scholarly journals The Effects of Business Strategy and Inventory on the Relationship between Sales Manipulation and Future Profitability

2019 ◽  
Vol 11 (8) ◽  
pp. 2377
Author(s):  
Hwa Deuk Yi ◽  
Sambock Park ◽  
Jonghyun Kim
Keyword(s):  
Product Differentiation ◽  
Business Strategy ◽  
Positive Impact ◽  
Corporate Sustainability ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Real Activities Manipulation ◽  
The Relationship ◽  
Cost Leadership Strategy

Many researchers have found that real activities manipulation undermines future profitability, because it deviates from normal operating activities. We are interested in sales manipulation, which is one type of real activities manipulation relating to corporate sustainability. First, we empirically examine whether the effects of sales manipulation on future profitability differ according to the strategies of a firm. Next, we divide sales manipulation as a type of real activities manipulation and optimal sales manipulation and then examine how the two types of sales manipulation affect future profitability. Finally, we examine how the effects of optimal sales manipulation on future profitability differ according to the firm’s strategies. The empirical findings show that the association between sales manipulation and future profitability is more negative (−) for a product differentiation strategy than for a cost leadership strategy. Further, the sales manipulation performed by firms with a high proportion of the starting inventory and a decrease in the inventory during the current year has a positive (+) impact on future profitability. Our results contribute to the literature on business strategy by presenting evidence that core management activities are related to future financial performance, according to the business strategy. In addition, our research shows that sales manipulation can turn into an optimal operating activity, depending on the firm’s situation.

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 IS SMEs ABLE TO CONSTRUCT BUSINESS STRATEGY TO IMPROVE ITS PERFORMANCE USING ITS OWN ABILITY? (STUDY ON SMEs KARAWO HANDICRAFT IN CITY OF GORONTALO, INDONESIA)

2017 ◽  
Author(s):  
Ariawan ◽  
Made Sudarma ◽  
Djumahir ◽  
Ghozali Maskie
Keyword(s):  
Human Capital ◽  
Business Strategy ◽  
Capital Investment ◽  
Structural Equation ◽  
The Body ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Focus Strategy ◽  
Cost Leadership Strategy

Status: Preprint (belum di terbitkan pada Jurnal manapun)The objectives of this study were to analyze and investigate the human capital resource of SMEs to achieve the expected level of performance and to see if the quality of human capital had been appropriate enough to be able to apply certain business strategy. This study also intended to see if the cost leadership strategy, differentiation strategy, as well as appropriate focus strategy to improve the performance of SMEs. This study employed a survey design in which researcher conducted a survey to managers or owner of 68 SMEs of Karawo handicraft in Gorontalo city. This study also employed the structural equation or PLS approach using warpPLS application to analyze the data. The finding of this study showed that the ability of the human capital owned by the SMEs had not yet maximized in improving its performance. The role of the mediation business strategy (cost leadership strategy and differentiation strategy) have been appropriate and matched the ability of the human capital to improve the performance of SMEs. The result of this study enriches the body of knowledge related to the resource based theory and the development of strategic management of the human capital investment for the implementation of business strategy to achieve good performance and system. This study also offers practical benefit for managers or owners of SMEs, and government in developing the business. The data were collected using cross sectional strategy by analyzing the opinions and perception of the managers or owners of the business. Future researchers are encouraged to expand this by involving bigger number of sample and broader scope of study. Future researcher may also develop this study using mix method research design to verify and take action on the interesting result of this study related to the implementation of focus strategy based on the ability of the human capital which has been confirmed to have the highest coefficient path, yet did not have significant effect to the improvement of the performance without the involvement of mediational variables such as the combination of focus-cost strategy or focus-differentiation strategy.

Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?

2014 ◽  
Vol 52 (5) ◽  
pp. 872-896 ◽  
Author(s):  
Rajiv D. Banker ◽  
Raj Mashruwala ◽  
Arindam Tripathy
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Positive Impact ◽  
Strategic Positioning ◽  
Content Type ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Trade Offs ◽  
Cost Leadership Strategy

Purpose – The purpose of this paper is to investigate the relationship between the strategic positioning of firms and the sustainability of firm performance. The paper argues that pursuing a differentiation strategy leads to more sustainable financial performance compared to following a cost leadership strategy. However, a differentiation strategy may also be associated with greater risk. Design/methodology/approach – To investigate the research questions, the authors utilize publicly available archival data consisting of 12,849 firm-year observations for the period 1989-2003. In the first stage of the analysis, factor analysis is used to determine firms’ strategic positioning. The resulting factor scores are subsequently used in regression analysis to investigate the sustainability of performance based on the strategic positioning of firms. Findings – The results indicate that both cost leadership and differentiation strategies have a positive impact on contemporaneous performance. However, the differentiation strategy allows a firm to sustain its current performance in the future to a greater extent than a cost leadership strategy. The differentiation strategy, though, is also associated with greater systematic risk and more unstable performance. Originality/value – Sustainability of performance refers to how much a firm's current profitability can be sustained in future periods. The main contribution of this study is the comparison of generic strategies based on the sustainability of firm performance. This aspect of the strategy-performance link has not been considered in prior work. Another contribution of the study is that it considers multiple dimensions of firm performance in order to evaluate the trade-offs involved with pursuing different strategies. In particular, the authors contribute to the literature by documenting that while differentiation leads to more sustainable earnings, it also leads to riskier and more unstable earnings.

