Strategic Management: I/O and Resource-Based Models

This article discusses the I/O and resource-based models of strategic management, their similarities and differences, and how to prioritize resources and capabilities for effective strategic planning. It also explains the importance of identifying strengths, weaknesses, opportunities, and threats in the organization and external environment.

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Strategic Management
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In organizational management, strategic planning is an activity applied in setting priorities, focus
energy and assets, strengthen procedures, ensure that staffs and other stakeholders are
functioning toward mutual goals, establish promise around envisioned outcomes/results, and
measure and adjust the organization's track in response to a shifting environment. It is a well-
organized effort that yields first verdicts and actions that outline and guide what an association
is, who it obliges, what it functions and its reason, with a concentration on the future (Wolf &
Floyd 2017, p98). Operative strategic planning pronounces not only where an association is
going and the activities needed to make advancement, but also how that particular organization
will recognize its success. Strategic management is the complete collection of continuing
activities and procedures that organizations utilize to systematically synchronize and support
resources and actions with undertaking, vision, and policy through an organization. Strategic
management happenings transform the still plan into a system that delivers strategic performance
response to verdict making and permits the plan to evolve and develop as requirements and other
conditions varies. Strategy Implementation is identical with Strategy Management and sums to
the systematic enactment of a strategy. The procedure of strategic planning is methodical in that
it grounds a sequence of questions that assist organizational leadership in examining experience,
test conventions, gathering and integrating information about the current, and anticipate the
situation in which the association will be working in the prospect. By siting priorities, strategic
planning suggests that some organizational verdicts and actions are further important than others.
Much of the strategy primes in making tough decisions about what is supreme vital in achieving
organizational efficacy. Characteristically, the strategy incorporates activity over several years
and desires to be altered over the time progress (Rugman & Verbeke 2017, p76).
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There are a variety of perspectives, replicas, and approaches applied in the concept of strategic
planning. The method that a strategic plan established depends on the nature of the
organization’s management, the philosophy of the organization, the convolution of the
organization and its surroundings, and the magnitude of the association. A strategy is the
combination of schedules to exploit core proficiencies through which an organization creates its
competitive superiority. Every business has or must approach. Deception is the only tactic that
gives a pure cut path for a corporation or firm to surpass the competitors. Similarly, an individual
should also have his/her strategy as it is hard for an individual to excel without anticipated plans.
But for active strategic planning organizations needs having their core competencies first
(Armstrong & Taylor 2014, p32).
INDUSTRIAL ORGANIZATION MODEL.
This archetypal explains it is the external atmosphere that the organization should take care of
before making their strategic plans. This model elucidates that the industry in that a firm chooses
to participate has a stronger effect on the firm’s presentation than do the selections managers
make inside the association (Bailey et al. 2014). The I/O model has four molds that enhance
effective operations. The primary assumption is that it is the exterior environment that generates
pressures and restrictions for a firm to create its strategy. The second supposition is that the firms
contending within a particular business has similar possessions under their control. Thus the
firms under these productions are more or less equivalent (Morden 2016, p78). The third
hypothesis is that the assets that are under their regulation are highly moveable. And the last
assumption is that the administrative people are sensible human beings.
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On the other hand, resource-based model primes with a diverse aspect than the I/O ideal where it
undertakes that each organization is a gathering of unique resource and competencies that
provide the foundation for its policy and that is the primary cause of their return. Rendering to
this model, variances in firms’ performances crosswise time are due principally to their unique
resources and aptitudes rather than the production’s structural features. So, this classical focuses
on unique possessions and competencies. If an organization has those exclusive resources, then it
can develop the abilities to gain a modest advantage (Bratton & Gold 2017, p45).
Conferring to IO theory, production forces in which a business operates are very significant for
the firm to preserve profitability. The industry appeal depends on the strength of the five armies:
• The rivalry between firms within the production.
• Buyers bargaining influence.
• Suppliers bargaining power.
• New entrant’s threats.
• Substitute products accessibility.
The sturdier the forces, the more unappealing the industry develops. Scrutiny of these five forces
is crucial for a firm to prime and set whether it can have an advantage over its contestants. IO
theory seats a premium on the atmosphere and is explicitly apprehensive about the opportunities
and threats curtailing the environment. Academics subscribing to the IO model argues that an
organization should scan the exterior climate and emphases on identifying and manipulating
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occasions and neutralizing coercions (Bryson 2018, p345). However, it is essential to match the
firm's innate aptitudes to exploit opportunities and strengths, for mitigating the threats from the
atmosphere. Strategic management academics attempt to discourse the performance differences
across the business regarding the two primary lines (IO and resources). As Montgomery opposes,
a portion of these variances may be owing to exclusive firm physiognomies and actions, and
another slice is due to the situations in their corresponding industries in which businesses
operate.
Resource-Based View (RBV)
Sustained competitive advantage mostly hangs on the resources (assets, skills, organizational
processes, firm aspects, information, and information) a particular organization possesses (Hitt,
Xu & Carnes 2016, p98). Although an external organization atmosphere is important, firm
possessions are far more important than the atmosphere in which the establishment operates.
