Introduction
Time-based
differentiation ± an old
strategic hat or an
effective strategic
choice: an empirical
investigation
Rui JaÂcome
JoaÄo Lisboa and
Mahmoud Yasin
The authors
Rui JaÂcome is Professor of Management, Faculdade de
Economia and JoaÄo Lisboa is Professor of Management,
Instituto de Sistemas e RoÂboÂtica, both at the Universidade
de Coimbra, Coimbra, Portugal.
Mahmoud Yasin is Professor of Management at East
Tennessee State University, Department of Management
and Marketing, Johnson City, Tennessee, USA.
Keywords
Business strategy, Portugal, Pottery, Effectiveness
Abstract
The strategic orientation of Portuguese firms in the
porcelain industry is examined empirically. In the process,
the effective use of traditional generic strategies as
opposed to emerging strategies is compared. Special
attention is devoted to the utility of classical Porter's
generic strategies in comparison to time-based
differentiation strategy. The study concludes that different
variations of the classical differentiation strategy, which
includes time-based differentiation, appear to be more
effective than cost leadership or mixed generic strategies.
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European Business Review
Volume 14 . Number 3 . 2002 . pp. 184±193
# MCB UP Limited . ISSN 0955-534X
DOI 10.1108/09555340210427076
184
In the last decade, a wide range of operational
and strategic philosophies have been
advanced to afford today's business
organization the flexibility required to
compete in the ever increasingly competitive
global market place. Such philosophies
include time-based competition, total quality
management, outsourcing, business
reengineering and management of change.
These philosophies and their associated tools
are shaping the business and operational
strategies of leading business in the
manufacturing and service sectors of the
global economy. Strategies based on these
philosophies are either used as the sole
strategic orientation of the business firm or as
a complement to the more traditional
strategic posture which is based on generic
strategies of cost leadership, differentiation
and focus.
Stalk and Hout (1990) contended that a
strategy based on time offers a new and
powerful source of competitive advantage.
Time, as the core of this strategic orientation,
is used to provide value to customers,
distribute new products and services faster,
and reduce ordering cycles, thus allowing the
business organization to offer products to
markets faster than its competitors. The
possibility of establishing a strategic
advantage based on time opens new
competitive avenues toward the goal of
strategic effectiveness. Therefore, the
emergence of time-based competition (Pruet
and Howard, 1996) and related strategic
options has cast some doubts on the utility
and validity of Porter's approach, which
advocates a single generic strategy.
Nevertheless, Porter's mood of generic
strategies is still widely accepted both in an
academic and practice sense.
The objective of this study is to examine the
strategic orientation and performance of firms
in the Portuguese ceramic industry in the
context of Porter's typology. In the process,
time-based variables are introduced into the
analysis in order to assess the presence of new
forms of strategic behaviors.
Background and relevant literature
Dess and Davis (1984) undertook a study in
the USA with the objective of demonstrating
 Time-based differentiation
Rui JaÂcome, JoaÄo Lisboa and Mahmoud Yasin
the validity and utility of Porter's typology.
Wright (1987), Wright et al. (1988, 1990,
1991), Parker and Helmis (1992) and
Reitspergar et al. (1993) have also examined
the utility of Porter's typology in the
classification of firms in the USA. A few
studies have attempted to empirically test this
typology. Kim and Lim (1988) examined the
applicability of Porter's generic strategies in a
Korean industry. The results were consistent
with Porter's theory of generic strategies, but
not in its pure form. In other words,
companies that followed differentiation
strategies, also followed cost leadership
strategies. On the other hand, companies that
utilised cost leaders also used differentiation
elements. Douglas and Rhee (1989)
examined the types of competitive generic
strategies used in the USA and Europe. The
methodology used was factor analysis and
cluster analysis. The results obtained indicate,
in general, that basic elements characterized
competitive strategies and the same types of
strategies were identified independently of
their market localization.
In Portugal, some empirical studies of this
nature have already been done. Green et al.
(1993) examined the applicability of Porter's
generic strategies in Portugal. A sample of 68
of the 500 largest companies existing in the
country was used. The results obtained
clearly indicated the utility and the
applicability of Porter's typology in defining
the behaviour of Portuguese industrial
companies.
