Strategic Management Models: 3 Modern Views for Sources of Competitive Advantage

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In a “one-world” nowadays economy, there are numerous approaches vying to offer strategic models for companies in their quest for sustainable competitive advantage. Moreover, the competitive landscape has changed dramatically over the last two decades, which prompted search for new strategic thinking that would account for globalization and IT revolution-triggered implications for businesses operating in various industries and across national borders.

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Kazakh National Agrarian University

Strategic Management Models:

3 Modern Views for Sources of Competitive Advantage

by Dr. Almaz Tolymbek

In a “one-world” nowadays economy, there are numerous approaches vying to offer strategic models for companies in their quest for sustainable competitive advantage. Moreover, the competitive landscape has changed dramatically over the last two decades, which prompted search for new strategic thinking that would account for globalization and IT revolution-triggered implications for businesses operating in various industries and across national borders. 

Indeed, globalization of markets and industries as reflected in the unprecedented flow of goods and services, financial capital, and knowledge across countries is conducive to hyper-competition, i.e., extremely intense rivalry among competing firms, characterized by escalating and increasingly aggressive competitive moves. This was conditioned by reduced restraints on business transactions across national boundaries (such as tariffs); difficulty in determining boundaries of an industry; and also broadened range of opportunities for acquiring resources and selling products and services.

On the other hand, technological breakthroughs as evidenced by increasing rate of innovations and rising speed at which technologies become production and communication tools for businesses also lead to redefining the role of technology and its applications in achieving competitive advantage.

Thus, among new sources of competitive advantage, we can point out to expedient access to and use of competitive intelligence, diffusion of new and transformed business relationships throughout the economy, integration of new business processes into organizational structure and operations, and strategic flexibility.

This new reality is reflected not only in shorter product life cycles and rapid technology replacements, but also through new business strategic options and approaches stemming from e-business and e-commerce models.

In this regard, the paper seeks to compare three modern strategic management models offering different perspectives on achieving and sustaining competitive advantage for businesses in today’s global economy. These models are based on the following frameworks for strategic thinking:

  • Industrial/Organization (I/O) View

  • Resource-Based View (RBV)

  • Delta Model (DM).

1. The Industrial/Organization (I/O) view, as exemplified by Michael Porter’s Five-Forces Model, focuses on the dominant influence of the external environment on a company’s choice of strategy. In other words, it posits that the external forces constrain the range of viable strategies resulting in above-average returns. It argues that companies competing within a particular industry possess similar resources and pursue generic strategies such as cost leadership and differentiation.


Underpinning assumptions are that resources for implementing strategies are highly mobile across firms, and that due to this mobility any resource differences between firms will be short lived.  This popular model

reinforces the importance of economic theory and offers an analytical approach that was previously lacking in the field of strategy. In particular, it

describes the forces that determine the level of competition and profit potential in a given industry and thus suggests how a company can use the analysis to establish a competitive advantage. By way of noting I/O’s limitation, it should be noted that to gain competitive advantage, only the two above generic strategies are offered and, thus, a company’s unique internal resources and strengths or weaknesses are not accounted for.

2. The Resource-Based View of Company (RBV) is a distinct approach to identifying what constitutes the source of competitive advantage. In contrast to I/O view, RBV finds it within a company itself by looking into its portfolio of different tangible and intangible assets defined as

resources (equipment, employee skills, patents, talented managers, finances, etc.) and capabilities (capacity for a set of resources to perform a task or activity in an integrative manner). Their combination would feature

a company’s core competencies as sources of competitive advantage over its rivals. To ensure a wide moat for any business, RBV places emphasis on sustainable competitive advantage that is durable and hard to imitate by competitors.

Major tenet of RBV is to regard a company's unique resources and capabilities (valuable, rare, and non-substitutable assets)

as a cornerstone for building a strategy that would take advantage of opportunities in the external environment to ensure a sustainable competitive advantage

Among evident limitations of RBV is lack of guidelines as to what processes should be activated to deploy a company’s core competences. Another drawback is its narrow inner focus on individual company’s resources with few clues on ways of linking its competences to specific customer demands. Thus, this model was criticized for the absence of analytic and strategy devising tools, which would constrain its capacity for generalization and application.

