INFLUENCE OF COMPETITIVE STRATEGIES ON PERFORMANCE … of competitive... · INFLUENCE OF COMPETITIVE STRATEGIES ON PERFORMANCE OF PRIVATELY-OWNED MEAT PROCESSING COMPANIES IN NAIROBI

INFLUENCE OF COMPETITIVE STRATEGIES ON PERFORMANCE OF PRIVATELY-

OWNED MEAT PROCESSING COMPANIES IN NAIROBI COUNTY

MUTISYA Faith Mutindi1, DR. SENELWA Anaya W.

2

1, 2 Jomo Kenyatta University of Agriculture and Technology

Abstract: The general objective of the study was to investigate influence of competitive strategies and

performance of privately-owned meat processing companies in Nairobi. The study explored the

influence of cost leadership strategy and performance of privately-owned meat companies in Nairobi;

assess the effect of delivery and distribution strategy on performance of privately-owned meat

companies in Nairobi; determine the impact of products quality and performance of privately-owned

meat companies in Nairobi; establish the impact of differentiation focus on performance of privately-

owned meat companies in Nairobi. The firm performance was measured using return on equity and

return on asset. The instrument for data collection used in the study was questionnaires. The study was

both qualitative and quantitative. This study used descriptive survey approach. Data was analyzed

using inferential statistics, regression analysis and ANOVA. SPSS version 22 was used to code and run

the data. Based on the study findings, the study concluded that performance of privately-owned meat

companies in Nairobi can be improved by cost leadership strategy, delivery and distribution strategy,

products quality, differentiation focus strategies. Regression results also indicated that cost leadership

strategy had a significant effect on performance of privately-owned meat companies in Nairobi.

Second in regard to delivery and distribution Strategy, the regression coefficients of the study show

that it had a significant influence on performance of privately-owned meat companies in Nairobi. The

regression coefficients of the study also showed that Products Quality has a significant influence on

performance of privately-owned meat companies in Nairobi. Lastly, in regard to the fourth objective,

the regression coefficients of the study showed that Differentiation Focus strategies had a significant

influence on performance of privately-owned meat companies in Nairobi. Other studies can seek to

assess the competitive strategies on performance of privately-owned firms Nairobi.

Key Words: Cost Leadership, Timely Delivery, Distribution, Differentiation

Introduction

Globalization has led to today’s dynamic business environment which is continuously changing

because of, knowledgeable and demanding customers, changing technology, increasing intensity of

competition, regulatory changes as well as mergers and acquisitions (Wing, Lenartowicz & Apud

2016). This has resulted in markets that can be characterized as increasingly turbulent and volatile and

has caused many organizations to seek competitive capabilities that enable them to exceed customers

expectations and enhance market and financial performance thus firms need to have contingencies to

this change by implementing strategies that permit quick alignment and redeployment of assets to deal

with environmental changes (Burnes, 2010). Ngonga (2011) notes that firms need to adopt strategies

that would enable them maintain competitive positions in the market or risk elimination. Ngonga

(2011) holds the view that to succeed, firms need to develop capability to manage threats and exploit

emerging opportunities with speed. Organizations therefore need effective strategies and strategic

initiatives that match the needs of the uncertain environment they are operating in and fulfill their

missions and satisfy their stakeholders.

The ability of firms to survive in the business environment is dependent upon their selection and

implementation of a competitive strategy that differentiates the firm from competitors (McGee, 2013).

International Journal of Business Management & Finance 1(50): 851-869, 2018

© SERIAL PUBLISHERS, 2018 www. serialpublishers.org

ISSN 2616-1818

852 Mutisya Faith Mutindi, International Journal of Business Management & Finance 1(50): 851-869, 2018

The characteristics of the competitive context are considered to be the factor that most strongly

influences the type of strategy a company pursues or can formulate, and the level of profitability. It is

also accepted that a company’s ability to be competitive and profitable depends not only on the type of

strategy it formulates and implements, but also on the way in which it is formulated (Rogers, 2017).

Demand for meat products, especially beef, has declined dramatically in North America. It has been

estimated that the beef consumption in U.S and Canada has declined by 42% and 58% respectively in

past two decades (Brocklebank & Hobbs, 2014). They noted that this decline in beef consumption was

caused by low quality and inconsistent beef products that did not meet consumers’ specification. In

addition, beef products have been marketed as generic meat cuts and this factor prevents consumers

from choosing beef products based on differentiated quality characteristics (Brocklebank & Hobbs,

2014). To address these problems, many firms have begun to move away from this commodity based

marketing and focus on increasing product differentiation based on branded beef.

In South Africa, cattle production is at 1 million heads from 12.6 million in 1994 to 13.5 million in

2004 due to human encroachment thus areas for grazing declined owing to expanding human

settlements and other activities such as mining, crops, forestry and conservation (Directorate

marketing, 2011). Beef cattle producers vary from highly mechanized commercial to communal

subsistence producers using indigenous technology. The cattle population of the 14.1 million available

in South Africa, 60% are owned by commercial farmers and 40% by emerging and communal farmers.

The gross value of beef production is dependent on value added and processed meat. The average

gross value of beef produced during the period 2000/01 until 2009/10 amounted to R 8, 880,844

(Directorate marketing SA, 2011). Global value of agricultural output contributes to 40 percent in food

security and supports the sustainable development goals of almost billion people Agricultural research

council (2011). Beyond their role in generating food and income, livestock are a valuable asset, serving

as a store of wealth, collateral for credit an essential security net during calamitous times. Globally,

livestock contribute 15 percent of total food energy and 25 percent of dietary protein, (Directorate

marketing, 2011).

