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Strategic Management: A combination of the internal and external perspective

Strategic management has long been viewed as the concept and process that link an organization and its environment together. It consists of the analysis, decisions and actions an organization undertakes in order to create and sustain competitive advantages.

Within the history of strategic management research there has been an unbalance between the internal and the external perspective. During the 1980s Michael Porter, one of the most prominent strategic management researchers, and his Five Forces model focused strictly on the external competitive environment.

Further, in the 1990s the focus shifted from external to internal along with Jay Barney’s development of the resource based theory in 1991. The issue of excluding one or the other perspective has now started to be acknowledged and researchers today are striving for developing models integrating both perspectives. However, theoretical models existing today that combine the two perspectives are complex and hard to apply in practice for managers within the business world.

In order to address the complexity of the strategic management concept we have chosen to develop a model with the purpose to connect and relate the external and internal perspectives by conducting an in-depth analysis of a chosen company.

The model also strives to be easily communicated, applicable and understandable for managers and employees on different levels within the organization. This leads us to the purpose of this thesis: “to develop a simplified model that combines the external and internal perspective of strategic management and apply this to a chosen company”.

The research was conducted through a case study based on the authors’ participation in a PBM (Project Based Module) – project. The model was tested on the company in question by analyzing the company’s internal and external environment with the means of analysis tools such as PEST-analysis, strategic group analysis, threshold analysis and the SWOTanalysis.

To conclude it is important to balance an organization’s internal efforts with the external market conditions and avoid excluding one or the other from the strategic management process. Combining the two perspectives results in identifying the current capabilities and competences and the direction of how to use these in order to meet market demands and gain competitive advantage.
Source: Jönköping University
Author: Axén Wrigfors, Caroline | Eliasson, Karin

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