Business Service Firms and Market Share

Authors

  • Timothy L. Wilson Clarion University
  • Barbro I. Anell Umea University, Sweden

Abstract

Traditional thinking suggests that profitability is linearly dependent upon market share, an assumption not carefully tested/or services. This assumption is examined in this study for business services in light of the apparent opportunity in this sector for entrepreneurs. Cross-sectional data from secondary sources suggest that a V-shaped relationship may be a better description of variation up to nine times average firm size in this sector. This interpretation of results is important to the strategy of small business managers became it relates to the plans they might make in growing their businesses. Normative recommendations promise improvements/or firms entering the critical intermediate share stage. These include focusing on revenue per employee as an objective, developing professional management assistance, formal projectfication of work (thus utilizing "virtual organizations'), and paying a11ention to organization while growing.

References

Buzzell, Robert D. & Gale, B. T. (1987). The PIMS principles: Linking strategy to performance. New York: Free Press.

Buzzell, Robert D., Gale, B. T., & Sultan, R. (1975). Market share -- a key to profitability. Harvard Business Review, January-February, 97-106.

Census of service industries- Geographic area series. U. S. department of commerce -- Bureau of the census, Washington, DC, 1982, 1987, 1992.

Clark, K. ( 1997). Manufacturing's hidden asset: temp workers. Fortune, (November I 0), 28-29. Coxe, W. (1980). Managing architectural and engineering practice. New York: Van Nostrand Reinhold.

Daft, R. L. (1992). Organization theory and design. 4" ed. St. Paul, MN: West Publishing. Day, E. & Barksdale, Jr., H. C. (1992). How firms select professional services. Industrial. Marketing Management, 21 , 85-91.

Day, G. S. (1975). A strategic perspective on product planning,. Journal of Contemporary Business, 1-34.

Haas, R. W. ( 1995). Business marketing: A managerial approach, 6" ed. Cincinnati, OH: South­western College Publishing.

Harnmermesh, R. G., Anderson, Jr., M. J.,& Harris, J.E. (1978). Strategies for low market share businesses. Harvard Business Review. (May-June},95-102.

Harvey, M. G. & Rupert, J.P. (1988). Selecting and industrial advertising agency. Industrial Marketing Management 17, 119-127.

Heskett, J. L. ( 1987). Lessons in the service sector. Harvard Business Review, (March-April). Jelinek, M. (1979). Institutionalizinglnnovation: A Study of Organizational Leaming Systems, New York: Praeger Publishers.

Jones, G. R. (1995). Organizationaltheory: Text and cases. Reading, MA: Addison-Wesley,433- 450.

Kotler, P. (1995). Marketing management, 8" ed. Englewood Cliffs, NJ: Prentice-Hall. Kotler, P. & Bloom, P. (1984). Marketing professional services .Englewood Cliffs, NJ: Prentice­Hall.

Lindblom, C. E. ( 1959).The science of muddling through. Public Administration Review. XIX, 79-88:

Lundin, R. & Midler, C. ( 1998). Projects as arenas for learning . London: Kluwer Publishing in press.

Lundin R. & SOderholm. A. (1995). A theory of the temporary organization. Scandinavian Management Review, 11-4, 437-455.

Mintzberg, H. (1983). Structure in fives: Designing effective organizations. London: Prentice­ Hall International.

Mintzberg, H. ( 1989). Mintzberg on management. New York: The Free Press.

Normann, R. (1983). Service management: Ledning och Strategi i Tjllnsteproduktion. Stockholm, Liber FOrlag - in Swedish. See also Normann, Richard ( 1989), Service management: Strategy and leadership in service businesses. New York: John Wiley.

Ozanne, M. R. (September 29, 1997). Managing strategic partnerships for the virtual enterprise. Fortune, Sl-848.

Pasmore, W. A. (1988). Designing effective organizations: The sociotechnical systems perspective. New York: John Wiley & Sons.

Peters, T. J. ( 1992). Liberation management. New York: Alfred A. Knopf.

Porter, Michael E. (1980). Competitive strategy. (New York: Free Press). Quinn, J. (1992). Intelligentenierprlses. New-York: Free Press.

RMA annual statement studies I 993. (1993). Philadelphia, PA: Robert Morris Associates.

Roach, J. D. C. (198I). From strategic planning to strategic performance: Closing the achievement gap. Outlook. (New York: Booz, Allen and Hamilton) 21.

Shostack, G. L. (1977). Breaking free from product marketing. Journal of Marketing.41, 73-80. Storey, D. J. ( 1994). Understanding the small business sector. London: International Thomson Business Press.

Wheelwright, S. C. & Clark, K. B. ( 1992). Creating project plans to focus product development. Harvard Business Review, 70-82.

Wilson, T. L. (1997). An exploratory study of business service profitability: Some implications for strategy. Journal of Small Business Strategy. 8-2, 53-66.

Wilson, T. L. (1996). Business services, profitability, projects and pre-projects – Conceptual analysis and exploratory research. In Cathy Owens Swift (Ed.) Atlantic Marketing Association Proceedings XII, 77-83.

Wilson, T. L.& Smith, F. E. (1996). Business services 1982-1992: growth, industry characteristics,financial performance. Industrial Marketing Management.25, 163-I 71.

Woo, C. Y. & Cooper , A. (1982). The surprising case for low market share. Harvard Business Review, I06-113.

Downloads

Published

1999-01-17

Issue

Vol. 10 No. 1 (1999)

Section

Articles

License

The Journal of Small Business Strategy (the “Publisher”) and the Author(s) agree as follows:
 
1.Author(s) hereby grant to Publisher all right, title, and interest in and to the Work, including copyright to all means of expression by any method now known or hereafter developed, including electronic format. If Publisher does not publish the Work within two (2) years of the Effective Date, copyright shall revert back to the Author. Publisher agrees to always credit Author(s) as the author(s) of the Work.
 
2.Publisher hereby grants Author a royalty-free, limited license for the following purposes, provided the Work is always identified as having first been published by Publisher.
    •The right to make and distribute copies of all or part of the Work for use in teaching;
    •The right to use all or part of the material contained in the Work in a book by the Author(s), or in a collection of the Author(s)’s work;
    •The right to use and distribute the Work internally at the Author(s)’s place of employment, and for promotion and any other non-commercial purposes;
    •The right to use figures and tables from the Work for any purpose;
    •The right to make presentations of material from the Work;
    •The right to use and distribute the Work on the Author(s)’s Web site and on the Author(s)’s university’s institute repository;
Such license shall be effective when the Work is first published in the Journal of Small Business Strategy.
 
3.The Author(s) represents and warrants that the Work: (a) is the Author(s)’s original work and that Author(s) has full power to enter into this agreement; (b) does not infringe the copyright or property right of another; (c) contains no materials which is obscene, libelous, defamatory or violates another’s civil right, right of privacy, or is otherwise unlawful; and (d) has not been previously published, in whole or in part. Author(s) shall indemnify and hold Publisher harmless against loss or expenses arising from breach of any such warranties.

How to Cite

Business Service Firms and Market Share. (1999). Journal of Small Business Strategy (archive Only), 10(1), 41-53. https://libjournals.mtsu.edu/index.php/jsbs/article/view/401