In Kenya, beef Industry contributes to the sustainable development goals of food and nutrition security

(Faith Mutisya, 2018). The meat industry contributes to 16% of Agriculture GDP thus the country

depends largely on agriculture for its manufacturing sector Aklilu, Y. (2008). This demand is coupled

with the increasing population in towns and cities leading to an increase for processed foods and value

added products with easy and fast preparation methods. This demand has driven processing firms into

vigorous struggle for sustainable competitive advantage (Baldwin et al 2008). To combat the

competition from the readymade food in the supermarkets, butcheries and other eating places which

has simplified life for many people, firms have to position themselves strategically by applying

different strategies in order to improve their performance. (Muthami et al, IGAD 2011). This has had

an impact with disposable incomes reducing and consumer behavior being affected and this has

resulted in consumers being cautious in their spending on processed meat.

In the government big four agenda; the livestock sector employs approximately 50 percent of Kenya’s

agricultural labor force and guarantees livelihoods for the 6 million pastoralists and agro-pastoralists

that live in the country’s arid and semi-arid lands (ASALs). The livestock sector’s contribution to

Kenya’s gross domestic product (GDP) range from 5.6 percent (Kenya National Bureau of Statistics)

to 12.5 percent (Behnke & Muthami, 2011), while Agricultural GDP range from 30 percent to 47

percent (FAO) (Muthee, 2006). Cattle are the most important source of red meat, accounting for 77

percent of Kenya’s ruminant off-take for slaughter. Baldwin et al., 2008 noted that approximately 80 to

90 percent of the red meat consumed in Kenya comes from livestock that are raised by pastoralists,

with the remainder coming from highland cattle.


Velji (2012) posit that the changing consumer behaviour as a result of changing lifestyles presents a

growing need for finished food products. Further value addition helped grow market share and sales

volumes. The value chains are primarily geared toward the domestic market, which consumes

approximately 99 percent of domestic production. Small volumes of meat are exported by the newly

re-operationalized Kenya Meat Commission (KMC) and private meat exporters who use KMC’s

facilities for a fee, as well as Choice Meats (a subsidiary of Farmers Choice), while the exporter and

individual ranchers export small volumes of live animals to Mauritius, Burundi (mainly goats), and

Uganda.

Statement of the Problem

Today’s dynamic business environment is continuously changing because of globalization, regulatory

changes, increasing intensity of competition, increasingly demanding customers, new information

technology, and mergers and acquisitions (Wing et al., 2006). This has resulted in markets that can be

characterized as increasingly turbulent and volatile and has caused many organizations to seek

competitive capabilities that enable them to exceed customers expectations and enhance market and

financial performance thus firms need to have contingencies to this change by implementing strategies

that permit quick alignment and redeployment of assets to deal with environmental changes (Burnes,

2000)

At present the strategies adopted by the meat processing companies are becoming highly important and

critical as the competition in the sector has intensified to the extent that firms need to change their

strategies in order to survive (D. Muthami et al, IGAD 2011). It is important in a sense that it enables

the companies to be cost effective, quality conscious and highly competitive in the contemporary

global market and thus in order to achieve their objectives, the companies must evaluate its internal

and external factors and formulate appropriate strategy congruent to the present situation.

Demand for meat products, especially beef, has declined dramatically in North America. It has been

estimated that the beef consumption in U.S and Canada has declined by 42% and 58% respectively in

past two decades (Brocklebank and Hobbs, 2014). Barkeman (2011) in United States noted that

consumer preferences and lifestyles are continuously changing and these results in greater emphasis on

taste and consistency, convenience, value for money, versatility and health factors thus businesses

must develop a greater understanding of consumer needs and changing preferences and anticipate and

respond to consumer concerns of safety, health and quality well in advance. As the current economic

environment becomes more competitive and introducing new brands becomes increasingly costly,

companies must find new strategies to increase their capacity and competitiveness (Lipponen et al.,

2004). South Africa (Johnson & Scholes, 2012) Organizations need to create a customer experience

that keeps customers coming back, a strategy which were ultimately separate one’s firm from the

competition. Building customer loyalty starts with a commitment to deliver excellence at every

moment of serving the customers and must extend from upper management to every frontline

employee.

The consumer has been empowered by greater knowledge and the changing needs. A combination of

these two facts implies that not only the retailer, but also the organization as a whole must make sure

that it is aligned to deliver customer value, in order to ensure sustainable competitiveness and survival,

manage risks and ensure acceptable returns. There is no previous study that has ever been conducted

on it and is on this basis that the study was undertaken to determine the influence of competitive

strategies on performance of privately owned meat processing companies in Nairobi.


The specific objectives of the study were;

i. To explore influence of cost leadership on performance of privately owned meat companies.

ii. To assess influence of timely delivery and distribution strategy in distribution on performance

of privately owned meat companies.

iii. To determine the influence of differentiation on performance of privately owned meat

companies.

iv. To establish the influence of differentiation focus on performance of privately owned meat

companies.

Theoretical Review

This study was guided by a number of theories as discussed subsequently. Porter's Five Forces Model,

Resource based theory and Institutional theory.

Environmental determinism theory

Cost leadership strategy has been linked to the environmental determinism theory the, Pfeffer and

Salancik (1978). This explained that organizations strategies and plans are determined by the

environmental context the firm operates in whereby a business aims to differentiate within one or small

number of the target market segments by achieving higher prices than un differentiated products

through specialist expertise or other ways to add value for customers (Porter 1985) Some researchers

define managerial role as inactive or symbolic where firms fail or succeed despite the strategic

decisions made within their organization. King (2007) review on the theory shows that some of the

central perspectives in this area such as system-structural and natural selection views are in favor of

environment driven structures for the survival of organizations in opposition to primacy of internal

managerial actions.