RBV is grounded on two key conventions, namely,
• Assets are heterogeneously dispersed across all the corporations.
• Organization resources are mostly motionless.
Given these conventions, an organization acquires competitive lead if the resources own the
qualities of scarcity, value, defective limit ability, no substitutability, and no transferability.
According to (Haines 2016, p89) the advocates of RBV argue that contending
business/corporations will not be capable of imitating strategies founded on resources since there
are causal uncertainty and social intricacy associated with the connection between these resource
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formations and sustained modest advantage. RBV has extended wide currency in the theoretical
lexicon since its capability judgment is very substantial in explaining why some organizations
achieve achievement even though they prime under the industry that is not executing well. The
essential logic overdue this model is the "competence logic" that denotes that a firm can outpace
rivals only if it has a more significant ability to acquire, progress, construct, and use the assets to
sustain its economic advantage. The primary dispute of this model is that a company's
competitiveness is an optimistic function of the resource deployment and capability structure so
that strategies are premeditated to capitalize on the prospects and mitigate intimidations
stemming from the surroundings. The technique in which firms deed and influence innate
abilities and possessions is the key. Having greater resources is compulsory, but not satisfactory,
condition. What is imperative is that the resources and attitudes need to be endangered from
exploitation by competitors through synthetic and changeover (Cassidy 2016, p101).
SIMILARITIES
In similarity, I/O and resource-based models help the organization in effective strategic planning
where they assist managers to identify various aspects of putting into consideration when
planning the overall production process. The models also act as strategies that deliver meaningful
information from the surroundings of the organization. They assist in the overall implementation
of planning technique as each of them plays a vital role in its department (Harrison et al. 2017).
DIFFERENCES
Industrial organization model mainly aspects of the external issues in the planning perspective.
These external issues are opportunities and threats. The model looks deeply on the available
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opportunities in the market that will give the company an upper hand where it will properly
market their products through utilization of the available opportunities. These opportunities
differ mainly from one particular organization to another thus an organization should at all times
ensure maximum utilization of present opportunities which in turn will enhance competitive
advantage (Grünig & Kühn 2015, p21). The I/O model also aspects threats available in the
market thus giving the organization base of curbing those threats. Threats reduce efficiently in
the production and marketing of goods hence they require useful analysis to minimize them
effectively.
On the other hand, resource-based model aspects internal aspects; strengths and weaknesses of
the organization. In this aspect, the management at all times should recognize the strengths of the
business which in turn grounds the establishment on strong foundations which enhance
tremendous and better productions. Strengths require effective utilization as this aspect will
outdo other businesses who lack particular strengths in the operation concept. According to
(Robson 2015, p4) weaknesses of the business also must be considered to enhance that the
company is in the position to analyze probable weaknesses and cater for them to enhance they do
not lag the production process behind. Weaknesses are inevitable in business, and due to that
reason, strategic planning (resource-based model) tries to identify weakness in the organizations.
Weakness, for instance, can be lack of some resources that are the vital inefficient production of
quality products.
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PRIORITY ENHANCEMENT
In enhancing priority measures to the two models under consideration, it is advised the senior
management team to consider some aspects that will base the organization on substantial
grounds to effective operations. Goals achievements in every organization is a vital aspect in
which every staff solely works in achieving the set goals that in turn amounts to the overalls
objectives achievements. The dials tend utilization in assessing organizational efficiency must be
chosen from numerous possible areas, and data congregated from several conceivable sampling
frames. The outline of strategy in an association is determined not only by the strategies and
actions of its frontrunners but also by powers in its external surroundings. Because both
administrations and atmospheres can vary over time, and for the reason, that different activities
operate in different surroundings, no single policy is universally practical (Stead & Stead 2014,
p9). The resource-based model should be prioritized in strategic planning concept as it permits
organization in the identification of which verge resources to develop permitting them to
complement the customers' needs and preferences with the company's valuable and tactical
resources. The RBV method enhances the combination and consumption of strategic resources to
distinguish various organizations in the market (heterogeneous).
Furthermore, the RBV allows firms' to function efficiently, competently and less costly than
contestants in the market. This standpoint is a significant discrepancy from the alternate market-
based view analysis. Based on the mixed view of RBV, several professors argue that an
organization should focus more on ways of structuring processes and resources to construct a
dynamic capability equated to the resources obsessed. Management (executives) should first
consider that they have possessions of various resources that are obligated in the market which
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will enhance smooth production. When an organization is in possession of all required resources,
they get the upper hand in getting a competitive edge in the market as they will be capable of
producing quality products which will satisfy the customers. After ensuring that they have all
required resources now the management team tend to intrude the market and analyze the trends
to gain knowledge on how to produce their needs. The analysis will assist much in recognizing
the client’s needs (Trigeorgis & Reuer 2017, p54).
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Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide to
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Cassidy, A. (2016). A practical guide to information systems strategic planning. Auerbach
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