Amir Zakaria Consulting Group | Business Strategy
Business Strategy The strategic management literature provides several typologies of business strategy orientations to describe how a firm could develop sustainable competitive advantages in an industry relative to its competitors (e.g., Miles & Snow, 1978; Miller & Friesen, 1986; Mintzberg, 1988; Porter, 1980, 1985). The common inclination in all of these business strategy typologies is a focus on the relative emphasis a business places on the efficiency or effectiveness of a firm’s market position. amir zakaria, nazli monajemzadeh, اميرذكريا, امير ذكريا, نازلی منجم‌زاده
Business Strategy, strategic management, competitive advantages, efficiency, generic competitive strategies, amir zakaria, nazli monajemzadeh, اميرذكريا, امير ذكريا, نازلی منجم‌زاده
16372
post-template-default,single,single-post,postid-16372,single-format-standard,ajax_fade,page_not_loaded,,qode-child-theme-ver-1.0.0,qode-theme-ver-10.0,wpb-js-composer js-comp-ver-4.12,vc_responsive

Business Strategy

Business Strategy

The strategic management literature provides several typologies of business strategy orientations to describe how a firm could develop sustainable competitive advantages in an industry relative to its competitors (e.g., Miles & Snow, 1978; Miller & Friesen, 1986; Mintzberg, 1988; Porter, 1980, 1985). The common inclination in all of these business strategy typologies is a focus on the relative emphasis a business places on the efficiency or effectiveness of a firm’s market position. For instance, Miles and Snow’s (1978) defender strategy and Porter’s (1980) overall cost leadership strategy describe a firm’s relative focus on efficiency to become the lowest cost producer in the industry. Conversely, the prospector strategy (Miles & Snow, 1978) and differentiation strategy (Porter, 1980) describe a firm’s relative focus on the search for market opportunities to create and offer unique products and services to customers. Porter’s (1980, 1985) generic competitive strategy typology to depict the business strategy orientations of the FBs and NFBs because of its influence and dominance in strategy research (see CampbellHunt, 2000). Porter (1980, 1985) argues that the generic competitive strategies of cost leadership, differentiation, and focus (cost leadership or differentiation in a narrow market segment) represent different strategic orientations available to a firm to compete and achieve sustainable competitive advantages in its industry. Cost leadership and differentiation, therefore, represent two fundamentally different means of achieving sustainable competitive advantages and enhanced performance. A firm that pursues a cost leadership strategy could achieve a sustainable competitive advantage by becoming the lowest cost producer or service provider in its industry. A firm implementing a cost leadership strategy emphasises ‘‘aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas like R&D, service, sales force, advertising, and so on’’ (Porter, 1980, p. 35). A firm implementing the differentiation strategy, however, focuses on developing products or services that are unique or that customers perceive to be unique to create a competitive advantage. A firm generates these perceptions through advertising programs, marketing techniques and methods, offering products with greater reliability, durability, features and aesthetics, and superior performance than their competitors (Miller, 1988; Mintzberg, 1988; Porter, 1985). The differentiation strategy is typically bolstered by substantial investments in research and development, marketing, and product and service innovation. Empirically, most previous studies of the competitive strategy– performance relationship using Porter’s (1980) typology have supported the existence of a relationship between competitive strategy (cost leadership and differentiation) and performance in both transition and advanced economies (e.g., Acquaah, Adjei, & Mensa-Bonsu, 2008; Aulakh, Kotabe, & Teegen, 2000; Beal & Yasai-Ardekani, 2000; Campbell-Hunt, 2000; Dess & Davis, 1984; Kim, Nam, & Stimpert, 2004; Miller & Dess, 1993; Spanos, Zaralis, & Lioukas, 2004).

Reference

  • Acquaah, M., Adjei, M., & Mensa-Bonsu, I. F. (2008). Competitive strategy, environmental characteristics and performance in African emerging economies: Lessons from firms in Ghana. Journal of African Business, 9(1), 93–120.
  • Aulakh, P. S., Kotabe, M., & Teegen, H. (2000). Export strategies and performance of firms from emerging economies: Evidence from Brazil, Chile and Mexico. Academy of Management Journal, 43, 342–361.
  • Beal, R. M., & Yasai-Ardekani, M. (2000). Performance implications of aligning CEO functional experiences with competitive strategies. Journal of Management, 26, 733–762.
  • Campbell-Hunt, C. (2000). What have we learned about generic competitive strategy? A meta-analysis. Strategic Management Journal, 21, 127–154.
  • Dess, G. G., & Davis, P. S. (1984). Porter’s (1980) generic strategies as determinants of strategic group memberships and organizational performance. Academy of Management Journal, 27, 467–488.
  • Miles, R. E., & Snow, C. C. (1978). Organizational strategy, structure, and process. New York: McGraw-Hill.
  • Miller, D., & Friesen, P. H. (1986). Porter’s (1980) generic strategies and performance: An empirical examination with American data. Part II: Performance implications. Organization Studies, 7, 255–261.
  • Mintzberg, H. (1988). Generic strategies: Towards a comprehensive framework. In P. Shrivastava (Ed.), Advances in strategic management (pp. 1–67). Greenwich, CT: JAI Press.
  • Campbell-Hunt, C. (2000). What have we learned about generic competitive strategy? A meta-analysis. Strategic Management Journal, 21, 127–154.
  • Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.
  • Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York, NY: Free Press.
  • Miller, D. (1988). Relating Porter’s business strategies to environment and structure: Analysis and performance implications. Academy of Management Journal, 31,280–308.

Back To Blog

 

No Comments

Post A Comment