Strategy, environmental scanning, and their effect upon performance: an exploratory study of the food service industry

The major purpose of this study was to examine the relationship of strategy and environmental scanning to performance. Porter’s (1980) strategic typology was utilized to classify foodservice firms by strategic orientation; and, an analysis of variance was performed to determine the differences in their performance. Environmental scanning engaged in by the firms was measured utilizing a modified multimethod - multitrait scale developed by Hambrick (1979). A final analysis conducted in this study was the comparison of environmental sectors scanned by high and low performing firms of each strategic group to determine their relationship with the performance variables. The three performance variables used in this study were: (a) Return on Sales, (b) Return on Assets, and (c) Growth in Unit Sales.

All foodservice firms surveyed were either independent corporations or strategic business units of larger corporations whose major source of revenue was the foodservice industry. The study was nationwide with 18 national, 32 regional, and 15 local foodservice companies participating. The data was collected from fiscal year 1982 through fiscal year 1986 from both private and public sources.

Strategy and environmental scanning were found to have substantial influence on both Return on Sales and Return on Assets. High performing firms in both differentiation and low cost strategies were found to engage in significantly greater amounts of environmental scanning than low performing firms in those two strategic groups. Focus strategy underperformed all other strategic groups in all performance measures.