Porter's Generic Strategies and Firm Performance

The competitive environment is an external impact factor that can be examined using Michael Porter's strategy. In this resource, locate Porter's three generic strategies impacting a firm's performance. Create a chart, and then choose one of the brands you have examined in the branding section. Apply these options to each brand and conclude which is the best match. To apply the concepts to real scenarios in brand management, complete the exercises in the boxes. Use your notebook to create 2-3 sentence answers to the challenge questions. You must refer back to key concepts in the resource and charts when included.

Hypotheses and research questions

Based on the abovementioned literature in this section, the hypotheses of the study are presented. By testing the hypotheses of this study, the gap in the existing strategic literature that deals with the relationship of linking Porter's generic strategies with firm performance will be filled. In order to provide the empirical evidence for the most important of Porter's generic strategy, which enables the firm to increase the competitive environment, the following hypotheses have to be tested:

H 1
Low-cost strategy has a positive relationship with firm performance that operates in a competitive environment.

H 2
Differentiation strategy has a positive relationship with firm performance that operates in a competitive environment.

H 3
Focus strategy has a positive relationship with firm performance that operates in a competitive environment.

By testing these hypotheses, the data will be taken for each Porter's strategy separately, but to clarify more, the aim of this paper was to create two research questions. These questions show that the study has accomplished the required rules to get the final results:

  1. Are the respondent firms operating in the competitive industry? This question stresses the environment where the firms were competing, as it is well known that Porter's generic strategies are suitable only for firms that operate in the competitive industry. If the respondent firms were not operating on a competitive industry, the results of this study would not be significant for strategic literature.
  2. Which of the three Porter's generic strategies has more impact on firm performance? Answering this question provides for strategists in business and academic circles the final result that is the core goal of this study. By testing the above hypotheses, the data provide whether Porter's generic strategies have a positive or negative relationship with firm performance. After results are taken from hypotheses test by the multivariate regression, the answer to this question is found out.