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Influence of Generic Competitive Strategies on Performance in Retail Outlets in Nairobi , Kenya
| Content Provider | Semantic Scholar |
|---|---|
| Author | Wambua, Gerald K. |
| Copyright Year | 2016 |
| Abstract | The purpose of this study was to ascertain the influence of generic competitive strategies on the performance of all the major retail outlets in the Nairobi, Kenya. Specifically, the study aimed at determining the role of Porter's Generic strategies which consist of the overall cost leadership, broad differentiation, focused differentiation and focused cost leadership strategies on the performance of major retail outlets in Nairobi. The study adopted a descriptive survey research design with an aim of obtaining complete and accurate information giving precise precision in achieving the objective of the study. The population of interest included all the major retail outlets within the Nairobi Metropolitan. The major retail outlets were those with a workforce of over two thousand employees for each entire chain of Retail outlet, and with more than 15 branches within the Nairobi Metropolitan area. The sample size consisted the entire population of 78 retail outlets within the Nairobi Metropolitan. The research study entailed using both primary and secondary data. The primary data was obtained through the use of open ended questionnaires and personal information while secondary data was obtained from visiting documentaries such as the organizations' websites. Quantitative data was analyzed using the statistical package for social sciences (SPSS) Version 21 while qualitative data was analyzed using content analysis. The data was analyzed and interpreted using the descriptive statistics on frequency distribution and percentages. From the study findings it was clear that Porter's generic strategies played different roles in impacting on the performance of the major retail outlets operating in the Nairobi metropolitan. The descriptive and inferential statistics (correlation and regression analysis) were used to show the relationship of the independent variables and dependent variable at 5% level of significance. It is notable that there exists a strong positive relationship between the independent variables and dependent variable as shown by R value (0.777). The coefficient of determination (R) explains the extent to which changes in the dependent variable can be explained by the change in the independent variables or the percentage of variation in the dependent variable and the four independent variables that were studied explained 60.40% of the performance in retail outlets as represented by the R.The analysis showed that broad differentiation strategy had the strongest positive (Pearson correlation coefficient =.876, p-value= .000< .05 ) influence on performance in retail outlets. In addition broad differentiation strategy, overall cost leadership strategy, focused differentiation strategy and focused cost leadership are positively correlated to performance in retail outlets with Pearson correlation coefficient of .865, .754 and .721 with p-values of .001 < .05, . 002< .05, .008 < .05 respectively.. In the light of the findings and conclusions, the following recommendations are hereby proposed: The study has however indicated that there is a need for a sustained strategic action to be undertaken by the major retail outlets within International Journal of Human Resources and Procurement Vol. 5 Issue 10 http://www.ijsse.org ISSN 2307-6305 Page | 268 Nairobi Metropolitan in order to enable them to attain their overall objectives of improving or sustaining their performance and to match their generic strategies with the environment in which they operate. The major retail outlets should also integrate more with other entrepreneurial sectors to enhance their business understandings and enlighten the management in terms of knowledge and operations dynamic. There is need to enhance broad differentiation and overall cost leadership strategies play a major role on the performance of the major retail outlets within the Nairobi metropolitan. These two strategies lie at the heart of price wars, which occur when retailers compete with The study has contributed to the body of knowledge by establishing that product quality, customers focus, training and process management through total quality management in telecommunication industry in Kenya. International Journal of Human Resources and Procurement Vol. 5 Issue 10 http://www.ijsse.org ISSN 2307-6305 Page | 269 INTRODUCTION Competition is at the core of the success or failure of firms. Competition determines the appropriateness of a firm's activities that can contribute to its performance and ultimately to profitability and growth. Competitive strategy is the search for a favourable competitive position in an industry (Porter, 2008).The environment in which organizations operate is constantly changing with different factors influencing the performance of organizations. Since the turn of the millennium, the general business environment has been becoming more volatile, unpredictable and very competitive. Coping with the increasingly