Abstract: Globalization makes the world small and interdependent. In order to survive and remain profitable in the competitive environment, it becomes necessary for companies, regardless of their size, to be aggressive in their search and development of strategies that provide competitive advantage as they step up defensive strategies to improve their performance. Despite numerous contributions of SMEs in the growth economy, findings on the strategy adopted in creating competitive advantage pointed that it is not yet exhaustive given the turbulent business environment that they operate in. This study sought to determine relationship between competitive strategies employed by small medium enterprises and their organization performance with a focus to SMEs in Nairobi County. The study was guided by the following specific objectives, that is, to determine effectiveness of cost leadership strategy on performance of small medium enterprises within Nairobi County, to determine the effectiveness of product differentiation strategy on performance of small medium enterprises within Nairobi County, to determine effectiveness of product diversification strategy on performance of small medium enterprises within Nairobi County and to determine the effectiveness of market focus strategy on performance of small medium enterprises within Nairobi County. The study employed descriptive research design. The study relied mostly on primary data sources where questionnaire were used as a source of the data. The target population of this study was 574 SMEs operating within Nairobi County. The study employed a stratified random sampling technique in coming up with a sample size of 116 respondents from a total population of 574. The study generated both qualitative and quantitative data where quantitative data were coded and entered into Statistical Packages for Social Scientists (SPSS Version 17.0) and analyzed using descriptive statistics. Quantitative data was presented in tables and graphs while the explanation to the same was presented in prose. Based on the study finding, the study concluded that most of the organizations attempt to minimize the costs and pass the savings on customers. Product that is valued and perceived by customers as unique, highly skilled and creative product development personnel and product that serves unique purpose are some of the aspects that organizations considers most. Organization attempt to produce new products, modify existing products or add new products. Organizations match market characteristics and company’s competitive advantages. Organizations divide the market into smaller sections that can reach at low cost and that are cost sensitive. There is need for the firms to employ various strategies differentiation and relationship strategies to boost growth and sales. The study recommended that as small and medium sized business had immense opportunities that are not utilized should enlarge their size in terms of market portion and distribution of product where there are no existing business providing the same product. SMEs should seek to adopt more innovative product and services differentiations that make it a stand alone in the market.
Keywords: Differentiation, Market, Performance, Product and Strategy.
Title: Relationship between Competitive Strategy and Performance of Small and Medium Enterprises in Nairobi County
Author: Charity Wangui Maina, DR. MUTURI Willy
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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