Competitive Strategies on Organizational Growth of Manufacturing Firms in Kenya

Abstract

Relationship between competitive strategies and organizational growth of manufacturing firms has gain credence globally. Manufacturing firms Japan has recorded greater success in manufacturing sector globally due to their ability to adopt various competitive strategies that has aided them to achieved sustained competitive advantage. However, manufacturing industry in Kenya has experienced decline over the last five years. Manufacturing sector GDP contribution in Kenya has reduced in 2016 first quarter to KES 118,134 from KES 113,460 million 2016 second quarter. Therefore, this study sought to examine the influence of effect of competitive strategies on the organizational growth of manufacturing firms in Kenya. The specific objective was to examine the influence of cost leadership strategy on organizational growth among manufacturing firms in Kenya, to examine influence of differentiation strategy on organizational growth among manufacturing firms in Kenya, to examine influence of focus strategy on organizational growth among manufacturing firms in Kenya and to examine influence of product innovation strategy on organizational growth among manufacturing firms in Kenya. The study was guided by generic strategy theory, competitive advantage theory, resource based view theory, open systems theory and organizational growth theory. Survey research design was used covering a stratified sample of 189 firms drawn from the 454 manufacturing firms distributed across the 12 key industrial sub-sectors. The researcher used multi-stage sampling technique. In the first instance, stratified sampling technique was used to classify each of the 12 sub-sectors into individual strata. The sample then selected using simple random sampling technique from each of the stratum. Questionnaires were used to collect data. The statistics generated was descriptive statistics which included frequencies and percentages and inferential statistics which included a multiple linear regression. A multiple linear regression model was used to show the relationship between the dependent and independent variables. A pilot study was conducted in order to establish the validity and reliability of the questionnaire. In this study, the questionnaire was tested on 10% of the sample to ensure that it is relevant and effective. The subjects participating in the pilot study included in the final study to avoid survey fatigue. From the study findings, majority of the respondents agreed that competitive strategies are implemented by manufacturing firms in Kenya in which cost leadership strategy and differentiation strategy was mostly implemented. The study revealed that cost leadership strategy had a strong positive correlation with organizational growth. The study established that differentiation strategy plays a significant role on organizational growth. The regression analysis results indicated that differentiation strategy had a statistically significant influence on the organizational growth. The study established that focus strategy had a significantly strong positive relationship with the organizational growth, since a unit improvement in the product innovation strategy was likely to result to an improvement in the organizational growth. The regression analysis results indicated that product innovation strategy had a statistically significant influence on the organizational growth. The study also concluded that all the independent variables (cost leadership strategy, differentiation strategy, focus strategy and product innovation strategy contribute significantly to organizational growth. Based on the findings, study recommended that manufacturing firms do adopt the use of differentiation strategy in their business processes. Managers should focus on good cost management practices in addition to setting low interest rates to derive competitiveness.