Environmental determinism argues that the environment is the primary mechanism for explaining the

performance of an organization. Therefore, strategic leaders have limited effect on the performance of

an organization. There are different frameworks to help examine the macro environmental influences

in which firms operate. A political, economic, social, and technological (PEST) analysis is one of

them. Firms do not have any influence on the macro environmental forces such as political, economic,

social, and technological factors. Therefore, these factors can be viewed as either threats or

opportunities. This theory was guide this study as an analysis of these factors on the country or region

level would give a firm the chance to better position themselves within their environments through

increased awareness and adaptation. Firms are also under their microenvironments’ influence which

has a closer effect on an organization’s ability to make a profit.

Resource Based Theory

Differentiation strategy has been linked to the resources based view (RBV) model stresses on the

internal capabilities of firms. The underpinning concept of the RBS is that no two organizations are

identical because no two organizations have acquired the same set of organizational resources such as

capabilities, skills, experience and even organizational cultures. Thus organizations must possess

organizational resources with attributes that are rare, valuable, costly to imitate and non-substitutable,

which allow them to hold the potential of sustained competitive advantage over other competitors

Kong (2012). As Ludwig & Pemberton (2013) have shown, any firm operating in today's dynamic

external business environments needs to focus on competitive survival and their capabilities. Peng

(2013) established the notion of core competencies, which focus attention on a critical category of

resource, which is part of the firm’s capabilities.


According to David, (2011), the approach to competitive advantage contends that internal resources

are more important for a firm than external factors in achieving and sustaining competitive advantage.

In this view, organizational performance is primarily determined by internal resources including

physical resources, human resources and organizational resources. The mix, type and amount and

nature of a firm’s internal resources should be considered first and foremost in devising strategies that

can lead to sustainable competitive advantage. In other words its internal capabilities determine the

strategic choice it makes in competing in its external environment. The basis of the resource-based

view is that successful firms find their future competitiveness on the development of distinctive and

unique capabilities, which may often be implicit or intangible in nature. Thus, the essence of strategy is

or should be defined by the firm s unique resources and capabilities. King (2017) states that building of

capabilities derives from initial heavy and risky investments which allow firms to exploit the

opportunities available for scale and scope.

Open system theory

The theory has been linked to the differentiation focus strategy on delivery and distribution and

performance of firms. Organizations as open systems remain efficient and effective by adapting to the

shifts in their environment. Meaning they understand and service their target market better than anyone

else by having personal touch with their clients. They have to be concerned not only with what

happens within and among its subsystems and people, but also with what happens outside of itself for

no organization operates in a vacuum. The decisions the organization make have to fit in two

environments internal and external. These forces influence condition in every organization; however

the most influential force in one organization may have little impact on other organizations. Managers

continually ought to scan and monitor the environment.

The systems therefore that interact with the environment are therefore open systems (Plunkett et al.,

2008). Organizations are thought of as systems with interrelated subsystems that process various inputs

to generate various outputs, pleasing users and customers in the process. Some modest environmental

shifts can easily alter the results of management decision within organization. As open systems they

need structures to deal with forces in the world around them (Scott, 2008). Environmental determinism

argues that the environment is the primary mechanism for explaining the performance of an

organization. Therefore, strategic leaders have limited effect on the performance of an organization.

Firms do not have any influence on the macro environmental forces such as political, economical,

social, and technological factors. Therefore, these factors can be viewed as either threats or

opportunities. This theory was guided this study as an analysis of these factors on the country or region

level would give a firm the chance to better position themselves within their environments through

increased awareness and adaptation. Firms are also under their microenvironments’ influence which

has a closer effect on an organization’s ability to make a profit. A microenvironment consists of

bargaining power of suppliers, bargaining power of customers, threat of new entrants, and threat of

substitute products (Porter 1996).

Competitive advantage theory

Accordingly to the competitive theory, a firm’s relative position within its industry determines whether

a firm’s profitability is above or below the industry average. The fundamental basis of the average

profitability in the long run is sustainable organizational performance. There are two types of

competitive advantage combined with scope of activities for which a firm seeks to achieve them, leads

to generic strategies: cost leadership, differention and focus (porter, 1980).


Differentiation focus has been linked to the Porter's Five Forces Model whereby; there are countless

variations in the competitive strategies that companies employ, mainly because each company's

strategic approach entails custom-designed actions to fit its own circumstances and industry

environment. The custom-tailored nature of each company's strategy makes the chances remote that

any two companies-even companies in the same industry employed strategies that are exactly alike in

every detail. Managers at different companies always have a slightly different spin on future market

conditions and how to best align their company's strategy with these conditions; moreover, they have

different notions of how they intend to outmaneuver rivals and what strategic options make the most

sense for their particular company. In this study Porter's Five Forces Model illustrated how managers

in privately owned meat companies in Nairobi outdo their competitors. The proponents of this model is

Michael Porter’s Generic Framework theory gives techniques for analyzing industries and competitors.

This theory can be used to find the optimum position for a company within an industry and often a

determinant of a company’s profitability can be said to be the attractiveness of an industry in which it

operates.

Porter (2008) identifies five forces of competition as fierce rivalry, threat to entry, threat to substitutes,

power of suppliers and power of buyers. He upholds that understanding the forces that shape a sectors

competition is the basis for developing a strategy. Generic strategies can be effectively correlated to

organizational performance by using key strategic practices. Porter posits that if the forces are extreme,

no organization earns striking returns on investment and if the forces are benign, most of the

companies are profitable. The composition of the five forces varies by industry and that an

organization needs a separate strategy for every distinct industry such as the public universities.

Porter's (1998) generic strategies comprise of low cost, differentiation, focus and combination

strategies. These are commonly conventional as a strategic typology for all organizations.

Porter (1985) asserts that an organization is mostly concerned with the amount of competition within

its industry. He asserts that low cost and differentiation are distinct ends of a continuum and that may

for no reason be related to one another has sparked a great deal of theoretical debate and empirical

research. This debate may have been partly encouraged by the absence of conceptual building blocks

supporting his value system theory. Scholars have since postulated theories that argue against Porter’s

point of view, proposing that low cost and differentiation may really be independent dimensions that

should be strongly pursued concurrently (Fournier, 2017).

