Marcu

Linking financial performance
to strategic orientation and
operational priorities
An empirical study of third-party logistics
providers
Jeff Hoi Yan Yeung
Department of Decision Sciences and Managerial Economics,
Faculty of Business Administration, The Chinese University of Hong Kong,
Shatin, People’s Republic of China
Willem Selen
Macquarie Graduate School of Management, MacquarieUniversity,
Sydney, Australia
Chee-Chuong Sum
Department of Decision Sciences, NUS Business School,
National University of Singapore, Singapore, and
Baofeng Huo
Department of Decision Sciences and Managerial Economics,
Faculty of Business Administration, The Chinese University of Hong Kong,
Shatin, People’s Republic of China
Abstract
Purpose – Aims to investigates the relationship ofstrategic choices of pure cost-, pure
differentiation-, or a combination-strategy on a composite measure of financial performance for
third-party logistics (3PL) providers in Hong Kong. In addition, it seeks to identify the importance of
operations priorities underlying the respective adopted strategy, as well as the importance given to
future competitive challenges for each strategy.Design/methodology/approach – Uses cluster analysis, ANOVA.
Findings – Logistics service providers classified to follow different strategies report different
financial performance, with companies adhering to the combined strategy of cost and differentiation
performing best, followed by pure differentiation companies, which in turn outperform pure cost-,
commodity driven-companies.
Researchlimitations/implications – Future research may be widened to include customer, and
not solely competitor, perceptions. Further studies could elaborate on technology adoption,
information sharing, strategy formulation, operations practices, and benchmarking. Other studies
could focus on the differences between high and low performers in terms of business performance, and
the processes that enable lowperformers to become high performers; as well as comparing logistics
strategies and practices between different countries.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0960-0035.htm
This research was supported by the Li and Fung Institute of Supply Chain Management and
Logistics.
IJPDLM
36,3
210
International Journal of Physical
Distribution& Logistics Management
Vol. 36 No. 3, 2006
pp. 210-230
q Emerald Group Publishing Limited
0960-0035
DOI 10.1108/09600030610661804
Practical implications – Third-party logistics providers, solely competing on cost and offering
basic services only, need to differentiate to gain improved financial performance. Logistics companies
can improve along multiple operational dimensions to achievecompetitive advantage in
the marketplace. Research identifies operational areas to be emphasized to drive strategy according
to strategic orientation, as well as generic factors that will drive future logistics management in
Hong Kong.
Originality/value – Linking perceived financial performance to strategic choices of pure cost-, pure
differentiation-, or a combination-strategy for 3PLproviders in Hong Kong.
Keywords Operations management, Third-party vendors, Logistics data processing,
Financial performance, Hong Kong
Paper type Research paper
Introduction
Over the past decade, third-party logistics (3PL) providers have extended their scope
beyond traditional transportation and warehousing activities to also include
procurement, distribution, inventory management,packaging, manufacturing, and
even customer services (Titone, 1996). Globalization, lead time and cost reduction,
information technology, outsourcing, and ever increasing customer expectations are
some of the reasons that have contributed to changes in the logistics landscape.
Companies nowadays are realizing that they can no longer compete as stand-alone
entities, and are better off as part of an...