Raposo (1994) conducted a study with the
intent of testing the applicability of Porter's
generic strategies in the Portuguese textile
sector. Although the results found were
consistent with previous work, they were used
to identify a taxonomy that was somewhat
different. Namely, there was no appearance of
variants that could be associated with the
differentiation strategies of cost leadership.
Marques (1996) undertook a study of
Porter's model in the Portuguese crystal
sector. Although the results did not contradict
Porter's thesis, they did put aside the
possibility of the presence of a new form of
competion, uniting a mix of more than one
strategy, which will eventually be more
profitable than the true traditional generic
pure strategies.
RaõÂnha (1996) conducted a study with the
objective of identifing the competitive factors
and the competitive strategies in the woollen
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European Business Review
Volume 14 . Number 3 . 2002 . 184±193
manufacturing industry in Portugal. Some of
the strategies identified were mainly
compatible with Porter's theory, namely the
differentiation and low cost strategies,
however other strategic orientations were
identified with different characteristics from
Porter's typology of generic strategies. RaõÂnha
called such strategic orientations quick-
response strategies.
Silva (1996) undertook a study on the
strategic orientation of companies in the
Portuguese mould industry, taking into
consideration Porter's typology of generic
strategies. The results of the study showed
that companies that took Porter's model into
consideration had also found variants in
orientation in terms of differentiation and cost
leadership. While Porter's typology has been
critically examined from a variety of
perspectives in a wide range of business
settings, little has been done to analyse the
emergence of new forms of strategic behavior
where time-based competition appears to be a
strong factor to increase competitiveness. The
study at hand attempts to fill this apparent
gap in the literature.
Study setting
The Portuguese porcelain industry is
dominated by small to medium size firms. It is
an industry of great tradition in Portugal and
assumes a position of prestige in the
Portuguese ceramic sectors. The products
manufactured are destined for domestic use,
hotel and restaurant use and decorative
means, for both the national and foreign
markets. The total value of exports of
porcelain products has more than doubled in
the 1990-1995 period, having reached in
1995 a total value of $44 million. This
increase is fundamentally due to the quality of
the products offered and the competitiveness
of price. The countries in communitarian
Europe and the USA are the main consumers
of these products, absorbing respectively 66
per cent and 28 per cent of the total value of
exports. Beyond the traditional competition
of the Asian markets, countries like Germany
and France, with higher costs, were forced to
transfer their factories to countries in Eastern
Europe, like the Czech Republic, Poland and
Russia, and in this way new competitors arose
at the international level.
 Time-based differentiation European Business Review
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Methodology Table I Number of workers in the porcelain industry in 1996

Sample and procedure Number of
The data collection was based on a survey Firm workers Percentage
sent to the main companies of the Porcelain Vista Alegre 800 19.6
industry. The survey contained six groups of Spal 600 14.7
questions, related respectively to the general Quinta Nova 530 13.0
characteristics of the companies' strategies; Cerexport 398 9.7
human resources, stock, production, FaÂb Porcelanas Da Batalha 350 8.6
marketing, and sales, according to the model Costa Verde 280 6.9
proposed by Dess and Davis (1984) and used Soc. de Porcelanas, SA 242 5.9
in several investigations reported in the Porcel 60 1.5
literature. The model contained a set of 21 NG 52 1.3
competitive methods, related to Porter's Diversos 773 18.9
generic strategies, which were used in our Total 4,085 100.0
survey. However we still opted for adding six Source: Dun & Bradstreet, Survey
new variables, namely low production costs,
development of design, product quality and
service offered, continuous improvement in Table II Volume of sales in the porcelain industry in 1996
the manufacturing process, following the Volume of Sales per
standards of quality guarantee, and meeting sales capita
the delivery date, in such a way as to reflect Firm Esc.000 % Esc.000
the importance of the time variable in the
Vista Alegre 4,300.000 23.3 5.375
decision-making process of the firm. From a
Spal 3,263.987 17.7 5.440
universe of about 50 firms that produce
Quinta Nova 2,262.000 12.3 4.268
porcelain in Portugal, we selected a group of
Cerexport 1,696.497 9.2 4.263
the ten largest firms, to which we sent a
FaÂb Porcelanas Da Batalha 1,595.000 8.6 4.557
survey, because of their importance in terms
Costa Verde 1,545.140 8.4 5.518
not only of the volume of production, but also
Soc. de Porcelanas, SA 1,226.199 6.6 5.067
their tradition in the manufacturing process.