competitive environment has forced firms to rethink their overall strategies in order to maintain or enhance their performance (Pearce & Robinson, 2001). Johnson & Scholes (2008) observed that industries are responding to customer's demand by becoming more innovative in their new ways of approaching the changed environment. They adopt strategies such as improved customer services, credit facility, post-paid cards and provision of convenience goods and services. Rapid technological change has created a new business environment where innovation has become a top competitive strategy. According to Ansoff & McDonnell 2009) increased competition has created fundamental shift in economic environment where no organization can hope to stay afloat if it fails to come up with proper strategic responses. Andrews (2002), defined strategic responses as the set of decisions and actions that result in the formalization and implementation of plans designed to achieve a firm's objectives. Therefore it is a reaction to what is happening in the economic environment of organizations. Porter (2005), views operational responses as part of a planning process that coordinates operational goals with those of the larger organization. Hence operational issues are mostly concerned with certain broad policies for utilizing the resources of a firm to the best support of its long term competitive strategy and survival. According to Volpe (2011), Supermarkets utilizing everyday low pricing operate more efficiently than those using other strategies. Stores increase their performance by using strategies of their closest competitors. Kenyan Perspective of Public Procurement The Kenyan economy has in general been growing in recent years, with GDP growing by 4.5%, 5.6% and 5.8% in 2012, 2013 and 2014 respectively(World Bank, 2015). However, most of the growth is not contributed by industries which are in the line of the retail outlets business. Agriculture declined from 4.2% to 2.9% in 2012 and 2013 respectively, whereas the manufacturing sector's contribution to the growth of the economy declined from 9.5% to 8.5% in 2012 and 2013 respectively (KNBS, 2014). This decline can be attributed to reduced rainfall in most grain growing areas of the nation and high electricity costs. A decline in these two crucial sectors of the economy has far reaching consequences on the profitability and growth on retail outlets in Kenya in general. There has also been a decline in demand on supermarkets supplies (Onyango, 2012). The adoption of a competitive strategy is a pivotal part of any business, more so in businesses dealing with consumables availed to the final consumer in markets which traditionally have many players (Johnson, 2005). Generally, large retail outlets face stiff competition among themselves and from other players, like the county markets, hawkers, small retail shops, etc. (USDA, 2012). In recent years, there have been entrants of new players in Kenya of international supermarkets, which are further eating into the existing market share of the major Kenyan retail outlets. As of 2015, four global retail chains have already entered the Kenyan market or are planning to enter the market, such as Wal-Mart—present in Kenya through its South African subsidiary, Massmart and Game Stores. Jet and Edgars plan to open retail outlets in Kenya, further intensifying competition in retailing in Kenya. (Euromonitor, 2014). The increased competition has forced the large retail outlets to rethink their strategies and is now moving into residential areas and small towns in a bid to increase their market share. This calls for massive investments in working capital, which is straining the companies' resources and could lead to unsustainable gearing levels compounded by the risk of over trading which may jeopardize the International Journal of Human Resources and Procurement Vol. 5 Issue 10 http://www.ijsse.org ISSN 2307-6305 Page | 270 survival of some of the major retail outlets in Kenya. For example Uchumi Ltd.'s annual report shows that its trade payables for the full year to June 2014 increased 2.5 per cent to Sh1.2 billion from Sh1.17 billion in the previous year and its total liabilities stood at Sh2.5 billion, up from Sh1.6 billion posted the previous year – a 56.2 per cent jump(Uchumi, 2015). The large retail outlets in Nairobi are also facing new challenges due to the entrant and growth of specialist retail stores which target a specific market through the distribution of their specialist products by selling their products directly to their customers though their branded stores, for example Dr. Mattress which specializes in Beds and mattresses, Hotpoint, dealing with electronic appliances and Victoria Courts, among others. Such stores are peeling off a large market share of such products which was previously enjoyed by the large retail outlets. Statement of the Problem Performance of the retail outlets in Kenya has been less impressive compared to the performance of the smaller and medium sized player |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://www.ijsse.org/images/volume5/issue10/ijhrp_v5_i10_267_293.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
