Outside-in or Inside-out

Introduction: Organizations and the environments that they operate in are both constantly changing. When managing an organization, decision makers must constantly keep in mind the relationship between the two in order to either generate or maintain competitive advantage. There exist two perspectives to business level strategy; either an organization adapts to the environment, or the environment is adapted to the organization.
Thesis: The outside-in perspective places an emphasis on fitting the organization to the environment. The firm watches for changes in the environment and for threats or opportunities to emerge. After establishing a presence in the market, it watches for shifts in the market or inroads from competitors and adapts to each situation as necessary. Due to the flexibility exhibited by firms following this perspective, it is well suited for gaining the first mover advantage.
Antithesis: On the other hand, the inside-out perspective stresses the importance of a firm’s competencies. It attempts to build up its competencies over time, which creates opportunities that the firm can exploit. This perspective attempts to generate competitive advantage through heavy investment into developing intangible strengths that are difficult to replicate. In addition, firms can exploit this advantage by continually improving its competencies and staying ahead of competitors attempting to emulate them.
Analysis: Fashion is an industry that is characterized by a market with rapidly changing desires. As such, it is of utmost importance for firms in this industry to be able to react quickly to shifts in consumer tastes. Interestingly, Inditex managed to adapt to global markets using the inside-out perspective despite adaptation being part of the outside-in perspective’s domain. Inditex’s strength was that its production and design facilities were heavily centralized, creating an incredibly short supply chain. Due to this, they could react to fashion trends extremely