Competing both ways: How combining Porter's low‐cost and focus strategies hurts firm performance

2021 ◽  
Author(s):  
Chi‐Hyon Lee ◽  
Manuela N. Hoehn‐Weiss ◽  
Samina Karim
Keyword(s):  
Firm Performance ◽  
Low Cost ◽  
Focus Strategies

Impact of Porter’s Generic Strategy on Firm Performance with reference to Nepalese Retail Banking Sector

2021 ◽  
Vol 4 (i) ◽  
Keyword(s):  
Regression Analysis ◽  
Firm Performance ◽  
Low Cost ◽  
Differentiation Strategy ◽  
Cost Strategy ◽  
Generic Strategy ◽  
Low Cost Strategy ◽  
Focus Strategy ◽  
Generic Strategies ◽  
Focus Strategies

Porter’s generic strategies are the proven and pervasive strategic options in achieving competitiveness and better firm performance. This paper aims in examining the effect of Porter’s generic strategies (low-cost, differentiation, and focus) on firm performance in the context of Nepalese retail banks, a more competitive service industry. This study applies casual comparative research design and the data have been collected through administering questionnaire survey from 75 senior bank managers of 18 Nepalese commercial banks who being engaged in strategic affairs. The econometric model has been constructed to measure the expected effect of the strategies on firm performance. The descriptive analysis, Pearson’s correlation analysis, and multivariate regression analysis were conducted. The empirical results of correlation analysis and multiple regression analysis produced consistent results indicating positive associations between generic strategies and firm performance. The empirical results from regression analysis declared higher positive and significant impact of low-cost on firm performance. Similarly, positive effect of differentiation strategy and focus strategy on firm performance was reported. The findings suggested that pursuing low cost strategy provides more financial returns with comparison to differentiation and focus strategies. The finding also suggested for combination of low-cost and differentiation (and focus) strategies could provide better competitiveness and firm performance. Keywords: Generic Strategy, Low-cost strategy, Differentiation strategy, Focus strategy, Firm performance

scholarly journals The role of marketing in today's enterprises

2014 ◽  
Vol 25 (2) ◽  
pp. 171-194 ◽  
Author(s):  
Jochen Wirtz ◽  
Sven Tuzovic ◽  
Volker G. Kuppelwieser
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Design Methodology ◽  
Low Cost ◽  
Structural Models ◽  
The West ◽  
Marketing Department ◽  
Content Type ◽  
The Usa

Purpose – The purpose of this paper is to explore the role of marketing in today's enterprises and examines the antecedents of the marketing department's influence and its relationship with market orientation and firm performance. Design/methodology/approach – Data were collected from the West (i.e. the USA and Europe) and the East (i.e. Asia). Partial least squares (PLS) was used to estimate structural models. Findings – The findings support the idea that a strong and influential marketing department contributes positively to firm performance. This finding holds for Western and Asian, and for small/medium and large firms alike. Second, the marketing department's influence in a firm depends more on its responsibilities and resources, and less on internal contingency factors (i.e. a firm's competitive strategy or institutional attributes). Third, a marketing department's influence in the West affects firm performance both directly and indirectly (via market orientation). In contrast, this relationship is fully mediated among Eastern firms. Fourth, low-cost strategies enhance the influence of a firm's marketing department in the East, but not in the West. Research limitations/implications – The paper assumes explicitly that a marketing department's influence is an antecedent of its market orientation. While the paper finds support for this link, the paper did not test for dual causality between the constructs. Originality/value – Countering the frequent claim in anecdotal and journalistic work that the role of the marketing department diminishes, the findings show that across different geographic regions and firm sizes, strong marketing departments improve firm performance (especially in the marketing-savvy West), and that they should continue to play an important role in firms.

scholarly journals Market Orientation And Performance: Does Organizational Strategy Matter?

2011 ◽  
Vol 18 (1) ◽  
Author(s):  
Kamalesh Kumar ◽  
Ram Subramanian ◽  
Karen Strandholm
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Customer Orientation ◽  
Positive Impact ◽  
Low Cost ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Competitor Orientation ◽  
Cost Leadership Strategy

Data from a survey of 159 hospitals was used to test the relationship between market orientation and firm performance for low cost and differentiation strategies. Hospitals pursuing a differentiation strategy had stronger market orientation than those pursuing a cost leadership strategy. Market orientation had a more positive impact on the performance of organizations pursuing a differentiation strategy than on those pursuing a cost leadership strategy. In the cost leader group, the inter-functional coordination component of market orientation significantly affected firm performance, while in the differentiator group the customer orientation and competitor orientation components of market orientation had significant impact on performance. The implications of these findings for managers also are discussed.

