"Creating Competitive Advantage from Outside-in Perspective"

Business level strategy is a matter of creating competitive advantage within the business environment to exploit the market. Before the firm is able to create the competitive advantage, it must know how a business system works. The business system is comprised of resource base (stock of asset), activity system (value chain), and the product its offing (value proposition). These business system components help the firm to create the competitive advantage and create the pathway to sustain it. When the firm is able to identify the components of the business, the next step is to assess the internal environment, which is the strengths and weaknesses, and to identify the outside environment (competitors), which are the opportunities and threats. In this chapter there are two points of view of how to create a competitive advantage. There are the “outside-in” perspective and the “inside-out” perspective. In the next couple of paragraphs, I will argue why the “outside-in” perspective is a key to create the sustainable competitive advantage.

The “outside-in” perspective begins with a development of the firms’ strategy to analyze the environment to assess the attractiveness of market opportunities. The firms must assess the demand of the market of what the customer wants and needs before they can invest the capital and time to create the goods and services. Assessing the market place and the needs of customers can be very difficult; therefore the firms need to choose the strategy that aligns with the core business. There are several strategies discussed in the chapter such as cost leadership, differentiation, and focus. The key goal of the “outside-in” perspective is to be the first-mover in the market. This helps the firms to roll-out the new innovative idea or knowledge before the competitors.

The firms also must assess the internal environment, which are the strengths and weaknesses of the internal resources to create the competitive advantage. By looking from “outside-in” perspective, the firm must not forget about the ability to assess their own strengths and weaknesses in the internal environment. The “outside-in” perspective helps the manager to assess what is feasible or not feasible for the inside environment of the firm’s resources and ability to accomplish the goal.