In summarizing the above model it is evident that managers in privately owned meat companies in

Nairobi must employ Porters generic strategies that companies that manage to place them self correctly

can generate more profits than companies who have not thought about their optimal position. The

framework is called generic because it is not industry dependent. A company should reflect on its

strengths and weaknesses in order to find its competitive advantage, and this unique strength should be

leveraged.

Conceptual Framework

The schematic diagrams below was not only guide the study, but was also show the interrelationship

among the key variables in the study as illustrated in Fig. 2.1.


Independent Variable Dependent Variable

Figure 1: Conceptual Framework

Empirical Literature Review

Cost Leadership strategy and Organizational Performance

Company manipulates its pricings to affect its market. The focuser’s basis for competitive advantage is

either lower costs than competitors serving that market segment or an ability to offer niche members

something different from competitors. Due to the flooding of meat products from both regional

markets like Botswana and international markets cost leadership is an element that cannot be ignored.

According to Davidow and Uttal, (2011) pricing strategy as a sustainable competitive advantage

ensures that ventures operating in the same industry in a location tend to have pretty much the same

cost structure, meaning that when one competitor cuts price. According to Allen et al., (2016), when a

firm design, produces and markets a product more efficiently than its competitors such a firm has

implemented a cost leadership strategy. Cost reduction strategies across the activity cost chain

represented low cost leadership. Attempts to reduce costs spread through the whole business process

from product design to the final stage of selling the product. Any processes that do not contribute

towards minimization of cost base should be outsourced to other organizations with the view of

maintaining a low cost base (Akan, 2016). Low costs permitted a firm to sell relatively standardized

products that offer features acceptable to many customers at the lowest competitive price and such low

prices gain competitive advantage and increase market share. These explains that the cost efficiency

gained in the whole process was enable a firm to mark up a price lower than competition which

ultimately results in high sales since competition could not match such a low cost base.

Delivery and Distribution strategy and organizational performance

Distribution can be an excellent source of competitive advantage for a producer and since the

distribution channel advantage is difficult to copy by the competitors it provides both substantial and

sustainable competitive advantage. This strategy is related to the distribution of goods and services to

Performance of Privately-

Owned Meat Processing

Companies in Nairobi

Profitability/ revenue

Return on investments

Cost Leadership Strategy

Low cost manufacturing

Mass production

Differentiation strategy

Consumer specifications

Product differentiation

Differentiation Focus

Branding of products

Product packaging size

Delivery and Distribution

Strategy

Mass distribution

Just in time delivery


the ultimate customers. Goods and services that require the customer to go to the producer must be as

accessible as possible. Hence, an important consideration in the distribution strategy for companies is

location of their outlets. The task before the management is to select the place where the actual sale is

to take place and this should be in the face of conveniences and comforts to the customers. Changing

lifestyles and increased affluence have led to higher service expectations by the customer and this has

made distribution the key marketing variable. This statement gained 84 per cent agreement in the

survey (Hilbers, 2010).

Lamb et al., (2010) noted that meat distribution can be achieved through intensive distribution which is

the distribution aimed at utmost market coverage. The producer tries to make the goods accessible for

each means that the consumers might want to buy from or selective distribution which in these level,

dealers are screened. The producer sells its product through certain dealers but not all possible

wholesalers and retailers. Exclusive distribution: this is where only authorized dealers are allowed to

sell a particular product. The dealership is exclusive and restricted. At times it might be only one

dealer in one region. The distribution of meat involves the distribution of slaughtered or processed

animals to wholesalers, retailers, and final consumers. The distribution process starts from the abattoir,

from there is later distributed to wholesalers or retailers depending on the use of the meat. The process

must involve the use of refrigerated vehicles to facilitate the distribution (Lamb et al., 2010).

Product Quality strategy and Organizational performance

Meat quality is evaluated based on information available about the meat, not only on the meat itself.

Customers use intrinsic and extrinsic cues when determining meat quality. This provides opportunities

for more differentiation of meat products, new requirements for the meat value chain in terms of

delivering meat, and the provision of more information regarding the product (Grunert, 2016).

Different strategies have been formulated by organizations in different sectors in order to ensure that

they attract and retain their customer and the key of it is to increase the service quality level.

Quality relates to the inherent characteristics of the product (colour, flavour, tenderness and nutritional

value) as well as the added-value characteristics (compliance to specification, convenience and

consistency). Taljaard et al. (2016) posit that the industry achieved competitive advantage through

superior quality by producing food products which meet the stringent requirements of the modern

consumer. International quality measures such as ISO 9002, quality assurance systems and on-farm

assurance programs must be put in place and everyone in the chain from pasture to plate must adhere

to it. An accurate description, branding and labeling system which provides correct information to

consumers may, by enhancing consumer confidence in the product, both improve per capita

consumption and attract a price premium.

Differentiation focus and Organizational performance

Differentiation is a strategic choice, not a feature of the market, and as such needs to be based on

creating a bundle of resource capabilities. Product experiences that complement consumers’ lifestyles,

brands that communicate their aspirations may allow poultry business to prosper in future. In offering a

unique experience, a higher cost is necessary to cover extra costs incurred (Enz, 2011). The leading

hypothesis is that sustained superior performance arises from sustainable competitive advantages.

From the viewpoint of strategic management, such fundamental strategy for survival is to reinforce the

competitiveness of market price through cost reduction or to develop a new market. Nowadays,

however, such conventional manner came to an end. The true winners in a new era ventured which

succeed in preparing peerless competition manners through daring ideas and constant innovation,

which has already come out in all industries (Hamel, 2012). Thus, the management should seize a good


opportunity for promising future business, invest constantly in the development of means to compete

and ultimately improve the internal execution power (Woo, 2017).