scholarly journals Open innovation in the context of organisational strategy

2019 ◽  
Vol 11 (3) ◽  
pp. 86-95 ◽  
Author(s):  
Katarzyna Walecka-Jankowska ◽  
Joanna Zimmer
Keyword(s):  
Open Innovation ◽  
Corporate Strategy ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
The Cost ◽  
Operational Range ◽  
The Relationship ◽  
Cost Leadership Strategy ◽  
Innovation Processes

Abstract The paper aims to analyse the relationship between different types of corporate strategy and open innovation in the contexts of the age, size and the operational range of enterprises. The research targeted companies in Poland that were surveyed from January to April, using traditional and electronic forms of a questionnaire. The questionnaire was developed based on a 5-point Likert scale. The level of “openness” of innovation processes in an enterprise was determined according to a 3-point scale, namely, a closed innovator, a hybrid or semi-open innovator, and an open innovator. The strategy implemented by an enterprise was classed into main three types used to achieve a competitive advantage, i.e. cost leadership, differentiation or diversification. There is a strong correlation between open innovations, the cost leadership strategy and the differentiation strategy (negative correlation). The relationship between the age, size and the range of a company and the opening of innovative processes was also observed. The research aims to fill the knowledge gap existing in the literature regarding the links between a particular type of strategy and the opening of innovation processes.

scholarly journals An Empirical Study of Strategic Positioning and Production Efficiency

2015 ◽  
Vol 2015 ◽  
pp. 1-11 ◽  
Author(s):  
Hsihui Chang ◽  
Guy D. Fernando ◽  
Arindam Tripathy
Keyword(s):  
Production Efficiency ◽  
Competitive Advantages ◽  
Strategic Positioning ◽  
Cost Leadership ◽  
Listed Firms ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Brand Development ◽  
The Relationship ◽  
Cost Leadership Strategy

We examine the relationship between strategic positioning of firms and their production efficiency. Firms with competitive advantages based on either cost leadership or differentiation are able to outperform their competitors. Firms pursuing a cost leadership strategy seek to be the lowest cost producer, primarily by minimizing inputs for a given level of output, thus concentrating on increasing the efficiency of their production processes. On the other hand, firms that pursue a differentiation strategy rely on innovation, brand development, marketing, and so forth to achieve competitive advantages; therefore such firms do not place high emphasis on production efficiency. Thus the importance of production efficiency for the success of a firm depends on the strategic positioning of the firm. We apply DEA to an archival data for a large sample of publicly listed firms to investigate the importance of production efficiency for firms based on their strategic positioning. We provide empirical evidence that firms pursuing a cost leadership strategy attribute higher importance to production efficiency, while firms pursuing differentiation strategy attribute less importance to production efficiency.

Aligning supply chains with product variety

2019 ◽  
Vol 35 (4) ◽  
pp. 13-15
Keyword(s):  
Supply Chains ◽  
Product Variety ◽  
Content Type ◽  
Cost Leadership ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Pertinent Information ◽  
Alignment Model ◽  
The Relationship ◽  
Cost Leadership Strategy

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper explores the relationship between product variety, the performance of a business, and their supply chains and proposes a strategic alignment model to separate a low product variety cost leadership strategy from a high product variety differentiation strategy. By clarifying the strategic aims of their supply chains, businesses can portray their market offer in a consistent and operationally sustainable way. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

scholarly journals International Diversification, Product Strategy, And Firm Value:Evidence From Korea

2014 ◽  
Vol 13 (6) ◽  
pp. 1551
Author(s):  
Donseung Choi ◽  
Eunho Cho
Keyword(s):  
Firm Value ◽  
International Diversification ◽  
Sensitivity Analyses ◽  
Product Strategy ◽  
Cost Leadership ◽  
Strategic Fit ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
The Relationship ◽  
Cost Leadership Strategy

Existing studies showed inconsistent results for the relationship between international diversification (ID) and firm value. Thus, we primarily examine whether each MNCs product strategy moderates the relationship between ID and firm value. The results show that MNCs product strategy moderates the relationship between ID and firm value as measured by Tobins Q. Specifically, a positive relationship exists between ID and firm value in the firm group pursuing a cost leadership strategy, whereas a negative relationship exists between the same variables in the firm group pursuing a differentiation strategy, suggesting that the strategic fit between product strategy and ID is likely an important factor in the relationship between ID and firm value. Our results remain robust after conducting sensitivity analyses using the price-to-book value (PBR) ratio and individual components of composite ID measures. Accordingly, we conclude that a cost leadership strategy of Korean MNCs is more likely to have a competitive advantage in a foreign market than a differentiation strategy. This study primarily contributes to the literature on ID in that it provides the first evidence on the relationship between ID and firm value that takes into account an MNCs product strategy using the strategic fit perspective.

