Competitive Strategies and Organizational Performance of Construction Companies in Kisumu County, Kenya

Abstract

Competitive strategy is a long-term action plan of a particular firm in order to outperform its rivals and gain market leadership. This entails identifying assets of competition inside the chaotic surroundings thereafter developing strategies that suit organizational skills to the modifications within the surroundings. Competitive advantage is composed of the maneuvers, tactics and procedures a company has and is employing to draw customers, resist competitive stress and enhance its market position. The research objectives were to determine the competitive strategies adopted by construction firms in Kisumu County and establish the influence of the competitive strategies on firm performance. This study was based on Game Theory and Strategic Conflicts model. The study used cross sectional descriptive survey design. Target population was composed of 200 listed resident construction companies operating in Kisumu County. A random sampling technique was employed to select 134 respondents who were determined using Yamane formula. A structured questionnaire was used to collect primary data. Descriptive statistics and inferential statistics were used to analyze data. The study established that the construction firms in Kisumu County adopted competitive strategies which include; cost leadership which was achieved by offering competitive prices among others, product differentiation which was achieved by the reputation of the firm products, growth strategies which include a strong brand, expanding and opening branches in other regions, grand strategies which was achieved by adoption of new building technologies and embracing business integration with other firms. The study findings established that firm performance was significantly influenced by the three generic strategies (cost leadership, differentiation and focus). Further, out of the four growth strategies studied, the findings revealed that market penetration and market development were the only strategies that significantly affected firm performance. However, grand strategies had three strategies namely; joint venture, innovation and strategic alliance that influenced firm performance significantly. The findings also showed grand strategies had significant effect on all the tested five performance indicators, whereas generic strategies significantly influenced learning and growth and environmental safety and corporate social responsibility. The study findings equally established that growth strategies had significant influence on the following three performance indicators; financial performance, customer satisfaction and environmental safety and corporate social responsibility. The research findings showed that three broad strategies: generic strategies, growth strategies and grand strategies had statistically significant influence on firm performance. The findings also revealed that the most predictor variable was the generic strategies followed by grand strategies and the least was growth strategies. The research therefore deduced that competitive strategies have influence on firm performance and therefore advise firms to adopt competitive strategies. Arising from the study findings, the researcher proposes the following areas for further study: There is a particular need for further study establishing factors affecting the embracing and execution of competitive strategies within the construction industry in Kisumu County. Also a further research should be undertaken to identify the influence of competitive strategies on performance of resident construction companies in other counties and compare the results.