Marco Cucculelli, Cristina Bettinelli and Angelo Renoldi
The purpose of this paper is to focus on how investments in research and development (R&D) and advertising affect the performance of small- and medium-sized enterprises (SMEs…
Abstract
Purpose
The purpose of this paper is to focus on how investments in research and development (R&D) and advertising affect the performance of small- and medium-sized enterprises (SMEs) during recessions.
Design/methodology/approach
Contingency theory is applied to a data set of 376 Italian clothing SMEs during the period 2000-2010 to test whether investment in R&D and advertising impacts financial performance differently when contingent factors (such as market share, financial leverage and business model change) are taken into account.
Findings
Empirical results confirm that market share and leverage moderate the effects of investments in R&D and advertising (i.e. intangibles) on performance, and also that changes in business models are an important contingent factor that explains performance. Specifically, the paper ascertains that a novelty-centered business model, together with investments in intangibles, positively affects performance during recessions.
Originality/value
This study offers an input to the debate on how SMEs develop and sustain their competitive advantage during the recession. It contributes to existent theory by showing whether and how contingencies, such as a firm's market share and leverage, moderate the relationship between performance and investments in R&D and advertising in SMEs. Second, it addresses the call for additional data “about the strategic effects of business models and how they influence the positioning of firms in their competitive environment” (Amit and Zott, 2008, p. 20) by introducing business model change/innovation as a new contingency factor and by empirically testing its effects on “objective measures of firm performance” (Bock et al., 2012, p. 301).
Details
Keywords
Corporate Strategy, Vertical integration, Diversification.
Abstract
Subject area
Corporate Strategy, Vertical integration, Diversification.
Study level/applicability
Graduate.
Case overview
The case discusses the evolution, decline and turnaround of Mahindra Powerol, a division inside the large Indian business group, Mahindra & Mahindra (M&M). The Powerol division had its genesis from the then Farm Equipment Sector, when they used the surplus capacity in the tractor manufacturing facilities to produce and sell power generators (Gensets). Powerol capitalized on the rapid growth of the Indian telecommunications sector and the need for power backup at remote locations for the mobile communication towers. Adopting a lean asset model, it transformed the industry ecosystem and grew rapidly. As the telecom opportunity saturated, Powerol performance declined, but quickly rebound as it diversified into other products. As Powerol continues its diversification journey, there are questions about how Powerol can leverage the lean asset model that was their source of competitive advantage in the Gensets market, into other businesses.
Expected learning outcomes
Introduce the fundamental logic of vertical integration. The case elucidates how and when a firm vertically integrates/outsources its operations.
Supplementary materials
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Details
Keywords
Competitive strategy.
Abstract
Subject area
Competitive strategy.
Study level/applicability
Post-Graduate (MBA/Doctoral) level courses.
Case overview
This paper aims to examine the evolution of Himalaya Drug Company (hereinafter referred to as Himalaya), an Ayurveda-based pharmaceutical-wellness company. Over the eight decades of its history, Himalaya has built a reputation for Ayurveda-based formulations that conform to allopathic standards and are accepted globally. In the recent years, Himalaya dramatically strengthened its competitive position of “scientific Ayurvedic products” through its entry into fast-moving consumer goods (or consumer-packaged goods), categories of wellness products as well as over-the-counter (non-prescription) drugs. This case describes the focused differentiation strategy of Himalaya and sets out the challenges it faced/would face in sustaining its focused differentiation strategy, as it enters into highly penetrated categories such as toothpastes and soaps (that were traditionally dominated by broad differentiators and broad cost leaders).
Expected learning outcomes
The outcomes are as follows: to exemplify the logic of focused differentiation, where a competitor commands a higher willingness to pay than its average competitors, by narrowing its target segments; to illustrate how the firm’s entire set of activities are tailored to meet the specific needs of a set of carefully chosen products, narrow customer segments, of defined geographic markets; to highlight how a combination of tradeoffs and fit helps protect the firm’s competitive position from its potential imitators; and to demonstrate the limits of a focused strategy, specifically relating to growth, and how a company such as Himalaya can overcome such limits.
Supplementary materials
Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 11: Strategy.
