Business Strategy and Financial Performance

Business Strategy and Financial Performance

Nuno Miguel Teixeira (Polytechnic Institute of Setúbal, Portugal), Inês Lisboa (Polytechnic Institute of Leiria, Portugal), Teresa Gomes da Costa (Polytechnic Institute of Setúbal, Portugal) and Teresa Godinho (Polytechnic Institute of Setúbal, Portugal)
DOI: 10.4018/978-1-5225-8479-7.ch001

Abstract

This chapter will focus on the relationship between the business strategy and the financial performance, which naturally, will study the different approaches to the competitive context and the strategic initiatives themselves. The contributions of different authors over time and the evolutionary logic of the approaches on business strategy are first, which will emphasize strategic positioning and resource-based theory. Next, several types of strategies will be approached, based on different views: product and market choices, sources of competitive advantages, the activities to be carried out internally or to be subcontracted and the geographic space of action (internationalization). Finally, a number of research papers will be presented that studied the relationships between business strategies and financial performance, mentioning the main empirical evidence from the different studies. In this way, it is intended to contribute to a better knowledge of successful strategies in the business context.
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Thinking Strategic Approaches

The development of management as a discipline arose from companies’ growth in the end of the nineteenth century, because of the second Industrial revolution. The main goal of the classical management approach was the need to systematize work organization and make it more efficient for workers to perform tasks. On that matter, important contributions were made by Frederick Taylor (1911), Henry Fayol (1916) and Max Weber (1904) who studied, respectively, productivity in tasks performing, the chain command, and bureaucracy as a way of establishing rules and procedures in the organizations’ functioning.

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