Question

Industrial organization theorists argue that external factors are more important than internal factors to a firm`s achievement of competitive advantage. Explain both your and their position

Answer 1

According to Industial Organisation the attractivenes of industry depend on the five forces competition of firms with in thw industry, bargaining power of buyers and suplliers, threat of new entrant and substitue products. External Factors includes legal, social , economical, political and technological changes. It helps in coping up with current environment situation by using well developed technology we can use our rescoutces effectively and efficiently. According to Industrial Organisation theorist if a firm wants to achieve, survive and grow in this competitive market they should cahnge their plans according to the external factors and scan the environment to cope up. By observing the external environment we can easily study the eternal opportunities and threat much faster. External environment helps in  analysing and competiting with the status of the environment in comparison with the internal environment. They say how much the internal organisation is strong if you dont understand the status of external environment you will not be able to stand in the environment. With the help of legal environment you can make use of technology from the other countries and with political environment you can easily expand your firm.

According to me, Internal factors are more important than external factors as if the management is not working properly then the firm willnot be able to survive.If you have to survive in the market the management and human resources should work hand in hand. The organisational culture of the firm should be ethical and well structured there should not be chaos or repitition of the work in the organistaon. In every department there should be effiicient managers and the environment shouldbe healthy so that every employee can give best of them and even new ideas to cope up or stand out in the environment. If the internal factors are effective and efficient then even with the old technology a firm can do even better and in the other situation if the internal factors are not performing well then analysing and scaning the all external factors are a waste.