Porter’s Generic Strategies and Competitive Advantage of Small and Medium Enterprises Within Industrial Area of Nairobi City County

Abstract

With the ever transforming business environment, a few businesses can be assured of survival and secure returns and it is for these reasons that the intensity of business competition has increased in all businesses. However, a business that understands the market needs and is able to fulfil customers in a more effective and profitable way than its competitors results to the business attaining competitive advantage. The objective of this study was to establish the relationship between Porter’s generic strategies and competitive advantage of Small and medium enterprises within industrial area of Nairobi City County This study was anchored on resource based view theory and competence strategy-based theory. Descriptive research design was adopted in this study. The population of the study was all the manufacturing small and medium enterprises operating within Industrial Area region in Nairobi. As such, all the 66 manufacturing SMEs registered by the Kenya Manufacturing Association (KAM) based at Industrial Area was targeted. A census survey sampling approach was employed in selecting the sample population for the study. The study utilized primary data. Questionnaires were used to gather primary data. Descriptive as well as inferential statistics were then used to perform analysis. The study concludes that differentiation strategy has a positive influence on competitive advantage of SME’s. It indicates that any unit increase in the differentiation strategy will cause competitive advantage of SME’s to increase. Also, the study concludes that increase in cost leadership strategy was confirmed to cause an increase in the competitive advantage of SME’s due to the positive effect. Focus strategy of the SME showed a positive impact on competitive advantage of SME’s which means that it increases competitive advantage of SME’s as a result of a unit increase. The study recommends that that manufacturing SMEs should produce goods that are unique and of different quantities for the various available markets. Hence, this will help them to increase and expand their present markets since they will be in a position to access wealthy customers who can buy in bulk and the ordinary customers who can only afford small portions at a time. Further, the study recommends that manufacturing SMEs in Nairobi City County should embrace cost leadership through embracing technology in their businesses. This will help them to be effective in their work thus reducing unnecessary manpower.