Effect of Porters Generic Strategies on Firm Performance of Tyre Dealers in Nairobi County, Kenya

Abstract

The study sought to assess the effect of Porter’s generic strategies on firm performance of Tyre dealers within Nairobi County. The study adopted a descriptive research design. The population of the study were tyre dealers in Nairobi County. A sample of 200 tyre dealers was picked through random sampling in Nairobi County. Out of the targeted tyre dealers that were picked through simple random sampling, 108 were responsive indicating a 54% response rate, this large sample ensured the reliability of the responses while the mode of the structure of the questionnaires guaranteed the validity of the data collected. After analysis of the data through correlation and multiple regression, it was deduced that there is a strong effect of Porter’s generic strategies on firm performance, with a strong correlation coefficient of 0.975, 0.928 and 0.976 for cost leadership, differentiation and focus respectively. Multiple regression deduced that 95.2% of firm performance was attributed to cost leadership, differentiation and focus strategies based on the regression model. Based on the regression model cost leadership has a deduced coefficient of 0.84 implying that an increase in a unit of firm performance is due to an increase in 0.84 unit of cost leadership. Differentiation generated a co-efficient of 0.09 implying an increase in one unit of performance due to an increase in 0.09 unit of differentiation Focus strategy deduced a co-efficient of -0.05 implying a reduction of a unit of performance by an increase in practice of focus by 0.05. This overall indicated that cost leadership and differentiation have a positive effect on performance while focus strategy has a negative effect on firm performance.