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Business scope and competitive differentiation: a study of strategy consistency
Author(s) -
Pehrsson Anders
Publication year - 2006
Publication title -
strategic change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.527
H-Index - 16
eISSN - 1099-1697
pISSN - 1086-1718
DOI - 10.1002/jsc.773
Subject(s) - scope (computer science) , product differentiation , business , consistency (knowledge bases) , marketing , competitive advantage , industrial organization , sample (material) , flexibility (engineering) , economics , management , microeconomics , computer science , chemistry , chromatography , artificial intelligence , cournot competition , programming language
Obstacles to strategy implementation and change are often due to limited consistency between the choices that a firm has to make regarding business scope and differentiation. The purpose of this paper is to identify relationships between business scope and competitive differentiation in industrial firms. It reports on managerial perceptions within a sample of business units of Swedish manufacturing firms in Germany, the United Kingdom and the United States. The study found that standardized products offered to just a few market segments are associated with an emphasis on product differentiation but that this strategy causes negative performance effects. In contrast, penetration of many segments is associated with customer flexibility attributes, yielding positive results. The study contributes to our understanding of strategy consistency by establishing associations between business scope and competitive differentiation. Management advice is presented.Copyright © 2006 John Wiley & Sons, Ltd.