Porcel 341.000 1.8 5.683
We received nine responses, which we went
NG 220.490 1.2 4.240
on to use in this study. These nine porcelain
Diversos 2,000.000 10.8 2.587
companies represent 90 per cent of the brut Total 18,450.313 100.0 4.532
value of production of porcelain in Portugal,
Source: Dun & Bradstreet, Survey
therefore our sample can be considered fairly
representative of the industry studied.
consistent with Green et al. (1993). Using a
The estimated number of workers in the
scale ranging from 1 (not important) to 5
total number of porcelain companies in 1996,
was approximately 4,085 workers, 3,312 of (very important), senior executives were
which make up only nine companies (Table asked to rate the relative importance of several
I). The same nine companies in the porcelain competitive methods to the strategic
industry, amount to 90 per cent of the total orientation of their firms (Table III).
volume of sales in 1996, estimated at Responses were analysed using factor and
approximately 18.5 thousand million cluster analysis to establish patterns of relative
escudos, (Table II); 8 thousand million importance. The measurements used in the
escudos are destined for exports and the performance analysis were the rentability on
remaining for use in the internal Portuguese sales and the return on equity. The
market. significance of the results was verified using a
one-way ANOVA: the Newman-Keuls test.
Instrument
A survey instrument, which is based on the
work of Dess and Davis (1984) was used to
Data analysis and results
measure the strategic orientation of the
participating firms. The instrument was Descriptive results
translated to Portuguese and tested using a Before the first phase of the factor analysis
panel of executives. This procedure is was conducted on the data collected from the
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Table III Modified Dess and Davis panel

Competitive method Differentiation Cost leadership Focus
MC1 ± New product development ++ .. ..
MC2 ± Customer service .. ±± ..
MC3 ± Operating efficiency .. ++ ..
MC4 ± Product Quality control .. .. ..
MC5 ± Experienced /trained personnel .. .. ..
MC6 ± Maintaining high inventory levels .. .. ±±
MC7 ± Competitive pricing ±± ++ ..
MC8 ± Broad range of products ±± .. ±±
MC9 ± Developing/refining existent products .. .. ..
MC10 ± Brand identification ++ .. ++
MC11 ± Innovation in marketing techniques and methods ++ ±± ..
MC12 ± Control of channels of distribution .. .. ..
MC13 ± Procurement of raw materials ±± ++ ±±
MC14 ± Minimum use of outside financing ±± .. ±±
MC15 ± Serving specific geographic markets .. ±± ++
MC16 ± Capacity to manufacture speciality products .. ±± ++
MC17 ± Products in high price segments .. ±± ..
MC18 ± Advertising ++ .. ..
MC19 ± Reputation within industry .. .. ..
MC21 ± Innovation in manufacturing process .. ++ ..
MC22 ± Low production costs .. ++ ..
MC25 ± Continuous improving in the production process .. ++ ..
MC26 ± Following ISO norms for TQM ++ .. ..
MC27 ± Meeting the delivered date ++ .. ..

Notes: ++ very important; .. no clear consensus by panel; ± ± least important

survey on competitive methods, correction
analysis was performed. We verified three of
the six variables added to the Dess and Davis
panel showed high correlation with other
variables, namely: design development
(MC23), product quality and services offered
(MC24) and meeting the delivery dates
(MC27). In the case of design development
(MC23) and product quality and service
offered (MC24), they showed a high
correlation with many other variables,
therefore we opted to exclude them from our
analysis. In relation to the variable meeting
the delivery date (MC27), we verified that
there exists a strong correlation between it
and the prevision of market evolution
(MC20). This is consistent with common
sense, because a good market evolution
estimate facilitates all the work of production
planning and allows more rigour in meeting
the delivery date. We analysed the average
obtained in the answers on the importance of
each variable (competitive method) provided
by the descriptive analysis (Table IV) and
compared the average between meeting the
delivery date (MC27) and the prevision of
market evolution (MC20), respectively 4.44
and 3.78. Therefore, taking then into
187
consideration the fact that a largely significant
importance was given to meeting the delivery
date (MC27), we opted for maintaining this
variable and excluding the prevision of market
evolution (MC20) from our analysis. In this
way, we reduced our analysis to a total of 24
variables, 20 pertaining to the Dess and Davis
panel and four new ones. The results
obtained by the descriptive statistics, average
and the standard deviation, allowed us to
discover the importance attributed to each
competitive method in the definition of the
companies' strategies by the executives of the
porcelain companies.