scholarly journals Generic Strategy and Bankruptcy Risk of Nepalese Enterprises

2018 ◽  
Vol 3 ◽  
pp. 25-41
Author(s):  
Dhundi Raj Bhattarai
Keyword(s):  
Firm Strategy ◽  
Z Score ◽  
Bankruptcy Risk ◽  
Cost Leadership ◽  
Book Value ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Administrative Expenses ◽  
The Relationship ◽  
Cost Leadership Strategy

The purpose of this paper is to examine the relationship between firm strategy and bankruptcy risk. The research design consists of descriptive and causal-comparative research designs in order to deal with the various issues raised in this study. In addition, this paper uses the Altman-Z score which combines several measures of performance and risk to come up with a score that denotes the bankruptcy risk inherent in a firm. Secondary data has been used collected from annual audit report of concerned organization of manufacturing and hotel industries from fiscal year 2000/01 to 2014/15. Factor analysis, descriptive statistics, correlation analysis, and regression analysis are different statistical tools that have been used for this study. Further, cost leadership and differentiation strategies has been constructed from selling, general, and administrative expenses scaled by net sales; net sales scaled by cost of goods sold; net sales scaled by net book value of plant and equipment; and net sales scaled by net book value of plant and equipment variables through factor analysis. By regressing Altman-Z score against relevant control variables and proxies for differentiation and cost leadership strategies, this study has evaluated the relationship between bankruptcy risk and firm strategy. The analysis shows that the enterprises adopting higher selling, general and administrative expenses in association with higher gross profit margin have been pursuing differentiation strategy whereas higher investment on property, plant and equipment along with their existing value indicates that they have been following cost leadership strategy. Value of Nepalese enterprises pursuing cost leadership strategy has a positive effect on reducing bankruptcy risk while pursuing differentiation strategy has a negative effect on reducing bankruptcy risk.

scholarly journals PENGARUH BUSINESS STRATEGY DAN BUSINESS RISK TERHADAP GOING CONCERN PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI TAHUN 2010-2014

2016 ◽  
Vol 3 (2) ◽  
pp. 177
Author(s):  
Sefira Yovalia ◽  
Wibowo Wibowo
Keyword(s):  
Business Strategy ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Manufacturing Companies ◽  
Business Risk ◽  
Cost Leadership ◽  
Going Concern ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Cost Leadership Strategy

<span class="fontstyle0">The purpose of this study was to determine the effect of business strategy and business risk of the company's going concern in manufacturing companies in BEI 2010-2014. Going Concern is defined as the continuity of an entities. Business Strategy is divided into two, cost leadership strategy and differentiation strategy. The research data obtained from the annual financial statements and the company on the Stock Exchange website Indonsia. The samples used were 144 companies manufacturing sector listed on the Stock Exchange in 2010-2014. The sampling technique used was purposive sampling. This study uses logistic regression analysis. The analytical tools used to test the hypothesis is SPSS 22. The results showed that the cost leadership strategy, differentiation strategy and business risk does not affect the going concern. However, cost leadership strategy,<br />differentiation strategy and business risk simultanelously can affect the going concern.</span>

The Impact of Strategic Relevance and Assurance of Sustainability Indicators on Investors' Decisions

2014 ◽  
Vol 34 (1) ◽  
pp. 131-162 ◽  
Author(s):  
Mandy M. Cheng ◽  
Wendy J. Green ◽  
John Chi Wa Ko
Keyword(s):  
Strategic Alignment ◽  
Investment Decisions ◽  
Company Strategy ◽  
Cost Leadership ◽  
Nonprofessional Investors ◽  
Differentiation Strategy ◽  
Leadership Strategy ◽  
Strategy Versus ◽  
The Impact ◽  
Cost Leadership Strategy

SUMMARY In this study, we report two 2 × 2 between-subjects experiments that investigate the effect of strategic relevance of reported sustainability information and its assurance on nonprofessional investors' investment decisions. The first experiment manipulates strategic relevance of reported environmental, social, and governance (ESG) indicators between “high” and “low” by varying the company strategy (sustainability-based differentiation strategy versus cost leadership strategy unrelated to sustainability). The second experiment manipulates the strategic alignment of the ESG indicators (holding strategy constant). We also manipulate the presence (absence) of assurance in both experiments. Results from both experiments document that investors perceive ESG indicators to be more important, and are more willing to invest in the company if ESG indicators have higher strategic relevance. Experiment one also provides evidence that assurance increases investors' willingness to invest to a greater extent when ESG indicators have high relevance to the company strategy. Our findings suggest that the assurance of ESG indicators has a beneficial signaling role in communicating the importance of this reported information to investors.

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