An exploratory study of the impact of strategy and structure on the organizational performance of restaurant firms

There is an increased emphasis in management literature on the use of strategic management as the primary means of adapting organizations to their changing environments. For firms in the maturing hospitality industry to survive and succeed, they will have to depend upon their ability to strategically align themselves with the turbulent environment, and select appropriate strategies to create defendable competitive positions. Success in strategy implementation depends partly on whether a firm's strategy is congruent and complementary with its structure, and this match is expected to have a positive impact on financial performance. With that in mind, a study was carried out in 1987. The objectives of the study were: 1) to examine restaurant firms based on the context of Porter's strategic typologies at the business unit level to see if they espouse one of his three generic strategies: overall cost leadership, differentiation, and focus; 2) to examine the relationship between structural attributes and generic strategy in restaurant firms, these attributes were specialization, formalization, and centralization; 3) to examine the relationship between strategy, structure, and financial performance of restaurant firms. Three performance measures were used: return on assets, return on sales, and growth in unit sales. Following a pilot-test phase, the top management team in 296 American multi-unit restaurant firms were surveyed, using a structured questionnaire. Ninety-one firms participated in the survey, giving a 30.7% response rate. The sample was well represented by all major segments in the restaurant industry. Based on the purposes and research questions, three sets of hypotheses were derived to determine the relationship of strategy and structure in restaurant firms, the relationship of strategy and performance, and the differences in structure among the high performers and low performers in each of the strategy groups. T-tests and analysis of variance (ANOVA) statistical analyses were conducted to examine these relationships. The level of significance, alpha value, was set at 0.05. Results indicated that strategy was not related to structure in restaurant firms, and that it only affected one of the performance measures, return on sales. It was found that certain performance measures were related to structure for companies espoused in low cost and focus strategy, but not to differentiation strategy. These findings were inconclusive in validating Porter's model. Some of the probable reasons are: 1) Porter's generic strategies may not be applicable for the service industry due to the existence of the fundamental differences in manufacturing and service, 2) the unique characteristics of the restaurant business and the relatively short life cycle of an innovative product or service.

Name thesis:degree_name

Ph. D.

Level thesis:degree_level

doctoral

Department dc:contributor.department

Human Nutrition & Foods

Grantor dc:publisher

Virginia Polytechnic Institute and State University

Year dc:date.issued

1988

Author dc:creator

• Tse, Eliza Ching-Yick.

Chair dc:contributor.committeechair

• Olsen, Michael D.

Committee members dc:contributor.committeemember

• Evans, Michael R.
• Webb, Ryland E.
• Litschert, Robert J.
• Johnson, Dana J.

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/10919/87679

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/87679