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The Fit-Concept in Strategic Management – an Inappropriate Idea for Companies in the 21st Century?

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Join now to read essay The Fit-Concept in Strategic Management – an Inappropriate Idea for Companies in the 21st Century?

Executive Summary

The aim of this paper is confronted with the question of how the fit concept in strategic

management is an appropriate idea or not for companies in the 21st century. After a short

introduction about strategy which is defined by Michael E. Porter (1980), we will describe

some basic concepts. Cited by Porter (1985, 1996) and Thomson/Strickland (1998), we

find out that operational effectiveness is a helpful tool, but not enough for gaining

competitive advantage. Strategies must be developed and it must match the organization

in order to become effective. This is a task which is often fulfilled by the management.

Then we will go deeper into the concept of fit. Some additional discussions of different

perspectives follow and a briefly overview about the research of the six types of fit can be

found. After clarifying the meaning of fit, we come to the McKinsey 7-S framework,

because this is an important management tool which is still up-to-date and relevant to our

assignment. Inspired by the authors we analyze the Japanese’ Keiretsu Concept. We find

out that they are effective and successful on the one hand, but on the other hand,

symptom appears where the changing environment also influences their business because

of globalization. Therefore the concept of fit is important for them too. After this section

we compare the business situation between the 20th and the 21st century in the sense of fit.

Information and capital movements as well as a spread portfolio for investors are

addressed in the last chapter. At the end this paper closed with the result that the fit

concept is necessary in the 21st century, because the competition on operational

effectiveness alone can only lead to a situation, where the only differentiating factor is

prize and this leads to diminishing profits. Michael E. Porter’s view of the fit concept

seems to be a good option for gaining the competitive advantage until nowadays.

1 Introduction

The world economy is moving swiftly from the industrial age to the knowledge/information/systems age. The traditional hierarchical structures built around functional specialization have to undergo radical surgery to accommodate greater emphasis on building competitively valuable cross functional capabilities; the best companies have to be able to act and react quickly and to create, package, and rapidly move information to the point of need- in short, companies have to reinvent their organizational arrangements. This challenge imposed on companies and the required changes, which come with this problem, have to be dealt with to retain or gain sustainable competitive advantage. If we agree with Porter’s definition that a strategy is performing different activities from rivals or performing similar activities in different ways, then we can safely assume that strategy is as important for companies in the 21st century as it was for companies in the late 20th century. This would mean that with the change of the industry from standardized

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