Research Methodology

This study employed a descriptive research method. The population of this study shall be 226

employees of the firms. The study targeted staff members from different departments which formed

the basis for stratification. The target population was 226 that is total number of firm staffs on

permanent and contract basis. 40% of 226 staff formed the Sample population of the study. According

to Kothari, (2004) a representative sample is one which is at least 40% of the population thus the

choice of 40% equal to 90 staff members is considered as representative.

Table 1: Sample population

A proportionate sample size of approximately 90 respondents which is 40% of the population was

selected using stratified random sampling technique from the identified sample. The method is good

because it is less costly and does not consume a lot of time from each stratum a sample, of pre-

specified size, is drawn independently in different strata.

The primary data was gathered using questionnaire of both open and close ended questions during the

study. Pilot study was conducted to determine if there was be flaws, limitations, or other weaknesses

within the data collection instrument to make the necessary revisions prior to the implementation of the

study. Population of the pilot was 10% of the total population size which was pre tested to all the

respondents in all cadre sample population. In testing reliability, a construct composite reliability

coefficient (Cronbach alpha) of 0.7 or above was considered to be adequate for this study. The study

used both face and content validity to ascertain the validity of the questionnaire.

The study generated both qualitative and quantitative data. Quantitative data was coded and entered

into statistical packages for social scientists (SPSS version 22) which was analyzed using descriptive

statistics. Responses with same patterns or theme was grouped together in coherent categories. The

study adopted correlation analysis at 5% level of significance to study strength, direction of the

relationship between the independent and dependent variable). To quantify the strength, and direction

of the relationship between the variables, the study utilized Karl Pearson’s coefficient of correlation.

The study used multiple regression analysis and Analysis of Variance (ANOVA) to analyze the degree

of relationship between the variables in the study at 5% level of significance.

The multiple regression model that aided the analysis of the variable relationships was as follows:

Y=β0+β1X1+β2X2+β3X3+β4X4+ε

Department Sample population Target Population

Head of departments 3 5

Finance Department 5 10

Human Resources Department 3 6

Production Department 40 112

Quality Department 10 14

Sales Department 10 20

Marketing Department 7 15

Administration 2 4

Value Addition 10 40

Totals 90 226


Where; Y = Performance; β0 = Constant (Coefficient of intercept); X1 = cost leadership; X2= delivery

and distribution strategy; X3 = products quality; X4 = differentiation focus; ε = Error term for the

Model; β1-β4=Regression coefficient of four variables.

Research Findings and Discussions

A sample of 90 respondents were approached using questionnaires that allowed the researcher to drop

the questionnaire to the respondents and then collect them at a later date when they had filled the

questionnaires. A total of 90 questionnares were distributed to employees. Out of the population

covered, 75 were responsive respresenting an estimated a response rate/feedback of 83.3 %. This was

above the 70% which is considered adequate in descriptive statistics according to (Mugenda, 2008).

Descriptive Statistics

The study set out to determine the influence of competitive strategies on performance of privately

owned meat companies in Nairobi. To this end, four variables were conceptualized as components of

performance of privately owned meat companies in Nairobi.

Cost Leadership Strategy

The first objective of the study was to explore influence of cost leadership and performance of

privately owned meat companies. The respondents were asked to indicate the descriptive for cost

leadership. The result in table 4.5.1 revealed that majority of the respondent with a mean of (3.87)

agreed with the statement that the firm has low costs of products than the competitors’. The Standard

Deviation around the mean of the statements was 0.99showing a variation in responses. The result

revealed that majority of the respondent as indicated by a mean of (3.8) agreed with the statement that

the firm has Superior proprietary technology for efficiency in production. The Standard Deviation for

around the mean of the statements was 0.93 showing a variation. The result revealed that majority of

the respondent (3.85) agreed with the statement that the firm has Low cost manufacturing; Economy of

scale or outsourcing. The results were varied as shown by a Standard Deviation of 1.00. The average

response for the statements on Mass production in the firm was 4.44. Further results indicated the

Standard Deviation for statements on Mass production was 0.5 indicating that there were varied

responses. Also more similarity to our finding comes from Allen et al., (2016), who posit that when a

firm designs, produces and markets a product more efficiently than its competitors such a firm has

implemented a cost leadership strategy.

Table 2: Cost Leadership Strategy

The firm has: Not at all

Little

extent

Moderate

extent

Great

extent

Very

great

extent Mean

Std.

Deviatio

n

Low Costs Of Products

Than The Competitors’ 2.70% 2.70% 32.00% 30.70% 32.00% 3.87 0.991

Superior Proprietary

Technology For

Efficiency In Production 1.30% 4.00% 34.70% 33.30% 26.70% 3.8 0.93

Low Cost

Manufacturing;

Economy Of Scale Or

Outsourcing 2.70% 2.70% 34.70% 26.70% 33.30% 3.85 1.009

Mass Production 0.00% 0.00% 0.00% 56.00% 44.00% 4.44 0.5

Average

4.17 0.807


Time bound strategy in Distribution

The second objective of the study was to assess the influence of time bound strategy in delivery and

performance of privately owned meat companies. The respondents were asked to indicate descriptive

responses for delivery and distribution strategy. The result in table 3 revealed that majority of the

respondents as indicated by a mean of (3.28) indicated that they agreed with the statement that the firm

conducts Mass distribution of products to customers. The responses were varied as measured by Std.

Dev of 0.93. The result revealed that majority of the respondents as shown by a mean of (4.01)

indicated that they agreed with the statement that the firm delivers to large market share i.e.

institutions, hospitals, supermarkets etc. The responses were varied as measured by Std. Dev of 0.83.

