Effect Of Competitive Strategy And External Environment On Performance Of Food Processing Companies In Nairob

Abstract

The study’s main objective was to establish the effect of external environment on the relationship between competitive strategies and performance of food processing companies in Nairobi. The research employed the cross-sectional research design and targeted all 64 food processing Companies in Nairobi County where the operating manager of each of the Companies were interviewed. Secondary data was collected from financial statements of the food processing Companies. Primary data was collected via questionnaires. Use of statistical techniques (inferential statistics) that are advanced was applied. The dependent and the independent variable relationship was determined through application of a Regression analysis. The study revealed that food processing companies does costing of all products and services and maximizes on profitability through cost reduction strategies. Prediction by regression indicated that cost leadership positively impacts food processing companies’ performance in Nairobi. Regression analysis also revealed that differentiation strategy has an impact on performance of food processing companies, meaning that when differentiation strategy increases by a unit the performance of food processing companies will also increase. It was noted that focus strategy had a positive impact on food processing companies performance as well. The study also demonstrated that external environment has a positive change on food processing companies’ performance. This study recommends that as far as cost leadership is a form of competitive advantage the food processing companies need to not only focus on being a lowest cost management compared to competitors but also have in mind the fact that their customers not only value low prices but are concerned in the quality of products offered. The study recommends due to changes that are taking place in customers taste and preference, food processing companies should continue to differentiate their products. Through this they will be able to compete in other areas other than price, able to focus on quality and create brand image hence creating customer loyalty and achieving better performance. This study only looked at three factors, cost leadership, product differentiation and market focus. Further research ought to be conducted targeting other Nairobi companies to show the relation between competitive strategies and performance.