Market positioning view in the 1980s was that the fundamental factor affecting an organisation's profitability was industry structure. Rumelts (1991) found that industry effects ounly accounted for 8% of performance variance, whereas business unit effects accounted for 47%. So if profits are different amongst organisations in the same sector, then industry-level factors cannot be wholly responsible for differences in performance between organisations. Think about how Tesco overtook Sainsbury's in the 1990s.
McGahan and Porter (1997) challenged this, but still found industry effects were 19% and business unit were 32%. They state that environmental turbulence must also be taken into account, and that industry structure has less effect in stable sectors and more in turbulent sectors.
The debate is still raging. Neither is the sole "right approach". u3s2p8,9,10
Porter's 5F is a useful framework for asessing industry attractiveness through external environment analysis. RBV is the approach to use for internal analysis, however it is still complementary to market positioning.
Some definitions:-
Resources: tangible and intangible assets of the firm
Capabilities: the processes through which resources are combined and co-ordinated.
(Strategic) Assets: Resources and Capabilities
This definition seems a little circular!
Finally, Magnitude of Competitive Advantage of a Resource: The extent to which it reduces the cost structure or differentiates the offering of the organisation.
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