The result revealed that majority of the respondents with a mean of (3.91) indicated that they agreed

with the statement concerning the Location of outlet; that the firm has other available outlets other than

the company’s’ premises. The responses were varied as measured by Std. Dev of 0.82. The result

revealed that majority of the respondents (4.04) indicated that they agreed with the statement that the

firm practices Just in time delivery of orders. The responses were varied as measured by Std. Dev of

0.77. The average responses for the statements on delivery and distribution was 4.05 with a standard

deviation of 0.72.

There seems to be unison with our findings and those of Davies and Clarke (2004), who provide an

example of the dimensions of locational positioning which is based on the objectives of consumer

groups when they go shopping. Under this model, the principal driver of consumer behaviour when

they go shopping is the degree to which time is valuable to them.

Table 3: Time Bound Strategy in Delivery

Not at

all

Little

extent

Moderate

extent

Great

extent

Very

great

extent Mean

Std.

Deviati

on

Mass distribution of products to

customers 9.30% 5.30% 33.30% 52.00% 0.00% 3.28 0.938

Large market share i.e.

institutions, hospitals,

supermarkets etc 0.00% 0.00% 33.30% 32.00% 34.70% 4.01 0.83

Location of outlet; other

available outlets other than the

company’s’ premises 0.00% 0.00% 38.70% 32.00% 29.30% 3.91 0.825

Just in time delivery of orders 0.00% 0.00% 28.00% 40.00% 32.00% 4.04 0.779

Average

4.05 0.728

Differentiation Strategy

There was also need to determine the impact of differentiation and performance of privately owned

meat companies. The respondents were asked to indicate their levels of agreement on statements

regarding differentiation strategy. The results in table 4 revealed that majority of the respondent (3.83)

agreed with the statement; Consumer specifications are met. The responses were varied as shown by

the Std. Dev of 0.96. The result revealed that majority of the respondent (3.77) agreed with the

statement; the company values product differentiation strategy for its product. The measures of

dispersion around the mean was 1.07. The result revealed that majority of the respondent (3.72) agreed

with the statement: the company has Strong sales team. The measures of dispersion around the mean

was 1.07. The result revealed that majority of the respondent (3.81) agreed with the statement that

Buyer needs & behaviour are reviewed to a great extent. The measures of dispersion around the mean


was 1.21.The result revealed that majority of the respondent (3.59) agreed with the statement; the

company carry out advertising and campaigns. The measures of dispersion around the mean was 1.05.

The respondents were asked to indicate their levels of agreement on statements regarding products

quality. The results in table 4.5.3 revealed that majority of the respondent (3.93) agreed with the

statement; company products have added-value. The responses were varied as shown by the Std. Dev

of 1.03. The result revealed that majority of the respondent (2.67) agreed with the statement; branding

is considered important by the company. The measures of dispersion around the mean was 1.49.The

average response for the statements on products quality was 3.61 indicating that majority of the

respondents agreed with the statements.

The study findings are in agreement with Berry (2012) who argue that in order to exceed customer

expectation, companies need to present a realistic picture of their service to customers by checking the

promotional messages for accuracy, performing the service right to customers by stressing to

employees to provide reliable service, effectively communicating with customer to ascertain their

needs by using the service delivery process as an opportunity to impress on customers and also

continuously evaluating and improving their performance against customer expectations. Studies have

found that well managed companies have the following practices; strategic concept and top

management support, high standards of service delivery, service monitoring systems, satisfying

customer’s complaints and an emphasis on employee satisfaction.

Table 4: Differentiation strategy

Not at all

Little

extent

Moderate

extent

Great

extent

Very

great

extent Mean

Std.

Deviati

on

To what extend does

Consumer specifications

met? 2.70% 4.00% 28.00% 38.70% 26.70% 3.83 0.964

To what extend does the

company value product

differentiation strategy for

its product 4.00% 4.00% 34.70% 25.30% 32.00% 3.77 1.073

Does the company have

Strong sales team 5.30% 4.00% 30.70% 33.30% 26.70% 3.72 1.073

Buyer needs & behavior to

what extend are these

reviewed. 5.30% 6.70% 32.00% 13.30% 42.70% 3.81 1.216


company carry out

advertising and campaigns 5.30% 5.30% 36.00% 32.00% 21.30% 3.59 1.054

Average

3.61 1.129

Differentiation Focus

There was also need to establish the impact of differentiation focus on performance of privately owned

meat companies .

The respondents were asked to indicate the descriptive responses for differentiation focus. The result in

table 5 revealed that majority of the respondent (2.15) agreed with the statement that the company

carries out Research and development practices. The responses were varied as shown by a Std. Dev of

1.30. The result revealed that majority of the respondent (2.33) agreed with the statement that the


company allows Innovation and creativity from staff. The responses were varied as shown by a Std.

Dev of 1.35. The result revealed that majority of the respondent (2.03) agreed with the statement that

the company assesses Continuous improvement of its systems. The responses were varied as shown by

a Std. Dev of 1.25.

The result further revealed that majority of the respondent (2.12) agreed with the statement that the

company fits in the Global and domestic Competition. The responses were varied as shown by a Std.

Dev of 1.20. The result further revealed that majority of the respondent (3.41) agreed with the

statement that the company adopts to Changes in technology. Responses were varied as shown by a

Std. Dev of 1.20. The result further revealed that majority of the respondent (2.25) agreed with the

statement that the company have better educated workforce. Responses were varied as shown by a Std.

Dev of 1.24. The average response for the statements on differentiation focus was 2.38 indicating that

majority of the respondents agreed with the statements. The responses variations around the mean was

1.26.

Enz, ( 2011) support our findings by suggesting that Differentiation is a strategic choice, not a feature

of the market, and as such needs to be based on creating a bundle of resource capabilities. Product

experiences that complement consumers’ lifestyles, brands that communicate their aspirations may

allow poultry business to prosper in future. In offering a unique experience, a higher cost is necessary

to cover extra costs incurred

Table 5: Differentiation Focus

Not at all Little

extent

Moderate

extent

Great

extent

Very

great

extent

Mean Std.

