INFLUENCE OF GENERIC STRATEGIES ON PERFORMANCE OF METAL WORKS SME BUSINESSES IN NAIVASHA TOWN
George Ochieng Mita - Master of Business Administration, Laikipia University, Kenya
Prof. Isaac Ochie'ng - Laikipia University, Kenya
Dr. Robert Mwebi - Laikipia University, Kenya
ABSTRACT
With increase in competition that most businesses are facing today, rewards will accrue to those who will adopt generic strategies to ensure that they outperform their competitors. Performance of the SME sector is critical and will tremendously influence the performance of the entire Kenyan economy. However, there is little documented literature on how generic strategies influence the performance of SME in Kenya. This study therefore aimed at determining the influence of generic strategies on performance of metal works SME sector in Naivasha town in Nakuru County. The specific objectives were; to assess influence of cost leadership strategy in the performance of Metal works SME businesses; to determine how differentiation strategy has contributed to performance; and to examine the influence of focus strategy on the performance of Metal works SME businesses in Naivasha town. The study adopted a descriptive survey design in addressing the research objectives. The study targeted metal works SME in Naivasha town. The target population of the study was all the Metal works SMEs in Naivasha town. There are 150 Metal works SMEs registered by the Sub County government in Naivasha as at the end of 2016. A sample of 46 SME which is 38.3% of the population was selected using simple random sampling. The study found that 93.5% of the respondents were male while the remaining 6.5% were females Correlation results showed that none of the predictor variable was strongly correlated with each other. All of them had coefficients < 0.5, thus a model of three predictor variables could be used in forecasting performance (sales revenue). The results also showed that R which is the multiple correlation coefficients that shows quality of the prediction of the dependent variable by the independent variable is 0.932. This is a good indication since it points to a strong correlation. The R-Square which is the coefficient of determination equals 0.869 which shows that 86.9% of the variation in performance (sales revenue) can be explained by the changes in Differentiation strategy, Cost Leadership strategy and Focus strategy leaving 13.1 percent unexplained. The study recommended the need to employ strategies that would ensure superior value and performance. The differentiation strategy is highly recommended since there are a lot of substitute products in the market. This would mean that metal works SMEs offer services and products that differentiate them from others. Cost leadership is also recommended, this would mean that metal works SMEs operate at lower costs so as to be able to lower the prices of their commodities to attract customers and still remain profitable.
