Critical Review

Strategy is an important management theory that helps corporations to gain competitive advantages in their businesses and to forge a high performance organization. It is obvious that the current business environment has been becoming more complex than ever before because of the rapid technology development and more varied customer needs. Managers have to find the most effective methods of maintaining competitive advantages and sustainable business success in such a turbulent context. Therefore, formulating a proper strategy is the most effective method of helping the company clarify its position and guide it to achieve the organization goals. However, formulating strategy is always the most difficult.   In order to form a successful strategy, we should know what factors play important roles in the competition and how to analyze them to contribute to the final strategy, which are the components of a strategy. However, there are many different situations existing in both external and internal environment of the companies, such as competitor’s behavior or its own organizational structure, so that it is hard to tell which is more critical to a useful strategy. Executives often feel frustrated when trying to understand their companies’ current performance in an effort to formulate a strategy. Michel Porter explains the three components of a company’s internal environment involved in strategy in his article What Is Strategy which includes organizational structure, leadership styles and so on. However, he only addresses the strategy-making problem from the internal perspective which is not sufficient to formulate a comprehensive strategy because a company can’t succeed based solely on internal excellence without knowing external environment such as its competitors’ performance. So he analyzes the five competitive forces of firms’ external environment in another article, The Five Competitive Forces That Shape Strategy. Comparing these two articles would help us gain a more...