As can be observed in Table IV, the
competitive methods considered to be more
important were those with a value that was
higher or equal to 4, which corresponds to:
. meeting the delivery date (MC27 =
4.44);
. product quality control (MC4 = 4.22);
. operating efficiency (MC3 = 4.11);
. reputation within industry (MC19 =
4.00);
. low production costs (MC22 = 4.00);
. continuous improvement in the
production process (MC25 = 4.00).
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Table IV Descriptive statistics

Competitive method Mean SD
MC1 ± New product development 3.78 0.83
MC2 ± Customer service 3.22 1.39
MC3 ± Operating efficiency 4.11 0.78
MC4 ± Product Quality control 4.22 0.67
MC5 ± Experienced /trained personnel 3.44 0.53
MC6 ± Maintaining high inventory levels 2.00 0.87
MC7 ± Competitive pricing 3.44 1.01
MC8 ± Broad range of products 3.67 0.87
MC9 ± Developing/refining existent products 2.78 0.97
MC10 ± Brand identification 3.89 1.17
MC11 ± Innovation in marketing techniques and methods 3.22 0.97
MC12 ± Control of channels of distribution 3.56 0.88
MC13 ± Procurement of raw materials 2.67 1.00
MC14 ± Minimum use of outside financing 2.89 1.27
MC15 ± Serving specific geographic markets 2.56 0.88
MC16 ± Capacity to manufacture speciality products 3.89 1.05
MC17 ± Products in high price segments 3.22 1.20
MC18 ± Advertising 3.11 1.17
MC19 ± Reputation within industry 4.00 0.71
MC21 ± Innovation in manufacturing process 3.67 0.87
MC22 ± Low production costs 4.00 0.71
MC25 ± Continuous improving in the production process 4.00 0.71
MC26 ± Following ISO norms for TQM 3.89 0.93
MC27 ± Meeting the delivered date 4.44 0.53
Note: Number of observations = nine

Factor analysis results Factor 1: Classic differentiation

The factor analysis resulted in the extraction
of six factors that explained 92.7 per cent of
the variance. However, with the objective of
improving the identification and
interpretation of those extracted factors, we
proceeded to use an orthogonal rotation of
the varimax method. This analysis revealed
that the sixth factor extracted explained only
5.9 per cent of the total explained variance.
Therefore, we opted to retain only five factors
that explain 86.9 per cent of the explained
variance (see Table V).
The interpretation of the extracted factors
was done by taking into consideration the
characteristics of the porcelain industry, the
characteristics of generic strategies (see Table
VI), and finally of the adapted Dess and Davis
panel (Table III).
Each factor was given a designation that
reflected its strategic orientation (Table IV).
This provided a way to identify and
understand the main strategies followed by
firms in the porcelain industry, and on the
other hand verify the applicability of Porter's
generic strategies to these firms.
188
The competitive methods that are associated
with factor 1, are consistent with a
differentiation strategy that is similar to the
one proclaimed by Porter. This factor
explains 36.8 per cent of the explained
variance.
We can conclude that factor 1 clearly
identifies itself with a differentiation strategy
consistent with Porter's theory. In this
context, differentiation is achieved essentially
through the development of new products,
which are up-to-date and attractive, and tend
increasingly to follow the fashion tendencies
that are strictly connected to the porcelain
industry. The marketing campaigns and
publicity accompany the development of new
products to help to achieve a leadership in
relation to other competitors by creating a
unique image for a product. To accomplish
this type of strategy, the qualifications of
personnel and the rendering of a good post-
sales service are fundamental. The control of
the distribution channels is also a critical
factor of success and an obvious
preoccupation in these porcelain firms.
