Competitive Strategies and Performance of Foreign Owned Restaurants in Nairobi County, Kenya

Abstract

There has been great competition in the business environment because firms endeavor to outdo one another. Hence, it is vital for firms to perform better than their competitors. The general objective of this study was to determine the influence of competitive strategies on performance of foreign owned restaurants in Nairobi City County. Specifically, the study sought to establish the competitive strategies employed by foreign owned restaurants in Nairobi City County, and to establish the effect of competitive strategies on the performance of foreign owned restaurants in Nairobi City County. This study was based on Michael Porter’s Competitive Forces Model and the Resource Based View theory. The study used a descriptive cross-sectional research design. This study's target population was all the 47 foreign owned restaurants operating in Nairobi County CBD. For primary data collection purpose, this study divided the population into five strata, Italian, Chinese, Ethiopian, Indian and French. Purposive sampling was used to select individual respondents from each stratum. The researcher selected two respondents from each of the 47 foreign restaurants selected for the study giving a total of 94 respondents. Primary data was utilized in the study. Structured questionnaires were employed to obtain primary data using the Likert Scale. The targeted respondents in this study were employees in the managerial positions of the foreign owned restaurants in Nairobi City County. This is because they are involved in the organizations’ management and have a broad understanding of the affairs of these organizations. The primary data collected by the questionnaire was coded and entered into SPSS. Descriptive statistics in form of frequencies and percentages was used to analyze the descriptive elements of the study. Correlations and regression analysis was calculated to draw inferences to the entire population. The study concluded that foreign owned restaurants use competitive strategies. These strategies included cost leadership strategy, differentiation strategy, and focus strategy. The study also concluded that competitive strategies have a positive effect on the organization performance of foreign owned restaurants in Nairobi City County. Hence, use of cost leadership strategy, differentiation strategy and focus strategy result to improved organization performance of foreign owned

restaurants in Nairobi City County. Further, the study concluded that focus strategy had the greatest effect, followed by cost leadership strategy, while differentiation strategy had the least effect. The study recommends that the all stakeholders involved in the management of the foreign owned restaurants in Nairobi City County should use the findings of this study as they point out the importance of using competitive strategies. Using these findings, they will be informed on the best competitive strategies to use so as to boost the performance of their restaurants. From the study findings, they can formulate policies that will enable them reap the most from the use of a particular type of competitive strategy.