Generic Strategy

Topics: Strategic management, Strategic planning, Porter generic strategies Pages: 40 (11558 words) Published: April 2, 2013
British Journal of Management, Vol. 21, 1027–1043 (2010) DOI: 10.1111/j.1467-8551.2008.00626.x

A Study of the Role Played by Manufacturing Strategic Objectives and Capabilities in Understanding the Relationship between Porter’s Generic Strategies and Business Performance ´ ´ ´ Javier Gonzalez-Benito and Isabel Suarez-Gonzalez

´ Dpto. Administracion y Economı´ a de la Empresa, Universidad de Salamanca, Campus Miguel de Unamuno, Edificio FES, 37007 Salamanca, Spain Corresponding author email: An appropriate alignment between business strategy, manufacturing strategic objectives and manufacturing capabilities reportedly influences business performance positively. However, few papers empirically analyse this proposition for the case of Porter’s generic strategies of cost leadership and differentiation, and none jointly considers all four elements. This paper integrates strategies, capabilities and performance in a single model and proposes that both manufacturing competitive priorities and capabilities, articulated in terms of cost and flexibility, are essential for explaining the link between generic business strategies and business commercial and financial performance. Within this analytic framework, we test whether companies that emphasize one business strategy rather than another achieve a better alignment and superior performance. The analyses conducted with a sample of 148 Spanish manufacturers provide general support for these propositions and contribute to a deeper understanding of the role played by functional strategies in understanding the outcomes of business strategy.

The relationship between business strategy and business performance represents a central question in strategic management (Porter, 1980) and has given rise to copious research (CampbellHunt, 2000). However, little empirical research has focused on how business strategy should be The authors gratefully acknowledge the financial support of the Spanish Ministry of Science and Technology (Research Projects SEC 2001-1756 and SEJ 2004-03888/ ECON) and the FEDER funds. The authors also ´ acknowledge the efforts of Fundacion de Cajas de Ahorro (FUNCAS) to stimulate Spanish research; this paper is based on working paper number 299, prepared by the authors for the Working Paper Collection of this non-profit organization.

deployed and aligned with functional strategies to achieve better performance. This paper contributes to this line of study by identifying some manufacturing strategies and manufacturing capabilities that allow organizations to establish a link between two specific generic business strategies and business performance. The findings may also clarify and untangle some classic questions in the strategic management field about the compatibility between generic strategies. One of the most commonly used typologies of competitive strategy at the business level was proposed by Porter (1980, 1985), who classifies generic strategies according to two dimensions: the source of competitive advantage and the scope of the target market. The first dimension, on which we focus this research, distinguishes

r 2009 The Author(s) British Journal of Management r 2009 British Academy of Management. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK, and 350 Main Street, Malden, MA 02148, USA.

1028 between competitive advantage based on cost leadership and that based on differentiation. Although this scheme can be considered too simple to represent all possible strategic behaviours, it captures the essence of more complex business strategies and plays a significant role in discriminating among strategic configurations (Campbell-Hunt, 2000; Hambrick, 1983; Kotha and Orne, 1989; Miller, A., and Dess, 1993). Thus, it has come to be considered the dominant paradigm of business strategy (Hill, 1988). Porter’s framework also includes a theoretical proposition regarding the effect of business strategy on business...
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