Porter’s Generic Strategies and Performance of Selected Automotive Firms in Nairobi County, Kenya
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Date
2021
Authors
Louisa, Kabure
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The rapidly changing business environment that organizations operate within necessitate the employ of dynamic competitive strategies to facilitate exceptional performance and market relevance. The liberalization of the Kenyan market to allow second-hand imports has largely contributed to declining new vehicle sales volumes in spite of sufficient yield to satisfy local demand. In consequence, these firms have had to navigate the challenge of negative performance through price wars that are not a long term sustainable strategy for the business. Accordingly, this study sought to examine the effect of Porter’s generic strategies on performance of selected automotive firms in Nairobi County, Kenya. The specific objectives of the study were to investigate the effect of cost leadership strategy on the performance of selected automotive firms in Nairobi county, Kenya, to examine the effect of differentiation strategy on the performance of selected automotive firms in Nairobi county, Kenya and to determine the effect of focus strategy on the performance of selected automotive firms in Nairobi county, Kenya. In an attempt to leverage on the capacity to sustainably supply local demand the extent of the study covered selected new vehicle firms in Nairobi County, Kenya. The study was anchored on the market based view theory, the resource based view of the firm theory and the balanced scorecard. The study adopted descriptive research design and simple and purposive sampling to acquire the sample size. Drop and pick method using semi-structured questionnaires was employed to collect data. Ten respondents were used for pilot testing. Pearson’s product correlation was used to ascertain the correlation between the variables while the relative importance of each of the variables was determined by the multiple linear regression model. Cronbach’s alpha correlation coefficient was applied to verify the questionnaire reliability, where a level of above 0.7 confirmed internal consistency. Presentation of the collected data was done in charts, graphs and tables and an inference of the study was drawn. The study revealed that Porter’s generic strategies played a significant role in organization performance. The study at 95 percent level of confidence concluded that cost leadership with 0.0218 significance level, differentiation with 0.0234 significance level and focus strategy with 0.0241 significance level greatly affected organization performance. The study with a view to improve organization performance recommended formulation of policies and regulations to foster innovation and create an enabling environment for fair and market driven competition, frequent pricing structure reviews for affordable product offering and viable product innovations to cater for niche segments of the market
Description
A Research Project Submitted to the School of Business in Partial Fulfillment of the Requirement for the Award of a Master’s Degree in Business Administration (Strategic Management) of Kenyatta University, June, 2021
Keywords
Porter’s Generic Strategies, Performance, Selected Automotive Firm, Nairobi County, Kenya