Micro and Small Restaurants in Nairobi's Strategic Response to their Competitive Environment

Abstract

The key factors that promote competition in restaurants are speed of service, quality of food and competitive prices (Shay and Rothaermel, 2002).  Porter's Five Forces Model (Porter 1980, 1985) is frequently used in management literature to assess the competitive environment (e.g., Boulding and Staelin, 1993). They are threats to new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute products and services and rivalry among existing firms. To overcome these forces management must employ various strategic responses to combat the competitive pressures. Porter (1980) developed successful generic strategies for creating a defensible position and out performing competitors. They are, cost leadership, differentiation and focus. A survey was carried out in 311 licensed micro and small size restaurants in Nairobi. From the research findings, majority of the MSE restaurants have been in business for 1-2 years and have less than 20 employees. Managers and owners were the major players directly involved in decision making and most of them had tertiary education. From the mean scores, use of the provided strategic responses to the stated competitive forces were nearly all rated as 'average' by the respondents, except 'focus on reputation' that was the only strategic  response  rated 'very important.' The paper concludes that there was no general consensus among the respondents on the strategic responses MSE restaurants employ in response to the common competitive forces they face.

Key words: MSEs, Competitive pressures, Strategic responses