Every organization needs a solid strategy to survive and thrive in the ever-changing business environment, and this is true regardless of its size, activity, or location. The strategy is an ongoing process that enables an organization to adapt to the external environmental changes while managing its internal resources efficiently. Every industry is unique, and firms need to find a competitive advantage and fit in the industry structure to achieve business objectives. The SWOT analysis is a commonly used tool that identifies the strengths, weaknesses, opportunities, and threats of an organization. Firms use their capabilities and resources to implement strategic decisions and gain competitive advantages, which add economic value to the firm. If an industry cannot match the economic value produced by a firm, the competitive advantage becomes sustainable.

The Five Competitive Forces and the Resource-Based View are two strategic theories that firms use to gain a competitive advantage. The Five Competitive Forces theory, developed by Michael Porter in 1980, defines the degree of competition in an industry by analyzing five different forces: the threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitution, and rivalry among current competitors. Firms use this theory to analyze the industry structure and identify external forces that impact the sector's profitability. On the other hand, the Resource-Based View focuses on a firm's strengths and capabilities that create sustainable competitive advantages in the long run.

Both theories aim to improve the organization's position in the market and create a sustainable competitive advantage. However, the Five Competitive Forces theory emphasizes external factors affecting the industry, while the Resource-Based View takes a closer look at individual firm strengths and resources. In addition, the Five Competitive Forces model analyzes the industry structure, while the Resource-Based View evaluates each firm's unique strengths. Ultimately, both theories are concerned with creating economic value and consequently maximizing profits.

Regarding the role of human resource management in supporting these theories, both approaches recognize that the firm's workforce is a critical resource. The organization must develop its human resource management strategy in line with its overall business strategy. The Five Competitive Forces theory suggests that firms should manage their human resources to reduce the threat of new entrants and the bargaining power of suppliers and buyers. The Resource-Based View highlights the importance of developing human capital to gain and sustain competitive advantages.

In conclusion, the development of a successful strategy is crucial for the survival and growth of any organization. The Five Competitive Forces and the Resource-Based View are two popular theoretical frameworks that help firms gain and sustain a competitive advantage in their respective industries. Both theories have similarities and differences, and organizations must choose the most appropriate approach based on their unique characteristics and goals. Finally, the role of human resource management is essential in supporting the implementation of these strategies.

Conclusively, the ultimate goal of these theories is to assist organizations in making a profit and establishing a sustained competitive advantage in the industry. Neither theory is superior to the other; rather, they complement and support each other. The Five Forces theory focuses on identifying opportunities and threats, while the Resource-Based View theory concentrates on strengths and weaknesses. Both external and internal environments must be considered to achieve a strategic "fit" (Learned et al, 1969).

Effective strategic planning for any firm must comprise of human resources management (HRM), which is a vital part of firm resources that contribute to developing and implementing strategies, improving the firm's efficiency (Daft, 1983, as cited in Barney, 1991). The connection between HR and strategic planning gave rise to the concept of Strategic HRM (SHRM) (Walker, 1978, as cited in Wright et al, 2001). SHRM is closely linked to the Resource-Based View and Porter's Five Forces theories by focusing on employment methods that provide potential competitive advantage.

SHRM was inspired by the RBV and operationalizes the internal environment of firms' internal resources that contribute to competitive advantage. As with all resources, HR practices must be valuable, rare, expensive to imitate, and non-substitutable to establish and maintain sustainable competitive advantages (Barney et al, 2021). The RBV theory is a source that guides firms to SCA (Wright & McMahan, 1992), as it provides a context of how a strategy combined with human capital could lead to a superior advantage (Wright et al, 2001). However, HR systems are not a source of SCA, and which contributes to sustainable advantage is the human capital pool, the skillset present in the firm, and employee behavior that matches the business strategy (Wright et al, 1994).

The internal environment highlights the resources and capabilities that maximize strengths and minimize threats from the external environment. Given this, Porter is indirectly linked to SHRM, as it builds strategies, taking into account external factors. To apply the Five Competitive Forces model to SHRM, firms must consider new competitors with emerging SHRM, firms vying for human capital, job-seekers, the development of technology and AI that can replace the human presence, and current competitors in the industry.

Human resources are critical to firm resources, and its strategies contribute to the success of organizations. SHRM requires distinct HR policies, employee behaviors, and viewpoints that must be aligned consistently with the strategic planning of the firm. Despite focusing on internal resources, it's imperative to consider external forces to create superior performance.

In conclusion, organizations must create strategies that garner a sustained superior performance that competitors can't reach or imitate. A "fit" between the internal and external environment is necessary by maximizing strengths and opportunities and minimizing weaknesses and threats, with Porter's Five Forces and RBV theories contributing. Both lead to the creation of SCA. For firms to tackle external forces, a potent internal strategy must be structured. HR is a vital component of firms; therefore, employees' decisions impact the firm's positioning among competitors. SHRM aligns with both strategic theories, but to a greater extent with the RBV as both prioritize internal parts that later influence external ones. Since internal and external forces are constantly interacting, the alignment between these two environments is critical to achieving the organization's objectives.

References:

Barney, J.B., Ketchen, D., & Wright, M. (2021). Resource-based theory and the value creation framework.

The following list comprises various works that are important in the realm of strategic business management and organizational structure. The first is "Business Policy" by Learned, Christensen, Andrews, and Guth, published in 1969. Another important text is "Organizational Strategy, Structure, and Process", edited by Miles and Snow in 1978. Most readers of this topic are surely familiar with "The Five Competitive Forces that Shape Strategy" from 2008, authored by Michael E. Porter. Other works by Porter that are critical to the topic include "Competitive Advantage" (1985) and "Competitive Strategy: Techniques for Analyzing Industries and Competitors" (1980). SWOT analysis is also an important tool for companies evaluating their business strategies- a support tool for this, created by Samejima, Shimizu, Akiyoshi, and Komoda, was published in 2006. Finally, in the HR realm, "Human Resources and the Resource Based View of the Firm" by Wright, Dunford, and Snell (2001) and "Theoretical Perspectives for Strategic Human Resource Management" by Wright and McMahan (1992) provide valuable insight.