Finally, the manufacturing efficiency was not
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Rui JaÂcome, JoaÄo Lisboa and Mahmoud Yasin Volume 14 . Number 3 . 2002 . 184±193

Table V Factor analysis results

Factors
Competitive method 1 2 3 4 5
MC1 ± New product development 0.61 0.72
MC2 ± Customer service 0.92
MC3 ± Operating efficiency 0.55 0.54 0.51
MC4 ± Product Quality control 0.86
MC5 ± Experienced /trained personnel 0.87
MC6 ± Maintaining high inventory levels 0.86
MC7 ± Competitive pricing ±0.64 0.63
MC8 ± Broad range of products 0.95
MC9 ± Developing/refining existent products 0.92
MC10 ± Brand identification 0.82
MC11 ± Innovation in marketing techniques and methods 0.72
MC12 ± Control of channels of distribution 0.84
MC13 ± Procurement of raw materials
MC14 ± Minimum use of outside financing ±0.76
MC15 ± Serving specific geographic markets 0.83
MC16 ± Capacity to manufacture speciality products 0.71
MC17 ± Products in high price segments 0.75
MC18 ± Advertising 0.79
MC19 ± Reputation within industry 0.69 ±0.57
MC21 ± Innovation in manufacturing process 0.86
MC22 ± Low production costs 0.57 0.60
MC25 ± Continuous improving in the production process 0.71
MC26 ± Following ISO norms for TQM 0.90
MC27 ± Meeting the delivered date 0.70
Eigenvalues 8.83 3.95 3.13 2.82 2.12
Variance (%) 36.8 16.4 13.1 11.8 8.8
Accumulated variance (%) 36.8 53.2 66.3 78.1 86.9

completely set aside. The efficiency in
manufacturing, is and should be, associated
with a differentiation strategy, and in a market
which is becoming more and more
competitive, companies have to offer a
product with quality, competitive price and
within the stipulated deadline date of delivery,
which only becomes possible with high
efficiency in manufacturing.
Factor 2: Time-based differentiation
Factor 2 explains 16.4 per cent of the
explained variance. The competitive methods
associated with factor 2 are related to a
differentiation strategy (based on time),
which presents some consistency with
Porter's theory but not in its pure form. A
``time'' variable, expressed through meeting
the delivery date (MC27), is integrated into
the differentiation strategy, thus breaking
tradition with the classical concepts of
differentiation strategy. Although Dess and
Davis's original panel did not include a time-
related variable, which is fundamentally
189
important today, the results of the descriptive
statistical analysis indicated the presence of
this variable as one of the most important of
all variables, with an average of 4.44 on a
scale of 1 to 5. Given the importance of this
variable and having as a theoretical support
Stalk and Hout (1990), we identified factor 2
as a strategy of time-based differentiation.
Firms utilizing this strategy have the capacity
to conceive, develop and execute new
products and services more quickly than their
competitors, resulting in an increase in the
efficiency and more importantly an increase in
the clients' confidence, and therefore
permitting a quicker expansion and
effectiveness of the product line. In other
words, a competitive advantage is established
based on time. Efficiency in production is also
a fundamental requirement to achieve this
strategy, with success that still counts on
other more classic elements of differentiation
such as the product's trademark and
reputation in the industry.
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Table VI Generic strategies of the Portuguese porcelain industry use of outside financing (MC14 = ±0.76) are
Strategic consistent with differentiation strategies,
Competitive strategies variables Sig. especially for the firms that compete in this
segment of the market. While this strategic
F1: Classic differentiation MC2 +
orientation uses elements of dedifferentiation,
MC5 +
MC12 +
it also utilizes low cost elements of the cost
MC18 +
leadership. This kind of strategy according to
MC11 +
Porter, can lead a firm to be ``stuck in the
MC1 +
middle'', a situation which Porter does not
MC3 + recommend. However, other investigators
MC7 ± have the opposite opinion, as in Miller's
F2: Time-based differentiation MC8 + (1992) case where it is suggested that a mixed
MC10 + strategy which combines some aspects of
MC1 + differentiation with cost efficiency has some
MC16 + advantages.
MC27 + Factor 4: Cost leadership through improving
MC19 + actual products and production processes
MC3 + The competitive methods associated with
F3: Mix focus MC6 + factor 4 are associated with a cost leadership
MC15 + strategy (cost leadership through improving
MC17 + actual products and production process).
MC22 + This factor is consistent with Porter's theory.
