Cost Leadership Strategy: A New Game Strategy for Competitive Advantage in Milk Processing Firms in Kenya

Competitive advantage refers to the benefits that firms accrue from unique combination of possessions to outperform competitors. To build competitive advantage as a gateway to superior performance, firms pursue various beneficial strategic orientations. This study sought to establish whether cost leadership strategy gave rise to competitive advantage in milk processing firms in Kenya. The authors utilized the indicators of economies of scale, economies of scope and operational efficiency to operationalize cost leadership strategy while competitive advantage was operationalized through capabilities and knowledge. A census of all the milk processing firms was conducted with 148 respondents participating in the study. Data was collected using semi-structured self-administered questionnaires and subsequently analyzed using descriptive and inferential statistics. The study concluded that cost leadership strategy was a source of competitive advantage for the milk processors. It therefore recommends pursuit of cost leadership strategy as a competitive tool. It further recommends building of relevant capabilities and protection of tacit knowledge by firms as foundational blocks for competitive advantage.

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COST LEADERSHIP STRATEGY, COMPETITIVE ADVANTAGE, AND PERFORMANCE: A CROSS-SECTIONAL STUDY IN THE CONTEXT OF MILK PROCESSING FIRMS IN KENYA

International Journal of Management Innovation & Entrepreneurial Research ◽

10.18510/ijmier.2020.627 ◽

2020 ◽

Vol 6 (2) ◽

pp. 64-76

Author(s):

Paul G. Kimiti ◽

Stephen M. A. Muathe ◽

Elishiba M. Murigi

Keyword(s):

Competitive Advantage ◽

Economies Of Scale ◽

Scale Economies ◽

Economies Of Scope ◽

Cost Leadership ◽

Milk Processing ◽

Leadership Strategy ◽

And Performance ◽

The Relationship ◽

Cost Leadership Strategy

Purpose of the study: Cost leadership strategy is driven by economies of scale, economies of scope, and operational efficiency is a remedy to a performance where firms are facing high costs. This study sought to investigate the influence of cost leadership strategy on the performance of milk processing firms in Kenya through the lens of competitive advantage as a mediator. Methodology: The study adopted descriptive and explanatory non-experimental research designs. It was a census of all 29 milk processing firms registered with Kenya Dairy Board as of June 2019. Sampling was done using proportionate stratified random sampling technique and data was collected using self-administered semi-structured questionnaires. The analysis was done using means, standard deviations, and regression. Main Findings: The findings showed that a cost leadership strategy had a positive and significant effect on the performance of milk processing firms in Kenya with a competitive advantage partially mediating the relationship. The constituent measures of cost leadership strategy namely economies of scale, economies of scope, and operational efficiency accounted for 40.1% of the variation in firm performance. Applications of this study: This study provides suggestions for firms to manage costs and therefore improve performance. This is by increasing the size of operations, expanding into related business areas, and improving operational processes. Novelty/originality of this study: The study examines the influence of cost leadership strategy in a new context of milk processing firms in Kenya. It also incorporates a competitive advantage as a significant variable affecting the relationship between costs and performance.

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Nexus between Cost Leadership Strategy and Performance: Fact or Fallacy in Milk Processing Firms in Kenya

International Business Research ◽

10.5539/ibr.v13n10p1 ◽

2020 ◽

Vol 13 (10) ◽

pp. 1

Author(s):

Paul G. Kimiti ◽

Stephen M.A. Muathe ◽

Elishiba M. Murigi

Keyword(s):

Balanced Scorecard ◽

Economies Of Scale ◽

Economies Of Scope ◽

Cost Leadership ◽

The Balanced Scorecard ◽

Milk Processing ◽

Leadership Strategy ◽

Food Processing Sector ◽

The Government ◽

Cost Leadership Strategy

Milk processing firms as a constituent of the food processing sector play a crucial function both economically and nutritionally. However, performance in the industry continues to be impended by high costs leading to low profitability margins, decline in output and collapse of some firms while others show stunted growth. It is hypothesized that this situation can be remedied by pursuing cost leadership strategy through economies of scale, economies of scope and operational efficiency. Extant literature however is scanty on how this strategy is employed by milk processing firms in Kenya with studies done failing to focus on how the firms manage costs as a driver for better performance. This has made it difficult to determine whether the hypothesized effect is a fact or fallacy. This study thus was an investigation of the effect of cost leadership strategy on performance of milk processing firms in Kenya. It was anchored on the balanced scorecard model complemented by the resource based view and capability based view theories. The study empirically examined the relationship using data from milk processing firms in Kenya obtained from a sample of 168 key respondents. The findings showed that cost leadership strategy had a positive and significant effect on performance of milk processing firms in Kenya. The study recommends that milk processors improve their performance by cutting costs through measures to increase their scale of operations, expand into related business areas and improve operational processes. The government and other the regulatory bodies should implement corresponding supportive policies and reforms.

