The Impact of Product Positioning Strategy, Manufacturing Strategy and their co-alignment on ...

321 Pages·2010·13.21 MB·English

The Impact of Product Positioning Strategy,
Manufacturing Strategy and their co-alignment
on Firm's Performance
By
Irfan Butt
B.A. (The College of Wooster, Ohio, USA)
MBA (Thunderbird School of Global Management, Arizona, USA)
A thesis submitted to the Faculty of Graduate Studies and Research
in Partial fulfillment of the requirements for the degree of
Doctor of Philosophy in Management
Sprott School of Business
Carleton University
Ottawa, Canada
© Copyright Irfan Butt 2009
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Abstract
Both product positioning and manufacturing strategies are business level strategies
developed by the marketing and operations management departments of firms. Influenced
by resource-based and market-based views, both positioning and manufacturing strategies
have dimensions which at times are identical, such as quality, cost/price, and innovation.
Both strategies are postulated to have a significant impact on organizational performance.
The objective of this study is to understand how manufacturing firms in Canada develop
these strategies and what is their impact on bottom line; i.e., what are the factors which
influence the development of these strategies; how these strategies individually impact
firm's performance and what is the impact of co-alignment of two strategies on a firm's
performance. The findings of the empirical study are based on the data collected from
194 manufacturing firms in Canada.
The study was virtually divided into three parts. First, the influence of certain factors on
the development of positioning strategies and, in turn, the impact of positioning strategies
on a firm's performance was examined. Second, a number of factors impacting
development of manufacturing strategies were investigated, along with relationship of
manufacturing strategy with organizational performance. Third, the co-alignment of
positioning and manufacturing strategy was determined using profile deviation technique.
The adherence to ideal profile is taken as co-alignment for this study.
It was found that the development of positioning strategy is influenced more by customer
orientation than competitor orientation. Marketing capability plays an important role in
the development of positioning strategy. Focus on brand and company image leads to
higher customer satisfaction, more loyalty and better financial performance.
The final evidence regarding preference of resource orientation over market orientation is
inconclusive in this study as both of them influence only one manufacturing strategy each.
Our study confirms the conventional wisdom that each manufacturing strategy is backed
by the corresponding manufacturing capability. However, it reinforces the notion that
certain manufacturing capabilities, such as delivery, are integral to the operations and
survival of the firm. Cost, delivery and flexibility capabilities lead to improved financial
performance, while quality impacts customer satisfaction and loyalty.
This is the first study which empirically demonstrates that co-alignment of manufacturing
and marketing can be examined by operationalizing it as the lack of correspondence
between the profile of the top performing strategic configuration and rest of the strategic
configurations.
n
Acknowledgement
A long arduous journey which took seven years has finally reached this stage! My visibly
grey hair, shinning black at the time of joining the PhD program, testifies to my struggles.
This journey was saddled with moments of bleak sadness as well as times of sheer joy. I
endured the irreplaceable loss of both of my parents in the beginning of the program but
also witnessed the blissful birth of my two younger children.
I thank God Almighty who gave me the ability, strength and courage to persist through
all these years. There are a number of people who made it possible for me to reach this
stage. I am deeply indebted to my supervisors, Prof. Uma Kumar and Prof. Vinod Kumar,
who guided, directed, and encouraged me at every step, from conceptualization to
conclusion of this study. Their concern and compassion for their students is unmatched
and heart warming. I offer my sincere thanks to both of them. I would also like to thank
Dr. Alan Cai for his guidance and support.
I would like to thank a number of friends, fellow students and colleagues who shared
good times and experiences with me and provided wonderful company. There is a long
list of friends but I would mention Bhasker Mukerji and Shavin Malhotra, in particular. I
also thank Mahmud A. Shareef and V. Vedmani for their support in completing this
thesis.
I would like to thank all my professors at Sprott who sowed the seeds of critical thinking
and reflection in me. I received excellent support from Janice Walker, Anne Irvin, Pam
Norris, Greg Schmidt, Melissa Doric and other administrative staff at Sprott School of
Business. My employer since July 2007, Lahore University of Management Sciences, has
iii
supported me tremendously in finishing off this thesis by giving me plenty of time off
and a reduced course load. Thank you Dean Shaukat Brah. I would like to thank Ruth
Latta and John Malloch who provided editorial help in this work.
One person who perhaps suffered more hardship than anybody else during my PhD
program is my beloved wife, Alia. In addition to taking care of the household affairs
while I was busy with my studies, she has done a fabulous job of raising our four lovely
children. I am truly thankful to her for her unconditional support and unwavering
commitment. My four children - Danish, Noor, Umair and Faatimah had to frequently
put up with my unplanned long days at the university. Thank you so much for your
sacrifice, patience and love.
I dedicate this work to people I adore the most - my parents, my wife and my children.
