AN ANALYSIS OF COMPETITIVE STRATEGIES AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KENYA: A CASE OF NAIROBI CENTRAL BUSINESS DISTRICT
Keywords:competitive strategies, performance, cost leadership, differentiation, market focus, strategic alliance, small and medium enterprises
Purpose: The purpose of this study was to determine the influence of competitive strategies on the performance of small and medium enterprises in Kenya.
Methodology: The study employed a descriptive correlation design using primary data collected using questionnaires. The study targeted 4,560 SMEs in Nairobi CBD. The collected data was coded and entered into SPSS (V.20) to create a data sheet that was used for analysis. Data was analyzed using quantitative techniques. Descriptive statistics were used to describe the characteristics of collected data. Pearson’s Correlation, Analysis of variance (ANOVA) and Multiple Regression Analysis were used to establish the relationships among the study variables.
Findings: Cost leadership, differentiation, market focus and strategic alliance were all found to have a positive and significant influence on SME performance.
Unique contribution to theory, practice and policy: The study recommended that: SMEs should embrace and invest in cost leadership strategies most especially forming linkages with service providers, suppliers and other supplementary institutions since it will enable them achieve competitive advantage; SMEs ought to focus and invest more on differentiation as it could be used as a major competitive advantage tool against competitors; SMEs should know on what basis to segment their products, services and operations; and that SMEs should embrace strategic alliances to increase their market share.
Arasa, R. & Githinji, L. (2014). The relationship between competitive strategies and firm performance: A case of mobile telecommunication companies in Kenya. International Journal of Economics, Commerce and Management, 2(9), 1-15.
Bowen, M., Morara, M., & Mureithi, S. (2009). Management of business challenges among small and micro enterprises in Nairobi-Kenya, Journal of Business Management, 2 (1).
Camisón, C.,Boronat, M., & Villar, A. (2014). Technical strategic alliances and performance: The mediating influence of knowledge –based Competencies. Research Thesis.
Dirisu, J. I., Ilioya, O & Ibiduni, .O. S. (2014). Product differentiation: A tool of competitive advantage and optimal organizational performance (A Study of Unilever Nigeria Plc). European Scientific Journal, 9(34), 258-281.
Farid, M., Ebtihaj, A., & Omneya, M. Y. (2013). Matching competitive strategy to performance: An exploratory investigation in the emerging economy of Bahrain. Journal of Global Strategic Management, 64-78.
Gerber, M. E. (2011). The e-myth revisited: Why most small businesses don’t work and what to do about it. New York. Harper Collins.
Hilman, H. (2013). Enhancing organizational performance through strategic alignment of cost leadership strategy and competitor orientation. Middle-East Journal of Scientific Research, 18 (10): 1411-1416.
Kasiulevicius, V., Sapoka, V., & Filipaviciue, R. (2006). Sample size calculation in epidemiological studies. Lithuania: Vilnius University
Kenya National Bureau of Statistics (2012). National Micro and Small Enterprise Baseline Survey 2012, Survey Results, the Kenya National Bureau of Statistics (KNBS) – Kenya.
Khaled, M. A. (2012). Differentiation and organizational performance: Empirical evidence from Jordanian companies. J Economics, 3(1): 7-11.
Kim, L. & Lim, Y. (2012). Environment, generic strategies, and performance in a rapidly developing country: a taxonomic approach. The Academy of Management Journal, 31(4), 802 27.
Lee, C. W. (2012). Strategic alliances influence on small and medium firm performance. Journal of Business Research 60, 731–741.
Luliya, T.,Sununta, S., Yuosre, B., & Chotchai, C. (2013). Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), 168 – 184.
Muthoka, M & Oduor, P. (2013). Influences of Strategic Alliances on Organizational Performance: Supermarkets and Their Alliances in Kenya. European Journal of Business and Management, 6(34).
O’Farrell, P. N., Hitchens, D. M. & Moffat, L. A. R. (2013). The competitive advantage of business service firms: A matched pair’s analysis of the relationship between generic strategy and performance. The Service Industry Journal, 13(1), 40-64.
Onugu, B. A. N. (2015). Small and medium enterprises in Nigeria (SMEs): Problem and prospect. Being a Dissertation Submitted to St. Clement University in Partial Fulfillment of the Degree of Doctor of Philosophy in Management.
Porter M.E., (2012). Competitive strategy: Techniques for analyzing industries and competitors, Free Press, New York.
Porter, M. (1980). Competitive strategy, Free Press, New York, NY.
Porter, M. (1985). Competitive advantage: Creating & sustaining superior performance, Free Press, and New York, NY.
Powers, T.L. & Hahn, W. (2014). Critical competitive methods, generic strategies, and firm performance, International Journal of Bank Marketing, 22(1), 43-64.
Prajogo, D. I. (2012). The relationship between competitive strategies and product quality. Industrial Management & Data Systems, Vol. 107 Iss: 1, pp.69 – 83
Raduan, C .R., Jegak, U., Haslinda, A. and Alimin, I. I. (2014). A conceptual framework of the relationship between organizational resources, capabilities, systems; Competitive advantage and performance. Journal of International Studies - Issue 12
Spencer, X. S., Joiner, T. A. & Salmon, S. (2010). Differentiation strategy, performance measurement systems and organizational performance: Evidence from Australia. International Journal of Business, 14(1), 84-103.
Thompson A. and Strickland A. J. (2010). Strategic management: Concepts and cases, Irwin, New York.
Visser, K. (2013). Enterprise education in South Africa. Papers in education, training and enterprise. Centre for African Studies, University of Edinburgh.
Yanney, J. P. (2014). Business strategy and leadership style: Impact on organizational performance in the manufacturing sector of Ghana. American Journal of Industrial and Business Management, 4, 767-775.