Principles of management and competitive strategies: using Fayol to implement Porter

Abstract

PurposeThe purpose of this paper is to present how the past, Fayol's principles of management, is applied to the present, Porter's competitive strategies – cost leadership and differentiation – and in turn how the understanding of this connection between the past and present directs the future development of firms.Design/methodology/approachThis study explores which of Fayol's principles can be matched to Porter's cost‐leadership or differentiation strategy in terms of strategy implementation.FindingsThe paper finds that the principles of division of work, authority and responsibility, unity of command, unity of direction and scalar chain are useful in the implementation of a cost leadership strategy but other, more modern alternative principles apply for differentiation strategy. Likewise, the three principles of stability of tenure of personnel, initiative and esprit de corps apply to the implementation of differentiation strategy, but not to cost leadership, where, again, alternative principles apply. The remaining six principles of discipline, subordination of individual interests to the general interest, remuneration, centralization, order and equity are applicable to implementation of both.Practical implicationsBy melding the past with the future, it shows that the flexible use of Fayol's principles in an integrated manner lays the foundation for the successful implementation of competitive strategies and the future development of firms.Originality/valueThis study documents the flexible use of Fayol's principles, an issue that has received modest attention in the literature. It also adds to the literature on the potential implication of Fayol's work for successfully implementing competitive strategies.