By way of addressing limitations of the I/O and RBV models, other promising conceptual approaches have been sought of which Delta Model is a promising one.


3. Delta Model (DM) is a customer-centric perspective as compared to a product-centric approach characteristic of traditional strategic thinking. This model was developed by Dean Wilde and Arnoldo Hax (MIT Sloan School of Management, 2003) as an outcome of analysis of over hundred US and international corporations. [1] In a difference from the two above schools of strategic thinking, DM defines Customer Bonding as a primary source of competitive advantage. In other words, it contends that in the long run companies don't win by beating the competitors, but do so by achieving durable relationship with customers based on transparency, fairness, and long-term benefits for all parties involved. In this regard, strategy is not war with competitors or unique, stand-alone core competences of a company, but an extended network including a company, its customers, suppliers, and complementors (firms that provide products or services enhancing the main company’s products), which would foster cooperation in developing unique customer propositions.

In this model, complementors and other members of the network are seen as critical partners within this expanded enterprise, which takes advantage of the Internet-age networked economy. The customer bonding can be attained by investing “in and around the product by customers and complementors” so the result would be “collateral assets,… such as learning how to use the product, incorporating customer-specific data, integrating purchased add-ons, and customizing interfaces to the product.” [2] DM envisions three major strategic options to create customer bonding, which are as follows:


  • Best Product, similar to Porter’s options of low cost and differentiation
  • Total Customer Solution, focusing on customized value propositions
  • System Lock-In, aiming at building exclusive distribution channels to lock out competitors or creating a wide network of complementors working around a company’s product/service to lock in customers.

What makes this approach attractive is its ability to link an offered strategy with its implementation by incorporating the concepts of adaptive processes, aggregate and granular metrics, and experimentation and feedback. In this respect, “Delta model identifies the core processes of the business and provides a guide for how they need to function differently to achieve different strategic positions.” [2]

Thus, a distinguishing strength of Delta model is its new vision of sources of competitive advantage, a different set of strategic options, and integration of strategy formulation with its execution.


There have been multiple case studies illustrating successful application of Delta model in the real business context including companies in different industries such as health care, consumer products, automobile manufacturing, retail, e-commerce, software design, and computer and IT industries.


Those companies having employed this approach used the following strategies within the three options outlined in the table below:


Table 1

Best Product

Total Customer Solutions

System Lock-in

Low Cost

Customer Integration

Restricted Access

Effective Arm-Length Treatment of Customers

Redefining Customer Experience

Dominant Exchange


Horizontal Breadth

Proprietary Standards

Source: Website: Dean and Company (, section: Delta Model: The Triangle

How can researchers go about choosing between I/O, RBV, and DM for their effective use in strategy analysis and selection by businesses operating in countries such as Kazakhstan? By way of mapping a tentative way to an answer, it can be noted that depending on the technological level and structure of a particular industry, different models may be more appropriate in figuring out the most potent sources of competitive advantage for businesses with respective implications for the choice of viable strategies. For instance, without in-depth preliminary national industry analysis, it can be suggested that agriculture and food manufacturing may be sectors as appropriate subjects for I/O-based strategy development. Major national companies operating in oil/gas, mineral resource, and transportation industries would possibly appear as relevant cases for RBV-based analysis for strategic positioning. Finally, due to its more advanced stage in reliance on latest IT cutting-edge progress, financial (banking, insurance, and investment) sector seems to lend itself as a suitable candidate for DM-inspired search for strategic options to secure sustainable competitive advantage.

However, this is a preliminary suggestion that should be tested by further industry and market-specific research, which would take into account a more comprehensive picture of essential factors revealed through both external and internal audit for a company in question. In this regard, prospective business strategy studies of different industries and companies in Kazakhstan might lay ground for further testing for appropriateness and practical value as well as refining of the three frameworks reviewed in this paper.   




  1. Website: Dean and Company (, section: Delta Model: Research, retrieved 01/11/2011
  2. Website: Dean and Company (, section: Delta Model: Strategic Positioning, retrieved 01/11/2011.

Paper for KazNAU Round Table, December 2011, presented by Dr. Almaz Tolymbek

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