ABSTRACT
This chapter examines the final part of the ‘functional’ aspects of the organization – products and markets. The way in which an organization relates to its markets is one of the most important aspects of competitive strategy. The idea of a market as a place where buyers and sellers come together can apply to both inputs and outputs. Product markets are those in which an organization competes for sales, whereas resource markets are those in which an organization competes for its resource inputs. The way in which an organization's products relate to its markets is one of the most important aspects of competitive strategy, the aim of which is to gain a competitive advantage over competitors. An organization may have great technical and operational capabilities, but these capabilities only become a source of competitive advantage when such ‘distinctive capabilities’ are applied in the marketplace.