Deviati

on


company carry out

Research and development

practices

40.00% 33.30% 8.00% 9.30% 9.30% 2.15 1.302


company allow Innovation

and creativity from staff

33.30% 34.70% 9.30% 10.70% 12.00% 2.33 1.359

To what extend the

company adopts to

Changes in technology

8.00% 10.70% 38.70% 17.30% 25.30% 3.41 1.209


company have better

educated workforce

30.70% 40.00% 12.00% 8.00% 9.30% 2.25 1.242

Average 2.38 1.262

Correlation Analysis

Correlation analysis was used to determine both the significance and degree of association of the

variables and also predict the level of variation in the dependent variable caused by the independent

variables.


Table 6: Summary of Pearson’s Correlations

Cost

Leadership

Strategy

Delivery and

Distribution

Strategy

Products

Quality

Differentiat

ion Focus

performanc

e

Cost Leadership

Strategy

Pearson

Correlation 1

Sig. (2-Tailed)

Time bound

strategy in

delivery

Pearson

Correlation .553** 1

Sig. (2-

Tailed) 0

Product quality

Pearson

Correlation .837** .537** 1

Sig. (2-

Tailed) 0 0

Differentiation

Focus

Pearson

Correlation .448** .342** .709** 1

Sig. (2-

Tailed) 0 0.003 0

Performance

Pearson

Correlation .721** .442** .772** 664**

1

Sig. (2-

Tailed) 0.00 0.00 0.00 0.00

** Correlation Is Significant At The 0.05 Level (2-Tailed).

The correlation summary shown in Table 6 indicated that the associations between each of the

independent variables and the dependent variable were all significant at the 95% confidence level. The

correlation analysis to determine the association between Cost Leadership Strategy and performance of

privately owned meat companies in, Pearson correlation coefficient computed and tested at 5%

significance level. The results indicate that there was a positive relationship (r=0.721) between Cost

Leadership Strategy and performance of privately owned meat companies. In addition, the researcher

found the relationship to be statistically significant at 5% level (p=0.000, <0.05).

The correlation analysis to determine the relationship between delivery and distribution strategy on

performance of privately owned meat companies., Pearson correlation coefficient computed and tested

at 5% significance level. The results indicated that there was a positive relationship (r=0. 442) between

delivery and distribution strategy on performance of privately owned meat companies . In addition, the

researcher found the relationship to be statistically significant at 5% level (p=0.000, <0.05).

The correlation analysis to determine the relationship between products quality on performance of

privately owned meat companies., Pearson correlation coefficient computed and tested at 5%

significance level. The results indicate that there was a positive relationship (r=0. 772) between

products quality on performance of privately owned meat companies . In addition, the researcher found

the relationship to be statistically significant at 5% level (p=0.000, <0.05).

The correlation analysis to determine the relationship between differentiation focus on performance of

privately owned meat companies, Pearson correlation coefficient computed and tested at 5%

significance level. The results indicate that there was a positive relationship (r= 0.664) between

differentiation focus on performance of privately-owned meat companies. In addition, the researcher


found the relationship to be statistically significant at 5% level (p=0.000, <0.05). Hence, it was evident

that all the independent variables could explain the changes in the performance of privately owned

meat companies on the basis of the correlation analysis.

Regression Analysis

In this study multivariate regression analysis was used to determine the significance of the relationship

between the dependent variable and all the independent variables pooled together. Regression analysis

was conducted to find the proportion in the dependent variable (performance of privately owned meat

companies. on the basis of the correlation analysis) which can be predicted from the independent

variables (Cost Leadership Strategy, Delivery and Distribution Strategy, Products Quality,

Differentiation Focus).

The independent variables reported R value of 0.863 indicating that there was perfect relationship

between dependent variable and independent variables. R-Square is a commonly used statistic to

evaluate model fit. R-square is 1 minus the ratio of residual variability. The adjusted R2, also called the

coefficient of multiple determinations, is the percentage of the variance in the dependent explained

uniquely or jointly by the independent variables. The coefficient of determination also called the R2

was 0.744. R square value of 0.744 means that 74.4 % of the corresponding variation in performance

of privately owned meat companies in can be explained or predicted by (Cost Leadership Strategy,

Delivery and Distribution Strategy, Products Quality, Differentiation Focus) which indicated that the

model fitted the study data. Adjusted R square in table 4.11 was called the coefficient of determination

which indicated how performance of privately owned meat companies. varied with variation in effects

of factors which includes; Cost Leadership Strategy, Delivery and Distribution Strategy, Products

Quality, Differentiation Focus. The results of regression analysis revealed that there was a significant

positive relationship between dependent variable and independent variable at (β = 0.744), p=0.000

<0.05).

Table 7: Model Summary

Model R R Square Adjusted R

Square

Std. Error of the

Estimate

1 .863a 0.744 0.73 0.128663 a Predictors: (Constant), Differentiation Focus, Cost Leadership Strategy, Delivery and Distribution Strategy, Products

Quality

The significance value is 0.000 which is less than 0.05 thus the model is statistically significance in

predicting how Cost Leadership Strategy, Delivery and Distribution Strategy, Products Quality,

Differentiation Focus influence performance of privately owned meat companies. The F critical at 5%

level of significance was 51.695.

Table 8: ANOVA

Model Sum of

Squares

df Mean

Square

F Sig.

