Assessment of The Influence of Competitive Strategies on The Financial Performance of Small and Medium Dairy Processors in Nairobi County
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Date
2020-03
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Tangaza University College
Abstract
The dairy industry in Kenya plays an important role in the creation of employment and food security. It is one of the major drivers which the country is using to achieve the Sustainable Development goals and Kenya Vision 2030. The success of the sector however, is dependent on the ability of the different firms to improve performance through gaining a competitive edge that is sustainable. The main purpose of this study was to find out the competitive strategies used by small and medium dairy processors in Nairobi County, and to assess the influence the competitive strategies have on the financial performance of the firms. Specifically, the study sought to find out the competitive strategies used by small and medium dairy processors in Nairobi County, assess the influence of cost leadership strategy on the financial performance of small and medium dairy processors in Nairobi County, evaluate the effect of differentiation on the financial performance of small and medium dairy processors in Nairobi County, establish the influence of cost focus on the financial performance of small and medium dairy processors in Nairobi County, and determine the effect of differentiation focus on the financial performance of small and medium dairy processors in Nairobi County. The study used a descriptive survey research design, and a census of the firms. Questionnaire was the key instrument of data collection. The data collected was analyzed using descriptive statistics. The summarized information was presented using tables and charts. The study found out that the dairy enterprises had adopted the differentiation strategy more than the cost leadership, cost focus and differentiation focus strategies as represented by 32% of the respondents. Additionally, from the findings of the study, 67.5% who were the majority of the respondents indicated that cost leadership had influence on the performance of the firms to a moderate extent, while 62.7% agreed that differentiation strategy influenced performance to a very large extent. Cost focus strategy with 31.3% majority and differentiation focus strategy with 44.5% majority also had influenced the performance of the firms positively to a moderate and large extent respectively. This implies that the adoption of Porter’s generic strategies influences the performance of firms. The study concluded that firms use more of the differentiation strategy since it had more influence on sales growth than cost leadership, cost focus, and differentiation focus strategies. It is recommended that a longitudinal and inferential study be carried out on a larger study population of the small and medium dairy firms, which extends beyond Nairobi County. The study recommended that a replication of the study be carried out using more objective measures of performance like profits. The conclusions made from the study findings may be used by managers of both existing firms and new entrants into the industry, who may need to make decisions on what competitive strategies may be suited to their business in order to position themselves in the industry and to improve performance.
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Keywords
Influence of Competitive Strategies, Financial Performance, Medium Dairy Processors