Competitive Strategies and Organizational Performance in Small and Medium Enterprises Listed at the Nairobi Securities Exchange

Abstract

The main aim of competitive strategies is enabling a company to attain a position in the market that is profitable and sustainable while dealing with the forces that determine competitiveness in the sector the company is operating in. This means that organization needs to know what causes the competition and work towards developing strategies that enhance the organizational performance of their respective firms. The importance of SMEs in the economy is on the rise globally with the increase in deliberate policies of the government and legislations that aim to nurture the small enterprises as the driving force for the growth of the economy and creation of more job opportunities. The main aim of the study was to establish how competitive strategies used by SMEs influence organizational performance. This study utilized cross sectional qualitative survey research design. The target population for this study was the four chief operations managers (or their equivalents) at the four SMEs listed on the Nairobi Securities Exchange. The four SMEs are Nairobi Business Ventures, Home Afrika, Atlas Support and Flame Tree. The four managers formed the population of the study and so the study was a census. This study utilized an interview guide. Qualitative data was collected and analyzed using content analysis. The study found that the SMEs applied the use of differentiation strategies, cost leadership strategies and focus strategies which are competitive strategies. With the implementation of these competitive strategies by the companies, sales turnover and return on investment increased; the level of customer satisfaction, and product/services delivery time improved. The study also found that product/ services innovation and quality of product/ services improved to a great extent. For learning and growth the study found that application of communication strategies, use of technology, and enhances employee skills improved. The study therefore concludes that the competitive strategies used by SMEs positively influence the performance of the company. Managers of the companies should be aware of the needs of clients and provide them with product and services this will increase comoetitiveness of the company. The study also recommends that the companies should use holistic approach in strategy implementation this will increase the employee participation and therefore have a positive influence on the general performance of the company. SMEs should regularly review their marketing strategies and policies to ensure that they are up to date with the current trends in the market and they are effective. SMEs face various challenges, with the most pressing challenges being competition, lack finance. This means that the government has to provide incentives, subsidies as well as set up a conducive business operating environment for SMEs.