The Contribution of Differentiation Strategy Adopted by SMEs to Their Competitive Advantage: A Case Study of Small and Medium Sized Enterprises in Nyahururu, Kenya

Abstract

There is a tremendous increase in the collapse of the Small and medium sized Enterprises (SMEs) in Nyahururu Town while others struggle to meet growth, profit and productivity. Despite the importance of generic strategies being a determinant of the firm’s competitive advantage and thus a firm’s success and growth, few empirical researches have been undertaken to justify this in SMEs. Research to date has mainly concentrated in large corporations which are dominant in research work. Research undertaken has established a positive link between generic strategies and competitive advantages of SMEs. This study investigated the Contribution of Differentiation Strategy Adopted by SMEs to Their Competitive Advantage: A Case Study of Small and Medium Sized Enterprises in Nyahururu, Kenya. The study used a survey research design and target population of 985 SMEs while 276 SMEs were sampled out of which 164 responded showing a response rate of 59.42%. The sampling technique was stratified random sampling. To analyze the data, descriptive and correlation analysis was used with the aid of Statistical Package for Social Sciences (SPSS) computer program. The results indicated that differentiation strategies were being adequately used by the SMEs to gain competitive advantage. From the findings of the study owners and managers of SMEs are encouraged to develop ways of differentiating themselves from competition so as to stand out as unique to their clients.

Keywords: small and medium enterprise, strategy, generic strategies