Generic Strategies and Performance of Pharmaceutical Manufacturing Companies in Nairobi City County, Kenya
Loading...
Date
2021
Authors
Ngugi, Grace Wanjiru
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Various reforms have been put in place to improve the performance of the pharmaceutical sector. In 2018, the Ministry of Health revamped the pharmaceutical sector to improve access to quality, safe and efficacious medicines and medical products. Other reforms included standardizing of procedures and practices in the pricing and distribution of pharmaceutical and non-pharmaceutical supplies to enable Kenyans to access affordable medical products in the country without financial hardship. There is therefore need for pharmaceutical manufacturing companies to come up with strategies to enhance their competitive advantage over the importing companies. The aim of this study was to analyze the generic strategies and performance of pharmaceutical manufacturing companies in Nairobi County, Kenya. The specific objectives were to: assess the effect of cost leadership strategy on performance of pharmaceutical manufacturing companies in Nairobi County, Kenya, to examine the effect of differentiation strategy on performance of pharmaceutical manufacturing companies in Nairobi County, Kenya and to evaluate the effect of focus strategy on performance of pharmaceutical manufacturing companies in Nairobi County, Kenya. The study was informed by Porter’s Five Forces Model and Resource Based View theory. The study used descriptive research design. The population of this study was all the 22 pharmaceutical manufacturing companies in Nairobi County. The target population was the CEO, general manager and marketing manager in the pharmaceutical manufacturing companies. The study was a census of all pharmaceutical manufacturing companies in Nairobi. A structured questionnaire was used for data collection. Content validity was conducted and Cronbach’s alpha used to test for reliability. The study used primary data which was gathered from the managers. Data collected was organized in spreadsheets for the purpose of analysis. It was coded and entered into Statistical Package for Social Sciences (SPSS, Version 22.0) for analysis. Correlation and regression analysis were conducted to find the relationship between the independent and dependent variables. The findings showed that cost leadership strategy, product differentiation strategy and focus strategy positively and significantly influenced performance of pharmaceutical companies in Nairobi County, Kenya. The study concluded that managing the production expenses enhances business performance as a result of increased profit value. Additionally, the research concluded that lowering prices relative to that of competitors attracts more customers leading to increased sales volume. It was recommended that pharmaceutical firms should always aim at lowering the cost of production in order to reap optimal profits. However, these products should meet the quality demands in the market. It was also recommended that businesses should conduct customer satisfaction surveys in order to bridge the niche that may be identified. This way, businesses will be in a position to offer the relevant products and services and gain customer loyalty which eventually leads to increased profitability. In addition, it was recommended that non price competition strategies such as product packaging should be adopted by pharmaceutical firms to increase profitability. Customers would prefer to buy uniquely packaged products as they appear appealing. Future areas of study should focus on other competitive strategies since the three generic strategies that were identified did not account for 100% of the variation in performance of pharmaceutical firms.
Description
A Research Project Submitted to the School of Business in Partial Fulfillment of the Requirement for the Award of the Degree of Masters of Business Administration (Strategic Management Option) in Kenyatta University, May 2021
Keywords
Generic Strategies, Performance, Pharmaceutical Manufacturing Companies, Nairobi City County, Kenya