Perceived versus Financially Measured Strategic Position of a Company
| Authors | |
|---|---|
| Year of publication | 2014 |
| Type | Article in Periodical |
| Magazine / Source | Change Management |
| MU Faculty or unit | |
| Citation | |
| Field | Management and administrative |
| Keywords | Strategy; Differentiation; Cost Leadership; Performance |
| Description | The article focuses on the application and measurement of the two generic strategies proposed by M. E. Porter. The strategies are measured based on managers' declarations about strategies followed by their companies and also based on financially calculated strategic position of the companies. The data on perceived strategic position was gathered by a survey carried out with 452 managers from the companies residing in the Czech Republic. The financially measured strategic position was computed using DuPont's method of ROA decomposition applied on publically available data from financial statements. The indicators of return on sales (ROS) and assets turnover (ATO) were used to distinguish between the differentiation strategy and the cost leadership strategy. The comparison shows that the majority of managers perceived the strategy of their companies to be differentiation, although the financial data showed the prevalence of the cost leadership strategy. In addition, the results revealed that the harmony in perceived and financially measured strategies was typical for outperforming companies. |