scholarly journals Generic Strategies and Firm Performance: An Investigation of Informal Sector Micro-Enterprises in Kenya

2017 ◽  
Vol 12 (3) ◽  
pp. 148 ◽  
Author(s):  
Esther Mungai ◽  
Madara Ogot
Keyword(s):  
Developing Countries ◽  
Firm Performance ◽  
Informal Sector ◽  
Business Strategy ◽  
Business Performance ◽  
Low Cost ◽  
Business Strategies ◽  
Strategic Groups ◽  
Generic Strategies ◽  
Micro Enterprises

Micro-enterprises (MEs) have been shown to collectively be the largest employer in most developing countries thus playing a significant role in the countries economies. Using informal sector micro-enterprise furniture makers (wood and metal) in Nairobi, Kenya and based on Porter's competitive business strategies typology, this study sought to determine if the strategies employed by the informal sector MEs fit within the typology framework, and if membership within the strategic groups in the typology are a predictor of better business business performance. From the study, although membership within the two focus strategic groups of differentiation and low cost was confirmed, unlike studies done with medium and large enterprises, membership was not found to be a predictor of better business performance. Porter's typology may therefore not adequately capture the competitive business activities relevant to and directly by MEs, presenting an opportunity for research into the development of competitive business strategy typologies directly derived from their activities and therefore applicable to them.

Entrepreneurship and Competitive Strategy

2012 ◽  
pp. 351-376 ◽  
Author(s):  
Shepherd Dhilwayo
Keyword(s):  
Competitive Strategy ◽  
Low Cost ◽  
Competitive Strategies ◽  
Focus Strategies

The intertwined relationship between competitive strategy (business level strategy) and entrepreneurship is critical in making strategy more potent and organisations more competitive. Different competitive strategies, namely Miles and Snow’s prospector, defender, analyser, and reactor strategies and Porter’s generic, low cost, differentiation, and focus strategies are analysed, clearly showing how these integrate with entrepreneurship. An integrated entrepreneurial competitive strategy is critical to the success of today’s organisation.

scholarly journals Analisis Strategi Generik dalam Industri Perbankan Di Indonesia

2018 ◽  
Vol 1 (2) ◽  
pp. 32-38
Author(s):  
Akhmad Muhammadin ◽  
Rashila Ramli ◽  
Nuramal Nuramal
Keyword(s):  
Service Sector ◽  
Banking Industry ◽  
Low Cost ◽  
Comprehensive Approach ◽  
Strategy Analysis ◽  
Generic Strategy ◽  
Focus Strategies

The purpose of this study is, to analyze conceptually and generic strategy theory whichincludes differentiation strategies, low cost strategies and focus strategies in the banking industry inIndonesia. The influence of structure in generic strategy analysis on the banking industry in Indonesiais very varied. This analysis requires a comprehensive approach and requires an integrated approach.Generic strategy analysis provides an overview problems faced in measuring and evaluating theinternal conditions faced by the company, especially service sector companies namely the bankingindustry with regard to products, costs and focus on running a business. This research can alsodetermine the extent of the bank's actions to win the competition, and provide appropriate conditionsto achieve the company's goals.

scholarly journals Innovative low-cost strategy and firm performance of restaurants

2019 ◽  
Vol 13 (3) ◽  
pp. 266-281 ◽  
Author(s):  
Collins Kankam-Kwarteng ◽  
Barbara Osman ◽  
Jacob Donkor
Keyword(s):  
Firm Performance ◽  
High Performance ◽  
Low Cost ◽  
Competitive Intensity ◽  
Content Type ◽  
Interaction Terms ◽  
Cost Strategy ◽  
Low Cost Strategy ◽  
The Relationship

Purpose The purpose of this paper is to improve the appreciation of the moderating role of competitive intensity on the relationship between low-cost strategy and firm performance of restaurants. Design/methodology/approach The study uses empirical data collected from 118 restaurants operators, Ghana. The effects of relationships and the interaction of low-cost strategy and competitive intensity were tested using regression analysis. Findings The findings indicate the existence of a significant positive relationship between low-cost strategy and firm performance. The effect of competitive strategy on firm performance was found to be partially significant. The findings revealed that competitive intensity does moderate the relationship between low-cost strategy and firm performance of restaurants. Practical implications Implications of the findings for restaurant operators suggest that effective application of low-cost strategy and monitoring and managing competitive intensity results in high performance. Originality/value This study contributes to the existing literature on low-cost strategy, competitive intensity and firm performance. More specifically, the interaction terms of low-cost strategy and competitive intensity have been explored in this study and can be used for further investigations.

