Short Discourse — Strategic Management Models

Using these models to explain how businesses should position themselves to exploit current trends.

The basis of this short discourse is to use strategic management models to explain how businesses should position themselves to exploit current trends. The selected models for the discussion are; the PESTEL framework, Bowman’s Strategy Clock, and VRINE model.

PESTEL FRAMEWORK

PESTEL is an acronym for Political, Economic, Socio-cultural, Technological, Environmental, and legal factors that gives an exact and structured analysis of the external environment. This can be particularly helpful in identifying opportunities and threats. This framework is used as a strategic analysis tool to assess the business environment in which a company operates.

This useful tool analyzes market growth or decline and, therefore, the position, potential, and direction of a business. When a firm is considering entry into new markets, these factors are of considerable importance. Moreover, PESTEL analysis provides insight into the status of crucial market flatteners, both in terms of their present state and future trends.

Businesses need to understand the macroenvironment to ensure that their strategy is aligned with the powerful forces of change affecting their business landscape. When firms exploit a change in the environment — rather than simply survive or oppose the change — they are more likely to be successful. A solid understanding of PESTEL also helps businesses avoid strategies that may be doomed to fail given the circumstances of the environment.

More thoughts on the PESTEL framework here.

BOWMAN’S STRATEGY CLOCK

We can define Bowman’s strategy clock as a tool that is used to plan strategic placement in a market depending on two factors — price and perceived value. It shows the different directions or positions that a company can take to strategically place its services or products in the market using price and perceived value.

Using Bowman’s strategy clock, a business should be able to decide which position is best for them — for a competitive edge. The different positions around the clock show various strategies for how companies can succeed in their select market.

More thoughts on Bowman’s strategy clock here.

VRINE MODEL

VRINE model (Value, Rarity, Inimitability, Nonsubstitutability, and Exploitability) is an analysis tool that evaluates and accesses the resources and capabilities of a business. This analysis demonstrates how the business uses its resources and capabilities to attain a competitive edge, and how its products/services are distinctly different and more valuable than that of its competitors.

Value focuses on the level of value that a business resource or capability has, and how it allows the business to utilize opportunities or pre-empt threats. It also shows how the business can provide value to its target market and how it may be exceptional in the midst of competition.

Rarity, any resource that is not rare does not provide the business any competitive edge.

Inimitability and Nonsubstitutability give a competitive edge only when other competitors have not caught up with providing the same products/services or a close substitute. Businesses should manage to create and sustain a devoted target market that believes in their brand and the uniqueness of their products and services.

Exploitability happens when value is gotten from a resource or capability. If a business does not exploit its resources or capabilities then there will be no competitive edge.

More thoughts on VRINE model here.

REFERENCES

Barney, J. B. (1991) ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17(1), pp. 99−120.

Bowman’s Strategy Clock: How to Position your Product? Available at: https://thinkinsights.net/strategy/bowmans-strategic-clock/ (Accessed: 22 July 2022)

Introduction to Bowmans Strategy Clock Available at: https://getlucidity.com/strategy-resources/introduction-to-bowmans-strategy-clock/ (Accessed: 22 July 2022)