IV
Table of Contents
ABSTRACT I
ACKNOWLEDGEMENT Ill
LIST OF TABLES IX
LIST OF FIGURES XI
LIST OF APPENDICES XII
CHAPTER 1: INTRODUCTION 1
1.1 Background 1
1.2 Statement of Problem 5
1.3 Research Objective 9
1.4 Organization of the Remaining Chapters 10
CHAPTER 2: MANUFACTURING STRATEGY 12
2.1 Origins of Manufacturing Strategy 12
2.2 Manufacturing Strategy Defined 13
2.2.1 Content of Manufacturing Strategy 15
2.2.2 Process of Manufacturing Strategy 22
2.3 Summary 25
CHAPTER 3: POSITIONING STRATEGY 26
3.1 Origins of Positioning 26
3.2 Positioning Defined 27
3.3 Positioning and Other related Concepts 29
3.3.1 Segmentation and Targeting 29
3.3.2 Competitive Advantage and Differentiation 30
3.4 Positioning Strategy 31
3.4.1 Positioning Typology, Positioning Strategy and Positioning Dimension 31
3.4.2 Positioning Strategies by Streams 33
3.4.3 Positioning Strategy Dimensions 39
3.4.4 Developing Positioning Strategy 46
V
3.5 Summary 49
CHAPTER 4: ALIGNING POSITIONING AND MANUFACTURING
STRATEGIES 50
4.1 Marketing Strategy 50
4.2 Manufacturing Strategy 51
4.3 Aligning Manufacturing Strategy with Marketing Strategy 53
4.4 Aligning Manufacturing Strategy with Positioning Strategy 57
4.5 Summary 59
CHAPTER 5: THEORETICAL BACKGROUND 60
5.1 Determinants of Positioning and Manufacturing Strategies 60
5.1.1 Resource-based View 60
5.1.2 Market-based View 63
5.1.3 Integration of Resource Based and Market Based Views 64
5.2 Summary 67
CHAPTER 6: CONCEPTUAL FRAMEWORK 68
6.1 Research Objective 68
6.2 Conceptual Framework 69
6.3 Hypotheses 69
6.4 Identification and Specification of Variables 72
6.4.1 Factors Influencing Positioning Strategy Only 72
6.4.2 Factors Influencing Manufacturing Strategy Only 75
6.4.3 Factors Influencing both Positioning and Manufacturing Strategies 77
6.4.4 Positioning Strategy Dimensions 81
6.4.5 Manufacturing Strategy Dimensions 83
6.4.6 Organizational Performance 87
6.4.7 Control Variables 90
6.5 Summary 92
CHAPTER 7: METHODOLOGY 94
7.1 Research Design 94
7.2 Survey 94
7.2.1 Sample 95
7.2.2 Instrument Development 97
7.2.3 Data Collection 102
7.3 Data Analysis 102
vi
7.4 Summary. 110
CHAPTER 8: DATA PREPARATION 111
8.1 Data Preparation Ill
8.1.1 Normality Ill
8.1.2 Non-Response Bias 114
8.1.3 Common Method Bias 114
8.2 Principal Component Analysis 115
8.2.1 Influencing Factors - Positioning Strategy (Independent variables) 117
8.2.2 Influencing Factors - Manufacturing Strategy (Independent variables) 120
8.2.3 Organizational Performance (Dependent variables) 123
8.2.4 Positioning Strategy Dimensions (Mediating variables) 124
8.2.5 Industry Environment (Control variables) 126
8.2.6 Summary of Principal Component Analysis 127
8.3 Reliability of Measures 129
8.4 Validity of Measures 131
8.4.1 Content Validity 131
8.4.2 Construct Validity 131
8.5 Revised Conceptual Model 134
8.6 Revised Hypotheses 135
8.7 Summary 138
CHAPTER 9: DATA ANALYSIS 139
9.1 Descriptive Statistics 139
9.1.1 Sample Characteristics 139
9.1.2 Sub-sample Variations 143
9.2 Correlation and Regression Analysis 145
9.2.1 Correlation Analysis - Positioning Strategies 147
9.2.2 Regression Analysis - Positioning Strategies 151
9.2.3 Correlation Analysis - Manufacturing Strategies 160
9.2.4 Regression Analysis - Manufacturing Strategies 164
9.3 Co-alignment (Fit) Analysis - Profile deviation 172
9.3.1 Correlation Analysis - Profile Deviation 176
9.3.2 Regression Analysis - Profile Deviation 177
9.3.3 Profile Deviation - Additional Analysis 179
9.3.4 Analysis of Ideal Profile 183
9.3.5 Validation of Profile Deviation Method 185
9.4 Assumptions of Regression Analysis 188
9.5 Summary 189
CHAPTER 10: DISCUSSION 191
vii
10.1 Positioning Strategies 192
10.1.1 Positioning Strategies and Influencing Factors 193
10.1.2 Positioning Strategies and Organizational Performance 202
10.2 Manufacturing Strategies 205
10.2.1 Manufacturing Strategies and Influencing Factors 206
10.2.2 Manufacturing Strategies and Organizational Performance 212
10.3 Co-alignment of manufacturing and positioning strategies 213
10.4 Summary 217
CHAPTER 11: CONCLUSION 219
11.1 Positioning Strategy 221
11.2 Manufacturing Strategy 223
11.3 Co-alignment of Positioning and Manufacturing Strategy 225
11.4 Benefits and Implications 227
11.4.1 Theoretical Implications 228
11.4.2 Managerial Implications 230
11.5 Limitations 231
11.6 Future Research Directions 233
11.7 Summary 236
REFERENCES 238
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