External Business Environments (EBE)

Morphology, Assumptions And Interpretations

Without realizing, most of the common observed features of strategy theories and even observed practices in the industry, hold a natural tendency to take parts and to adopt (what is believed to be) the best strategic course of action (CoA). Hence, two major streams of thought are dominating the hearts and minds of strategists regarding the best CoA for the rational creation of value. One is a market-based view (MBV) centered on the comprehension of the industry structure, competition and dynamics. The other, with an opposing rationale, is the resource-based view (RBV), in which, is claimed that high returns are stimulated better of through the development of the firm´s own resources and capabilities. The notion of “value” regards the surpluses that the two primary economic agents, buyers and sellers (representing the demand and the supply-sides) are capable of appropriating.

So, What the difference in such approaches (MNB vs. RBV)? The distinction resides not on the objectives, as both hold the aspiration of yielding the highest value, or generating above-average returns (a.a.r), but on their way to get there, as to the process of generating value. So the ends are equal while the means are divergent, and here I advocate are a different way of getting the job done, with interdependencies as to the acquisition of further knowledge and building of intelligence bundles, and consequently, complementary ones. However, they adhere to what is called a pure approach (of analyzability), in which the strategist focus rather on the External Business Environment (EBE), as advocated by MBV, or instead focus on the Internal Business Environment (IBE) as antagonized by the RBV. Comprehensibly companies deal with limited resources, and often decisions require the choice of one of these course of action.

Yet, regardless of the preconceptions of the reader as to virtues and benefits of both, or to a mediating stream here identified, as a hybrid approach of (analyzability), i.e. the Positioning School, here the author refrains himself from further judgements of importance, and the same with their underlying philosophical stances (“view”) and epistemological preconceptions. Then, a question may be self-imposed

Question: Is market-focus “the” (best) way of strategizing?

The answer is a straightforward one. It is a round no (nope)! There is no single or best way to do so! Strategizing is nor solely about marketing-knowledge gains or resource-ownership or accumulation of large resource-bundles. Otherwise, the reality would have proven to be far simpler, with incumbents assuming a ranked position according to their possession of deeper market knowledge, or inversely, a larger position secured by larger number of resources in-house.

None of those streams of thought (MBV or RBV) have absolutely dominated the competition´s game. So, the reality is, a firm´s behavior towards the modus operandis in a market and the way to position itself and compete therein is not a “black and white” paradigm. Contexts diverge, and markets are not static and/or isolated from others.