Entrepreneurial orientation and firm performance in Italian firms

2020 ◽  
Vol 26 (4) ◽  
pp. 629-646 ◽  
Author(s):  
Jeremy Galbreath ◽  
Lorenzo Lucianetti ◽  
Ben Thomas ◽  
Daniel Tisch
Keyword(s):  
Firm Performance ◽  
Firm Size ◽  
Entrepreneurial Orientation ◽  
Competitive Strategy ◽  
Low Cost ◽  
Secondary Data ◽  
Content Type ◽  
For Profit ◽  
Contingency Perspective ◽  
The Relationship

PurposeConsidering that context is important and relying on a contingency perspective, the purpose of the study is to analyze the relationship between an entrepreneurial orientation (EO) and firm performance in one of the world's oldest economies: Italy. The contingency perspective relies on competitive strategy as a moderating variable.Design/methodology/approachUsing a mix of primary and secondary data sources, relationships are explored in a sample of 229 Italian for-profit firms. Moderated regression analysis is used for the sample and additional tests are conducted by firm size groupings.FindingsThe analysis suggests that an EO is positively associated with firm performance in the sample firms. Further, competitive strategy acts as a moderating influence: a low-cost strategy negatively influences the relationship, while a differentiation strategy positively influences the relationship. The firm size groupings do not appear to affect the results.Research limitations/implicationsThe study examines only for-profit firms in a single country, Italy; therefore, generalizability is limited. The results must be interpreted in light of these limitations.Originality/valueThis study contributes to the entrepreneurship literature by considering a relatively new international context in the EO–firm performance relationship. Further, a new contingency perspective is advanced by considering competitive strategy. In doing so, this study extends an understanding of the conditions under which an EO might be associated with firm performance.

Strategic CSR for airlines: does materiality matter?

2018 ◽  
Vol 30 (12) ◽  
pp. 3592-3608 ◽  
Author(s):  
Seoki Lee ◽  
Bora Kim ◽  
Sunny Ham
Keyword(s):  
Firm Performance ◽  
Airline Industry ◽  
Low Cost ◽  
Clustering Coefficient ◽  
Economic Conditions ◽  
Content Type ◽  
Strategic Csr ◽  
Corporate Social ◽  
The Relationship ◽  
Recessionary Periods

Purpose Considering the increasing significance of corporate social responsibility (CSR) in the corporate world and the mixed findings of the financial implication of CSR investment in the financial economics literature, the purpose of this study is to examine the relationship between (im)material CSR investment and firm performance and the moderating role of airline type and economic conditions based on the stakeholder theory and institutional pressure argument. Design/methodology/approach This study uses a two-way random-effects model by firm and year along with using clustering coefficient estimation by firm to control for the possibility of inflated standard errors because of autocorrelation across years within a given firm. Findings This study finds that both material and immaterial CSR initiatives do not directly influence firm performance, but airline type and economic conditions do moderate the relationship. In specific, the study found that airlines’ investments in material CSR initiatives show an indifferent effect on firm performance between low-cost and full-service carriers and also between non-recessionary and recessionary periods. On the other hand, investments in immaterial CSR initiatives present different impacts on firm performance between low-cost and full-service carriers and between non-recessionary and recessionary periods. In details, the effect is more negative for low-cost carriers and recessionary periods than full-service carriers and non-recessionary periods. Originality/value This is the first empirical investigation of materiality for the airline industry in relation to firm performance using the industry-specific Materiality Map developed by the Sustainability Accounting Standards Board. Further, this study incorporates two additional moderators (airline type and economic conditions) to enhance the understanding of the proposed relationships between (im)material CSR and firm performance.

scholarly journals Corporate Governance and Firm Performance of Listed Consumer Goods Companies in Nigeria

2021 ◽  
pp. 58-70
Author(s):  
Mayowa Ebenezer Ariyibi ◽  
Olusola Enitan Olowofela ◽  
Olaiya Kehinde Isaig
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Consumer Goods ◽  
Negative Impact ◽  
Low Cost ◽  
Cash Flows ◽  
Board Independence ◽  
Board Size ◽  
Income Statement ◽  
The Impact

We examine the impact of corporate governance on firm performance using the accounting measures based on the profitability status of the companies depending on cash flows and inflow from the income statement. In a sample of selected consumer goods companies, the study revealed that board size has positive significant effect on return on sales. Board size and board independence has positive significant effect on profit margin. It also revealed that board size and board independence negative significant effect on operating cash flow. Based on the findings, it is recommended that the organization should take cognizance of its board size since it influences the rate of turnover which is an intrinsic component of the overall performance of the organization. The organization should make sure the board size is regulated on a low-cost reduction basis so it does not induce a negative impact on the profitability status of the organization.

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