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Over the last 20 years, two main perspectives have emerged to explain how sustainable competitive advantage can be created and maintained - one stresses market position and the other core competence[1]. Managers might be tempted to ignore the distinctions between them since they tend to lead to broadly similar conclusions. However, the guidance that they offer on many particular strategic questions is not the same. By analyzing their own firm's situation from both points of view, managers can parlay the difference between the two approaches, if they learn how to define it, into valuable insight. In sum, looking at your business from both approaches will generate two sets of contrasting perspectives and options for action. For many firms, this bifocal vision - using the concepts of core competence and market position - to view the available strategic options will lead to a better result than if either perspective was used alone.
To learn how to gain the most benefit from a situational analysis from both of these perspectives, we'll review their main principles and premises using Southwest Airlines and Canon as the primary illustrations, plus examples from a number of other firms. Then we examine two strategic issues where the two perspectives produce distinct positions, and compare how these differences might be used to good effect in practice.
Market position - Southwest Airlines
The history of the market positioning approach goes back to the mid-1960s, when strategy first began to emerge as a discipline in its own right. It has its roots in the early days of the wellknown Profit Impact of Marketing Strategy (PIMS) project, PIMS was initiated and developed within General Electric to help with the task of finding a more strategic way to allocate capital to the various different business units within a diversified firm. Since 1975, this influential data-driven research project, designed to "measure the relationships between business actions and business results", has been further developed through its own dedicated, non-profit, organization, the Strategic Planning Institute. The PIMS research was one of the first to demonstrate a strong empirical link between market share and return on investment, establishing the basis for one of the earliest guidelines on market positioning. Later, the marketposition led perspective was further advanced by the Boston Consulting...