MC14 ± It explains 11.8 per cent of the explained
F4: Cost leadership through improving MC9 + variance.
existent products and production process MC26 + We can conclude that factor 4 associates
MC25 + itself with a total cost leadership strategy. In
MC7 + this context, it looks for a position of lower
MC22 + production costs, through continuous
F5: Cost leadership through innovation in MC21 + improvement in production processes and the
the production process MC4 + development and improvement of the existing
MC3 + products that allow the firm to benefit from
MC19 ± the experience and profit of economies of
scale. The porcelain firms that follow this
Factor 3: Mix focus strategy are mainly competing based on the
The competitive methods associated with price of porcelain products that are of little or
factor 3 are identified with a strategy which no differential.
we refer to as mix focus. It is similar to what
Factor 5: Cost leadership through innovation of
Porter considered as ``stuck in the middle''.
the production processes
This factor explains 13.1 per cent of the
Factor 5 is associated with a cost leadership
explained variance.
strategy (cost leadership through innovation
The label given to factor 3, as a strategy of
of the production process) as, in general, this
mix focus, is explained by a series of
strategic orientation is consistent with
competitive methods that are associated and
Porter's theory. This factor explains 8.8 per
related to a strategic approach that assumes cent of the explained variance.
forms of differentiation and low cost. This Factor 5 is related to a cost leadership
strategy expects to achieve a well-determined strategy, supported by a continuous effort in
segment of the market through the the innovation of the manufacturing processes
manufacturing of high priced products. In the and efficiency in manufacturing,
porcelain industry, this segment of the market complemented with rigourous quality control.
is associated with high quality products and This strategy expects to achieve or
well known brands. Brand recognition and consolidate a significant share of the market
image in the porcelain industry take a long which will permit it to benefit from economy
time to achieve, through long-term strong of scale and also a large saving in the
investments in publicity and marketing. These purchases, which will result in lower costs.
requirements and the little importance given to Once the low cost position is achieved, it will
190
 Time-based differentiation
Rui JaÂcome, JoaÄo Lisboa and Mahmoud Yasin
lead to margins that can be reinvested in new
equipment and more modern facilities in such
a way as to sustain the cost leadership
position.
Performance analysis: identification of
the strategic groups
To proceed to the performance analysis, three
strategic groups were identified. These
strategic groups were identified based on a
small number of key characteristics, which
provide a global chart of the firm's position.
The key characteristics previously analysed to
identify each strategic group were: trademark/
image and design, which represented one
strategic variable and quality which
represented the strategic variable.
` ... firms are clearly devoted to the
development of new products
accompanied by marketing campaigns
and publicity, and still exercise some
control over the channels of
distribution... '
Group 1 is made up of two major firms of the
porcelain industry, Vista Alegre and Spal.
This group is clearly identified as a generic
strategy of differentiation, characterized by
the strong images of the companies and
contain high quality products and well-known
trademarks. The firms are clearly devoted to
the development of new products
accompanied by marketing campaigns and
publicity, and still exercise some control over
the channels of distribution, essentially
through the network of their own stores.
Although basically following a differentiation
strategy, this group does not neglect the
efficiency of production, a fundamental
condition that allows it to improve
competitiveness and time of response. The
strategies identified by factors 1 and 2, classic
differentiation and time-based differentiation
respectively, are clearly related to this group.
The introduction of a temporary variable
which is expressed through the fulfilment of
the delivery dates, thus establishing a
competitive advantage based on time, is
consistent with Stalk and Hout's (1990)
notion. Efficiency in manufacturing has a
direct impact on this time-based strategy,
through an advanced industrial management
system which promotes perfect
synchronization between different productive
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European Business Review
Volume 14 . Number 3 . 2002 . 184±193
operations and the rationalization of the
layout.
The strategy corresponding to factor 3 was
referred to as ``mix focus''. This strategy is not
consistent with Porter's typology of generic
strategies; it corresponds to what Porter
considered ``stuck in the middle''. The
combination of variables like the specification
of a well-determined geographic market,
manufacturing of high cost products and low
cost production that are associated with this
strategy, are characterized by the
determination of a narrow target market,
typical of this approach, but combining some
differentiation characteristics and low cost.
