The applicability of Porter's generic strategies in pure online firms: A case study approach

Abstract

The aim of this paper is to investigate the usability and applicability of Porter's generic strategies in the current e‐business environment. In this paper, a review of Porter's generic strategies was conducted to recognise the limitations and weaknesses of the model, which prevent its effective application in the e‐business environment. To do so, a case study approach on three pure online firms, e.g., Amazon, e‐bay and Google was employed. The findings acknowledged the application of Porter's generic strategies to pure online firms in order to achieve competitive advantage and proved the positive impact of generic strategies on firms' performance. The paper suggests that although cost leadership strategy is able to generate greater performance, pursuing a differentiation strategy can be more worthwhile and sustainable for pure online firms compared to cost leadership strategy. This research contributes to existing research by suggesting Porter's generic strategies as a valid and viable model for pure online firms which operate in the current e‐business environment.

Effects of supplier orientation and competitive strategies on ICT firms’ performance

“…Accordingly, H5 ( p -value < 0.005) and H6 ( p -value < 0.005) are supported. These results are parallel to Firoz Suleman et al (2019), Anwar (2018), Herzallah et al (2017) and are in agreement with the work of Cantele and Zardini (2018), Santos-Vijande et al (2012), Bayraktar et al (2017) and Li et al (2006), all showing partial agreement. In addition, it has been determined that there is a statistically positive and significant relationship between competitive strategies and market performance.…”

“…With this strategy, it provides customers with standardized products and services at the most competitive prices so that firms can lower prices or beat their competitors and still make a profit (Santos-Vijande et al , 2012). Indeed, the main focus of the cost leadership strategy is to be able to put forward activities aimed at achieving sustainable competitive advantage by reducing and controlling costs (Firoz Suleman et al , 2019). With a cost-based strategy, a firm can increase profitability and market share with a lower cost structure (Koo et al , 2004).…”

“…Firms that can successfully differentiate often set higher prices than their competitors to support the high costs of being different or unique. It is expected that companies will be able to increase their profitability as the obligation to adopt a lower-cost position compared to competing products will be eliminated thanks to the customer loyalty provided by differentiation (Firoz Suleman et al , 2019). In this study, differentiation and cost leadership strategies, which are among the general competitive strategies pointed out by Porter (1985), are discussed and the effects of these strategies on supplier orientation and market and financial performances of the company are examined.…”

Effect of Competitive Strategies on Firm Performance and Mediating Role of Product Innovation

“…It has been determined that the focus strategy only affects the product-oriented performance. In the research conducted in companies that dominate the market in online commerce such as Amazon, E-bay and Google, it has been found that generic strategies are positively related to firm performance, but the differentiation strategy is more sustainable in the online market than the low cost leadership strategy (Suleman, Rashidirad, & Suleman, 2019).…”

Hybrid strategy and firm performance: a time-series qualitative comparative analysis of the Chinese ICT sector

“…Moreover, Thornhill and White (2007), based on 2,351 firms, found that firms with pure strategies outperformed those with hybrid strategies. Currently, studies are still discovering and confirming the applicability of pure strategies to firms in traditional sectors and manufacturing, such as the study of small and medium-sized agricultural firms in 12 Latin American countries (Brenes et al, 2020), and the three case studies of Amazon, eBay, and Google (Firoz Suleman et al, 2019).…”