Literature support the issue Contribution of Industrial organization According to Michael E.

Porter, Industrial organization can gives the new research breakdown the difference for the contribution of industrial organization to grow rapidly. In other words, industrial organization can offer to the analysis of strategic choices by the firms within industries. Based on the journal, Michael E. Porter stated that industrial organization brought new methodological tradition. Which mean, a techniques, method and tools to solve problems of strategic management of a certain firms. While according to LCAG (Learned, Christensen, Andrews, and Guth) explain about strategy as how environment of a firm manage to compete and encompassing the key choice about product, goals, markets and manufacturing. In addition, LCAG explained that a successful firm may has to match its internal organization. Which mean in terms of resource, capabilities, core competence, and competitive advantages. LCAG comes out an idea of consistency test to stress out the need of a firm and examine its strategy to see whether it is related these element. Whereby, it was illustrated as below figure 1.

Company strength, weakness

Industry economic & technical opportunities, threats

Figure 1 The Four Key Element of Effective Strategy Formulation

Personal values of key implementers Broader societal expectations

According to [Bain,1968; Mason,1953], behavior or conduct of a firm is determined by the industry structure, whose joint conduct determined the collective performance of the firms in marketplace. Whereby, it offer sa useful contribution of strategy formulation in industry and also gives a systematic model to guide the nature of competition in an industry. Industry Conduct Performance Structure (strategy) Figure 2 The Traditional Bain/Mason Industrial Organization Paradigm

Literature not support the issue

From Michael E. Porter point of view, he argued that there is disadvantage of the traditional Brain/Mason industrial organization paradigm. One of the arguments are there is a translation problem owing to different frame of reference. Which means, the scale of their observation and the idea of their frame was different from the coordinate system He did not support is the Industrial Organization (IO)explanation industry competition and performance could either applied for private or social. In addition, he explained that the fundamental different of frame of reference meant by the IO theory had to be translated before it can be consistence with privately perspective and recognized to the policy practitioners.

Michael E porter also argue that there IO views the firms as the free-standing entity. The diversification of IO is largely different from the literature in the oligopolistic market on the competitive outcomes. Moreover, the need of the corporation is strongly affect the objective of unit as well as the resource that made available to it will influence the market outcome. He also explain by giving example of a firm manufacture a motor and it uses to manufacture another product such as hair dryer and cooling fans, it will partly determine the total sale of unrelated product. Therefore to handle such shared cost, firms must formulate strategy of the both individual business unit level and the whole group of related business unit.

IO had a static perspective is one of Michael E. Porter argue yet comes out a question that is still unanswered by Brian/Mason theory that is, what make structure what is was, and what did a person will do about the changes in strategic viewpoint.? He stated that rom the Brian/Mason viewpoint of an industry performance is result from the industry structure. Therefore it was stated the structure is stable. Eventually, policy practitioner was used to cope with the changes of the structure in industry.

Another argument from Michael E. Porter is the IO is too limited. IO theory are identified too few in a critical aspect of structure for example the distribution of a firm sizes and entry barrier. Unmentioned variable is crucial to strategy in individual industries. However policy practitioners are more interested in long list than generality of various items. For an example, the concept of entry barrier included with specific factors, and many of it are not explained in the usual industrial organization accounts.

Reference
Journal : Porter, M.E. The Contributions of Industrial Organization to Strategic Management Harvard university Graduate School of Business Administration, 1979

Mason, E.S. Price and production policies of large-scale enterprises. Americnn Economic Review, March 1939, 29, 61-74.

Scherer, F.M. Industrinl mnrket structure rlnd economir p~rformnnce. Chicago: Rand McNally, 1970.