The maintenance of high stock levels and the
rejection of use of external financing are also
associated to this strategy.
Factors 4 and 5 correspond to the cost
leadership strategy in the form of two
variables, cost leadeadership through the
improvement of existing products and the
manufacturing processes (factor 4) and cost
leadership through innovation of the
production processes (factor 5). The
existence of more than one variant in the cost
leadership strategy has already been identified
in previous studies (for example Green et al.,
1993; Raposo, 1994; Marques, 1996; Silva,
1996). Either strategy as identified by factors
4 and 5's present attributes that are consistent
with Porter's typology of generic strategies.
They fundamentally look to compete based
on price, through a position of low cost
production reached through slightly different
methods. Another interesting particularity of
these strategies is the emphasis placed on
following the quality guarantee norms and
quality control consistent with the notion that
the improvement of quality and the reduction
of production cost are positively related.
With the exception of the mixed strategic
approach that corresponds to factor 3, the
results clearly indicate the utility and
applicability of Porter's typology of generic
strategies in the Portuguese porcelain
industry. This tendency was also noticed for
firms that followed differentiation strategies;
they did not neglect some traditional elements
exclusively related to the cost leadership
strategy, namely operating efficiency,
allowing, in this way, a larger sustained
competitiveness. Still, we detected the
presence and integration of new management
techniques and their impact on strategy
 Time-based differentiation
Rui JaÂcome, JoaÄo Lisboa and Mahmoud Yasin
development. These include time-based and
total quality strategic options.
In relation to return on equity, according to
the Newman-Keuls test, significant
differences were not found between the three
groups. The corresponding average of these
ratios are 5.7 per cent, 3.1 per cent, and 2.4
per cent respectively for groups 1, 2 and 3.
The results obtained in the performance
analysis are in part consistent with Porter's
theory (see Table VII). In other words, the
generic strategy of differentiation followed by
group 1 showed significantly better
performance, in terms of the return on sales,
than the strategies followed by group 3 which
followed a strategy of mix focus, similar to
what Porter considered ``stuck in the middle''.
However the Newman-Keuls test results in
terms of return on sales and return on equity
between groups 2 and 3 did not show
significant differences. Group 2, which
followed a strategic orientation based on cost
leadership, shows a performance that is
identical to group 3, which followed a mix
focus strategy. These results are different
from Porter's claims. Firms which followed
mixed strategy, as in group 3, did not have
inferior performance relative to those firms
that followed pure strategy, as in the case of
group 2.
Conclusion
Based on the results of this study, the
following conclusions are derived. First, firms
in the Portuguese porcelain industry exhibited
different strategic orientations. Some of these
strategic orientations tended to follow the
classical Porter's model of generic strategies,
such as differentiation and cost leadership and
even mixed (stuck-in-the-middle). Thus,
Porter's model appears to be valid. However,
other firms appear to be following a time-
based differentiation strategy with attention to
cost and efficiency of production. In this
context, the study at hand appears to support
the notion of the energies of time as a
competitive weapon. Thus, it is in agreement
Table VII Performance of the strategic group
Years Group
1995-1996 Instrument of measure 1 2
Mean Return on sales (%) 7.2 1.7
Return on equity (%) 5.7 3.1
European Business Review
Volume 14 . Number 3 . 2002 . 184±193
with Pruet and Howard (1996) and Stalk and
Hout (1990). Second, the performance
analysis among the three strategic groups
identified in this study (group 1:
differentiation, group 2: cost leadership and
group 3: mixed) revealed some interesting
results. In terms of the return on equity
measure, no statistical difference was detected
among these three groups. While in terms of
return on sales, only the differentiation group
outperformed the other two groups, with no
difference between cost leadership and mixed
``(stuck-in-the-middle)''. Perhaps this is an
indication that in today's highly competitive
global environment, cost alone is no longer
sufficient as a competitive tool. The lack of
significant difference between the cost
leadership group and the mixed group on
return on sales is in conflict with the
exceptions based on Porter's model. Third,
time-based differentiation appears to be a
valuable variation of the classical Porter's
differentiation generic strategy. Given that the
differentiation strategy outperformed the cost
and mixed strategies, a time-based
differentiation strategy may be a very effective
strategic orientation. This appears to be true,
especially when such strategy has quality and
efficiency elements.
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