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PORTER'S GENERIC STRATEGIES AND FIRM PERFORMANCE IN PETROLEUM MARKETING COMPANIES: A CASE STUDY OF VIVO ENERGY, NAIROBI, KENYA

International Journal of Management and Leadership Studies ◽

10.52281/jv3i110 ◽

2021 ◽

pp. 98-112

Author(s):

Novah Omboga ◽

Paul Machoka

Keyword(s):

Firm Performance ◽

Competitive Advantage ◽

Cost Leadership ◽

Leadership Strategy ◽

Focus Strategy ◽

Generic Strategies ◽

The Relationship ◽

Porter's Generic Strategies ◽

Cost Leadership Strategy

ABSTRACT The main objective of the study was to establish the influence of Porter's generic strategies and firm performance in petroleum marketing companies using Vivo Energy Limited as a case study. The business environment in emerging economies has witnessed intense competition among firms. Petroleum marketing companies in Kenya have had to face such conditions in a competitive environment prompting the firms to develop strategies that match their capabilities to market demands. The specific objectives of the study were: to examine how leadership cost strategy and; focus strategy affect the firm performance of Vivo Energy Limited. The study was premised on the; resource-based view, competitive advantage and contingency theories. This study adopted a descriptive research design. The target population was 237 employees at Vivo Energy Limited. Stratified proportion sampling was used to obtain a sample of 108 respondents. Questionnaires were used for data collection. Data was analyzed using descriptive and inferential statistics to determine the relationship between the study variables. Pearson correlation analysis was carried out to establish the relationship between dependent and independent variables. The analysis of variance (ANOVA) was checked to reveal the overall model significance. The study established that there was a positive relationship between the cost leadership strategy and firm performance. Analysis also revealed that focus strategy had a substantial positive correlation, establishing that focus strategy and firm performance are fundamentally related, and that the variation in firm performance can be explained by a unit change in focus strategy. The study recommended that the management of Vivo Energy Limited should adopt cost leadership strategy that is focused on gaining competitive advantage byselling their products at average prices to earn higher profits than competitors in the sector or below the average industry prices to gain market share. It also recommends that Vivo Energy should consider employing focus strategies that are concentrated on narrow segment aimed at achieving cost advantage or differentiation. Keyword: Cost leadership, Firm Performance, Focus strategy, Generic Strategies

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Sustaining Competitive Advantage in Prima Sakti

Jurnal Ekonomi dan Bisnis ◽

10.24914/jeb.v18i2.274 ◽

2016 ◽

Vol 18 (2) ◽

pp. 127

Author(s):

Kristin Handoyo ◽

John J. O. I. Ihalauw

Keyword(s):

Competitive Advantage ◽

Learning Effect ◽

Economies Of Scale ◽

Capacity Utilization ◽

Scale Economies ◽

Economies Of Scope ◽

Cost Leadership ◽

Metal Stamping ◽

Plastic Injection

Didirikan pada tahun 1993, Prima Sakti adalah sebuah perusahaan metal stamping dan plastic injection parts. Setelah lebih dari dua dekade, perusahaan ini telah berkembang menjadi sebuah perusahaan yang kompleks dalam hal ukuran, pasar dan produk. Penelitian kualitatif ini dipandu oleh sejumlah teori sebagai landasan dan menggunakan triangulasi data. Hasil dan pembahasan menunjukkan adanya perkembangan perusahaan dari sistem made-to-order menjadi sistem hybrid antara sistem made-to-order dan made-to-stock untuk memaksimalkan kapasitas dalam menerapkan cost leadership. Target pasar juga meluas dalam hal melanjutkan penetrasi pasar, pengembangan pasar dan pengembangan produk. Hasil dan pembahasan juga mengindikasi bahwa untuk mendapatkan keunggulan kompetitif, perusahaan mengintegrasi strategi cost leadership dan differentiation. Sebagai penutup, peneliti mengusulkan sebuah teori-mini yang didasarkan pada sejumlah variabel antara lain reputasi perusahaan, kualitas produk, pelayanan, learning effect, economies of scale, economies of scope dan capacity utilization yang mungkin memengaruhi keunggulan kompetitif untuk diuji secara kuantitatif.

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ANALISIS VALUE CHAIN DALAM UPAYA PENINGKATAN COMPETITIVE ADVANTAGE

Jurnal Ekonomi dan Bisnis Airlangga ◽

10.20473/jeba.v27i22017.56-70 ◽

2020 ◽

Vol 27 (2) ◽

pp. 238

Author(s):

Ratna Christiana Dewi

Keyword(s):

Competitive Advantage ◽

Value Chain ◽

Value Chain Analysis ◽

Cost Leadership ◽

Analysis Process ◽

Leadership Strategy ◽

Chain Analysis ◽

The Cost ◽

Cost Leadership Strategy

Introduction: This study aims to identify primary activities in the value chain analysis process to increase competitive advantage (competitive advantage) in order to support the cost leadership strategy of East Java Youth Lodging in order to survive and win with other tourist lodges and inns in Surabaya.Methods: This research uses a qualitative approach with the method chosen is a case study, while the type of this research is exploratory research.Results: The result of this research is that East Java Youth Lodging still has the opportunity to develop and compete in facing business threats because the Youth Lodging currently has a cost leadership strategy. East Java Youth Lodging as one of the accommodation services that offers cheaper prices with services and facilities that are no less than tourist lodges and other inns in Surabaya.Conclusion: Through the indication of primary activities with the value chain analysis process identified cost drivers that create opportunities for cost reduction, especially in logistics, so that the reduction in costs can be used as an increase in competitive advantage for East Java Youth Lodging.