1 Regression 2.662 4 0.666 51.695 .000b

Residual 0.914 71 0.013

Total 3.576 74

a Dependent Variable: Performance

b Predictors: (Constant), Differentiation Focus, Cost Leadership Strategy, Delivery and Distribution Strategy, Products

Quality


The research used a multiple regression model;

Y= β0+ β1X1+β2X2+β3X3 +β4X4 +Ԑ

The regression equation was be;

Table 9: Coefficients Table

Model Unstandardized

Coefficients

Standardize

d

Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 1.26 0.915 1.378 0.001

Cost Leadership Strategy 0.279 0.268 0.152 1.041 0.003

Delivery and

Distribution Strategy

0.616 0.24 0.605 2.565 0.001

Products Quality 0.246 0.171 0.375 1.436 0.015

Differentiation Focus 0.858 0.165 0.917 5.194 0

a Dependent Variable: Performance

Y=1.26+ 0.279X1 + 0.616X2 + 0.246X3 + 0. 858X4

The regression equation above has established that taking all factors into account (Cost Leadership

Strategy, Delivery and Distribution Strategy, Products Quality, Differentiation Focus) constant at zero,

performance of privately-owned meat companies was be an index of 1.26.

The findings presented also shows that taking all other independent variables at zero, a unit increase in

Cost Leadership Strategy led to a 0.279 increase in performance of privately owned meat companies.

The P-value was 0.003 which is less 0.05 and thus the relationship was significant. The correlation

coefficients on cost leadership strategy has a boost from Allen et al., (2016), who argues that when a

firm designs, produces and markets a product more efficiently than its competitors such a firm has

implemented a cost leadership strategy. Cost reduction strategies across the activity cost chain

represent low cost leadership.

The study also found that a unit increase in Delivery and Distribution Strategy lead to a 0.616 increase

in performance of privately owned meat companies. The P-value was 0.001 and thus the relationship

was significant. Hilbers (2010) in his study seems to rubber stamp our findings when he suggests that

distribution can be an excellent source of competitive advantage for a producer and since the

distribution channel advantage is difficult to copy by the competitors it provides both substantial and

sustainable competitive advantage.

In addition, the study found that a unit increase in Delivery and Distribution Strategy lead to a 0.246

increase in the performance of privately owned meat companies in. The P-value was 0.015 and thus the

relationship was significant. Meat quality is evaluated based on information available about the meat,

not only on the meat itself. Customers use intrinsic and extrinsic cues when determining meat quality.

This provides opportunities for more differentiation of meat products, new requirements for the meat

value chain in terms of delivering meat, and the provision of more information regarding the product

(Grunert, 2016).

Lastly, the study found that a unit increase in Differentiation Focus lead to a 0.858 increase in the

performance of privately owned meat companies. The P-value was 0 and hence the relationship was

significant since the p-value was lower than 0.05. Enz, ( 2011) support our findings by suggesting that


Differentiation is a strategic choice, not a feature of the market, and as such needs to be based on

creating a bundle of resource capabilities. Product experiences that complement consumers’ lifestyles,

brands that communicate their aspirations may allow poultry business to prosper in future. In offering a

unique experience, a higher cost is necessary to cover extra costs incurred

Conclusions of the Study

The study concluded that cost leadership strategy is statistically significant to performance of

privately-owned firms. This study concludes that cost leadership is positively related to performance

of privately-owned manufacturing firms. Time bound delivery and distribution strategy is statistically

significant to performance of privately-owned firms. This shows that Time bound delivery and

distribution strategy had significant positive relationship with performance of privately-owned firms.

This study concludes that Time bound delivery and distribution strategy is positively related to

performance of privately-owned meat processing firms.

Differentiation strategy is statistically significant to performance of privately-owned meat processing

firms. This shows that differentiation strategy had significant positive relationship with performance of

privately-owned food processing firms. This study concludes that differentiation strategy is positively

related to performance of privately-owned food processing firms. Differentiation focus is statistically

significant to performance of privately-owned food processing firms. This shows that differentiation

focus had significant positive relationship with performance of privately-owned food processing firms.

This study concludes that differentiation focus is positively related to performance of privately owned

food processing firms.

Recommendations of the Study

The study recommends that factors that cost leadership variability need to be looked into with a view

of managing the cost variability as this has influence on the overall performance of privately-owned

meat processing firms. There is need for every organization to establish sources of cost variability so

that the variability can be reduced. This calls for serious attention to enable the organization focus on

formulation of policies and achievement of the strategic pillar of operational excellence. Organizations

need to find ways of reducing cost of their products through mass production and low-cost

manufacturing.

The study recommends that top management in the manufacturing companies should take

responsibility for the active role in the implementation of inventory management practices. They

should allocate more resources towards quality improvement and they should ensure that they set

quality goals and distribute them throughout the organization. The person in charge of quality

management should report directly to the chief executive officer.

The privately-owned food processing firms should train their departments on ways of effectives and

efficiently enhancing the distribution strategy. This enabled the firms to get the right strategies which

lead to harnessing the benefits associated with the practice that is shortened customer satisfaction and

higher profit margins. In measuring performance firms should be aware of all the performance

measures and understanding what factors influence them to be able to deal with each one of them as it

demands. For instance, firms should take into consideration what criteria is related to performance and

capitalize on them like the mass production and just in time deliveries.

Differentiation focus should be practiced in privately owned meat processing firms. This enabled them

to operationalize the system. There is also need for privately owned meat processing organizations to

integrate the various functions so that differentiation focus strategy can thrive. Differentiation focus


activities such as branding product and product packing should be encouraged to enhance the

performance of privately-owned meet processing firms in Kenya.

Areas For Further Research

The study is a milestone for further research in the field of performance of privately-owned meat

processing firms in Africa and particularly in Kenya. The study focused on establishing the influence

of competitive strategies on performance of privately owned meat processing companies in Kenya as

indicated by an R2 value of 74.4 % and should therefore be expanded further in future in order to

include other competitive strategies that may as well have a positive significance to performance of

privately owned meat processing firms to cater for the remaining 25.6 %. Existing literature indicates

that there is need to undertake similar research in other sectors in Kenya and other countries in order to

establish whether the explored practices herein can be generalized to influence performance in the

institutions.

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