Research Journal of Economics & Business Studies - RJEBS - The ...

The market positioning concept was devised by Michael Porter during the 1980’s to provide
companies direction towards the new millennium with influential analytical frameworks, including the
value chain, five forces analysis and the generic strategies to achieve competitive advantage.
However, Porter’s (1980) concepts of competitive positioning received several criticisms. Mintzberg
(1990) noted that his theory only concentrated on positioning a company into its industry and when a
firm engaging in generic strategies fails to achieve any of them, it will find itself “stuck in the middle”.
Shrivastava, (1986) argued that the foundation of the problem to Porter’s framework is that if every
business adopted the suggested generic strategies, none would be able to secure a competitive
advantage. Scholars criticized the P5F model as static and incapable of identifying the rapid changes of
the industry and the external environmental factors such as globalisation and new technologies e.g.
internet, nanotechnology and renewable energy.
Drawbacks of the Process
Various academics (Beinhocker and Kaplan, 2002; Camillus 1996; Hamel and Prahalad 1989;
Mintzberg 1994) states that strategic planning and development in companies today is the persistence
adaptation of last year’s plans and budgets rather than the search for new opportunities and
differentiation. The traditional strategic planning process is an analytical process (Davenport, Leibold
et al. 2006; Roos 2004) consisting of painstaking data collection and evaluation to create huge reports
that probably no one even reads (Markides, 2001). It is also argued that in today’s rapidly changing
global environment, a formal analytical process of strategic planning is very time consuming and by
the time the findings are reported and the final plan is published and distributed, the environment is
likely to have changed making the plan to be obsolete. (Beinhocker and Kaplan 2003; Mintzberg 1987)
According to strategy scholars, planning and analysis eventually does not lead to a definite strategy.
As the future is always transforming and unpredictable management scholars’ advices companies to
change strategies according to the changes happening in the global environment by encouraging
innovation, rather than trying to reshape organisational boundaries and structures in an attempt to
‘position’ itself as the market leader to gain competitive advantage (Krinsky and Jenkins, 1997;
Mintzberg, 1993).
Drawbacks of the Content
Criticisms regarding the content of current strategy practice involve three closely related basic issues:
(1) concentrating on operational effectiveness and best practices (2) copying competitor’s strategies
and (3) continuously holding one strategic position.
When a particular firm concentrates solely on productivity to achieve operational efficiency and to
continue its operations, it usually misleads to the imitation of competitors strategies, matching and
copying their products, and not the necessary differentiation (Hamel 2001; Kim and Mauborgne 2002;
Porter 1996). Academics debate that companies do not differentiate themselves anymore, but the basis
of their competition follows the basic method, process and dimensions of competition: cost,
operational efficiency and price (Kim and Mauborgne, 1999; Nattermann 1999). As a result, several
studies show that this lack of strategic differentiation only offers customers’ choices based on price,
which consecutively results in decreasing margins within an industry (Hammonds 2001; Kim and
Mauborgne, 2005).
Most organisations only follow a common set of rules and guidelines to compete in a certain industry,
mainly focusing to hold on to their strategic positions, instead of searching for new ones in the market
(Markides 2000). Therefore, instead of differentiating themselves from competitors, firms continue to
operate one successful strategy for a longer period. Consequently, a company never understands the
need for change when the strategy that was successful once becomes obsolete (Christensen 1997,
Chung et al).
Drawbacks of the Tools
The evolution of strategic management and corporate planning began with the problems faced my
managers in the 1950’s and 1960’s. As corporations grew larger and the business environment became
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