As most existing computer‐aided design systems do not provide partfeature information which is essential for process planning, automaticpart feature recognition systems serve as…
Abstract
As most existing computer‐aided design systems do not provide part feature information which is essential for process planning, automatic part feature recognition systems serve as an important link between Computer Aided Design (CAD) and Computer Aided Process Planning (CAPP). Attempts to provide a structural framework for understanding various issues related to part feature recognition. Reviews previous work in the field of part feature recognition and classifies known feature recognition systems for the sake of updating information and future research. Briefly introduces about 12 systems. Studies 31 systems and lists them in the Appendix based on 60 references. Comments on future research directions.
Details
Keywords
Somesh Kumar Sharma and R. Srinivasan
The purpose of this paper is to identify facts of effective positioning mechanism for Indian market and develop a model that integrates three essential aspects of international…
Abstract
Purpose
The purpose of this paper is to identify facts of effective positioning mechanism for Indian market and develop a model that integrates three essential aspects of international trade, which have not been addressed combined yet.
Design/methodology/approach
The article develops the information framework for Indian market positioning. The information mentioned in the framework is validated using statistical tools with R Software and refined using Principal Component Analysis and Factor Analysis. The outcome of analysis develops the model for effective positioning mechanism for Indian market.
Findings
The study explores three statistically significant steps for effective Indian market positioning, which are finally summarized into 18 influencing variables in contrast to 91 variables available in literature.
Research implications
The 18 variables explored in this study should be considered as initial set of information, only for Indian market positioning. It should not be taken as standard paradigm to be followed in all cases. Research needs to be made to valuate such implications.
Practical implications
The model developed in this paper will be useful to both mature and ambitious international executives, in identifying the variables that can be considered for strategy formulation at different stages of Indian market positioning process.
Originality/value
This article offers a model that addresses research on Indian market positioning. It attempts to establish a relationship among the three components of international business, which can bring potential benefits to the foreign players.
Details
Keywords
Purpose: The purpose of this study is to assess the main and interaction effects of activity-based costing (ABC), internal information systems integration (IISI), and external…
Abstract
Purpose: The purpose of this study is to assess the main and interaction effects of activity-based costing (ABC), internal information systems integration (IISI), and external information systems integration (EISI) on manufacturing plant operational performance, controlling for plant characteristics.
Methodology/approach: The study uses survey data from a cross-section of 369 U.S. manufacturing plants. Data were analyzed using hierarchical regression model.
Findings and implications: The results indicate partial support for the main and two-way interaction effects on plant operational performance. The three-way interaction effects are significant and positive, suggesting that deploying all three resources (i.e., ABC, IISI, and EISI) leads to the higher plant operational performance.
Originality/value: The paper significantly extends prior research and contributes to the understanding of the main and interaction effects of ABC, IISI, and EISI on manufacturing plant operational performance. The paper would also be of interest to practitioners interested in keeping up with academic literature.
Details
Keywords
The chapter outlines the principles underlying relative utility models, discusses the results of empirical applications and critically assesses the usefulness of this…
Abstract
Purpose
The chapter outlines the principles underlying relative utility models, discusses the results of empirical applications and critically assesses the usefulness of this specification against commonly used random utility models and other context dependence models. It also discusses how relative utility can be viewed as a generalisation of context dependency.
Theory
In contrast to the conventional concept of random utility, relative utility assumes that decision-makers derive utility from their choices relative to some threshold(s) or reference points. Relative utility models thus systematically specify the utility against such thresholds or reference points.
Findings
Examples in the chapter show that relative utility model perform well in comparison to conventional utility-maximising models in some circumstances.
Originality and value
Examples of relative utility models are rare in transportation research. The chapter shows that several recent models can be viewed as special cases of relative utility models.
Details
Keywords
Paulo Botelho Pires and José Duarte Santos
Buying online has become a widespread and common activity for consumers, and, for many organizations, e-commerce has become a very profitable alternative to sell their products…
Abstract
Buying online has become a widespread and common activity for consumers, and, for many organizations, e-commerce has become a very profitable alternative to sell their products and services, also allowing them to leverage their strategy in new geographical markets immediately. Although the literature on the subject is comprehensive, there is a gap in identifying the holistic constructs that are the determinants of consumers' choice of an online store. This research resorts to an exploratory study, based on a nonsystematic literature review, seeking to identify these constructs. The results obtained allowed us to identify the following constructs: consumer behavior, customer experience, web content, catalog, terms and conditions, customer support, perceived value, trust, security and privacy, satisfaction, and loyalty. Customer experience, satisfaction, and loyalty constructs stand out from a strategic perspective.