

But such an approach would not suffice definitely; since competitors are trying to do things better as well. Therefore operational effectiveness cannot be considered as a synonym for strategy. But both are essential for superior performance beyond porter a critique of porter marketing essay work in a different ways Porter, 1996, p. Related to that, one can conclude that the road towards achieving competitive strategy that will bring substantial profit is much harder and longer.

However in his book Competitive Strategy Porter is mentioning three generic strategies whose critiques will be discussed in the following parts. Since then his theories were commented a lot, refined, reappraised and criticized as being hardly applicable in its complete sense. One of the main points of consideration was generic strategies that were elaborated in the previous part, and comments on which will be point of attention in the proceeding part.

However, choice of strategy is much bounded by size of the firm, access to the resources as well as industry and competitive analysis Wright, 1987, p. In his book Porter is arguing that in order to be successful a business should compete on the basis of one strategy; cost leadership, differentiation or focus. However this statement does not have to be accurate according to some scholars.

What Wright argues is that small firms have a choice of successfully competing only through focus strategy whereas bigger firm choice of either cost leadership or differentiation will not suffice and be attractive enough Wright, 1987, p.

Beyond Porter – A Critique of the Critique of Porter

But investing a big fortune in state-of the-art equipment when one is not clear about its advantage for sure would lead to investing a majority of money in something that may not be profitable at all Datta, 2009, p.

Point of critiques was the requirement of high market share in order to achieve cost leadership strategy, mentioned in the first part. But how one can achieve high market share in the first place? Scholars are arguing that market share leaders are actually coming to that point through differentiation strategy let it be of higher quality or attractive packaging, rather than through cost leadership Datta, 2009, p.

Allen and Helms developed a questionnaire to investigate such kind of linkage Helms, 2006, p. They used four factor scales: What they have discovered in their survey is that by correlation analysis of the four strategy scales there is a clear indication that each is significantly associated with organizational performance.

They went step further and outlined what strategic practices should be linked with each generic strategy in order to have positive organizational performance. Therefore one can conclude that generic strategies were beneficial for managers around the world in the tough job of strategic planning. Sustainable Competitive Advantage In the first part the importance of an effective strategy was emphasised.

However, having good strategy solely is not enough to cope with competitive environment. In fact strategy should be created in a way that results in competitive advantage, sustainable one per see.

His point of view stands for that best practice beyond porter a critique of porter marketing essay sustainable competitive advantage actually Welch, 2005, p. It is true that once a best practice is out there in the market many will try to imitate it. But job if imitating is not easy at all, however winners are doing two things; imitating and improving, and there is a space for creating competitive advantage Welch, 2005, p.

  • Competitive Rivalry between Existing Players This force describes the intensity of competition between existing players companies in an industry;
  • The impact of these forces on any of these players may vary, do to different strategies, competences and processes of these players;
  • Reviewing the blue ocean strategy critiques -a critique is a critical review next to the well-known publications of porter 1991.

Core Concepts Competitive strategy represents the search for a favorable position within an industry compared to one competitors hold, therefore trying to establish a profitable and sustainable position against the forces that determine industry competition see Figure 2.

The choice of competitive strategy can be backed by two central questions, shown in the following figure. Out of this one can conclude that the road towards achievement and sustainability of competitive advantage requires in depth work and investigation, which will be point of attention in the following parts. Resource Based and Environment Based Model During the last years of 20th and beginning of 21st century bulk of literature was written on the idea of sustainable competitive advantage and why it is good to have it.

In order beyond porter a critique of porter marketing essay achieve sustainable profit a firm needs sustainable advantage to achieve it Ma, 2000, p. However two key questions are missing: Which advantages tend to be sustainable and why? One of the answers was provided by the professor from Harvard Business School Pankaj Ghemawat who suggests there are three main categories of sustainable competitive advantage: However during the 1960s much of the debate on the question of sources of sustainable advantage was answered by the two main prevailing views, resource based view and environment based view Barney, 1991, p.

In the following figure there will be representation of the latter. Therefore resource based view tries to identify and benefit from those resources that help the organization to develop competitive advantage with primary focus on those sources that are being more static and unchanging. Kazem Chaharbaghi, 1990, p. It states that on fully utilizing inner beyond porter a critique of porter marketing essay a firm can still reach competitiveness. Therefore differences among competitor value chains are basic source of competitive advantage Porter, 1985, p.

Therefore value is measured by total revenue, and firm is profitable if the value it provides exceeds the costs involved in production. Value activities are therefore discrete pillars of competitiveness Porter, 1985, p. Primary activities are those related with physical creation of the product while support one are those that assist in all that process. Different types of firms will have different attention on some of the primary activities.

For a distributor firm for instance the crucial part is inbound and outbound logistics, while for service company per see in house and after service is the most important. Related to previously mentioned firms have to establish long-term competitive advantage Vasile Voicu Pantea, 2006, p.

For Porter the value chain is more than a buzzword, he promises that one who exploits it properly will experience new perspective, more likely to be called a clinical approach to strategy Heany, 2006, p. Therefore in order to sum Porter argues that utilizing on a firms value chain represents a valuable source of competitive advantage, creating and sustaining it Porter, 1985, p. Going back to his generic strategies, Porter argues that they have merit in creating competitive advantage as well wherefore he introduces cost and differentiation as advantages that company can use to become competitive.

A firm have cost advantage if its cumulative costs of performing of value activities is lower than that of competitors, while sustainability will be reached through uniqueness, and leaving no space for replication and imitation Porter, 1985, p.

Porter suggests for a firm to assess relative cost position of each value activity and then to accumulate it together with relative cost of different activities to determine its cost position Porter, 1985, p.

Porters Five Forces – content, application, and critique

After this is done Porter suggests that there are two ways from which a firm can gain competitive advantage; either by controlling cost drivers — meaning to say that control should be imposed on those parts of value chain that generate the highest cost, or by reconfiguring the value chain — meaning that a firm can find and adopt more efficient and cost effective way to design and produce its products. Finally he suggests that sustainability comes not only from the sources of competitive advantage but from their number as well, meaning to say that cost advantage derived from two or more value activities represents a great target for imitation by competitors, but since it is hard for them to achieve such set of circumstances it makes it more sustainable Porter, 1985, p.

Finally existence of sustainability depend upon the possibility of duplication by competitors Barney, 1991, p. Therefore a firm can say that it differentiates itself from competitors if it can be unique in some aspect that.