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COST LEADERSHIP STRATEGY AND PERFORMANCE OF HOTELS IN NIGERIAN CONTEXT

Journal of Applied Structural Equation Modeling ◽

10.47263/jasem.1(1)02 ◽

2017 ◽

pp. 1-12

Author(s):

Abdullahi Hassan Gorondutse ◽

Muhammad Sani Gawuna

Keyword(s):

Partial Least Square ◽

Theory And Practice ◽

Least Square ◽

Superior Performance ◽

Future Research ◽

Market Place ◽

Statistical Tool ◽

Cost Leadership ◽

Leadership Strategy ◽

Cost Leadership Strategy

The important achievement in any market place is competitive advantage. This paper examines cost leadership strategy on performance hotels. After extant literature review the research used quantitative survey approach to analyze the hypothesized relationships. The paper employs census sampling to collect data from the manager/owner of hotels Kano State Nigeria. The data were analyzed using partial least square (PLS) method one of the 2nd Generation statistical tool of analysis. The findings of this study indicate that cost leadership strategy have direct significant positive relationship with hotels performance, The result signifies the appropriateness of PLS in analysis and has contributed better understanding of cost leadership strategy influence on hotels performance. Similarly, finding of this study can assist practitioners and policy makers in Hotels industry support the idea of business level strategy in designing strategic plan for superior performance. Finally, study implications for theory and practice,limitations, conclusions as well as direction for future research were provided and discussed.

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ANALISIS VALUE CHAIN DALAM UPAYA PENINGKATAN COMPETITIVE ADVANTAGE

Jurnal Ekonomi dan Bisnis Airlangga ◽

10.20473/jeba.v27i22017.238-253 ◽

2020 ◽

Vol 27 (2) ◽

pp. 238

Author(s):

Ratna Christiana Dewi

Keyword(s):

Competitive Advantage ◽

Value Chain ◽

Value Chain Analysis ◽

Cost Leadership ◽

Analysis Process ◽

Leadership Strategy ◽

Chain Analysis ◽

The Cost ◽

Cost Leadership Strategy

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Competitive Strategies and Performance of Commercial Banks in Mombasa County, Kenya

International Journal of Business Management, Entrepreneurship and Innovation ◽

10.35942/jbmed.v2i1.109 ◽

2020 ◽

Vol 2 (1) ◽

pp. 65-74

Author(s):

Joseph Mariga Nyachwaya ◽

James Maina Rugami

Keyword(s):

Commercial Banks ◽

Target Population ◽

Superior Performance ◽

Successful Implementation ◽

Competitive Strategies ◽

Cost Leadership ◽

Differentiation Strategy ◽

Leadership Strategy ◽

Focus Strategy ◽

Cost Leadership Strategy

Commercial banks in Kenya and especially Mombasa County are facing firm rivalry demanding the use of competitive strategies so as to improve their performance. Most of the commercial banks are deliberating on ways to enhance their performance, with competitive strategies being one of them to arrive a market and afterwards make sense of and ensure its aggressive position. Therefore, this study aimed at establishing the effect of competitive strategies on the performance of commercial banks in Mombasa County. The specific objectives were to determine the effect of cost leadership strategy, differentiation strategy and focus strategy on the performance of commercial banks in Mombasa County. The study was anchored on the theory of resource-based view, strategic balancing and game theory. A descriptive research design was employed in this study. The target population of this study was 280 commercial banks staff in Mombasa County. The sample size was eighty-four after adopting a stratified random sampling technique to select 30% of the target population. The study made use of primary data collection using questionnaires. The data was analyzed using the Statistical Package for Social Sciences (SPSS) Version 24.0 and presented using tables. The study established that despite the challenges in implementation, competitive strategies are very important for banks to remain competitive in the market. The study further concluded that understanding the market structure is a key determinant for the successful implementation of competitive strategies. Banks following a cost leadership strategy realize statistically significant superior performance compared to those that pursue broad differentiation and focus strategy which reports above-average returns. The researcher highly recommends that commercial banks consider shifting more of their focus on the cost leadership strategy in order to realize superior performance. To succeed at offering the lowest price while still achieving profitability and a high return on investment, commercial banks are recommended to operate at a lower cost than its rivals, this could be possible through some fairly unique capabilities to achieve and sustain their low-cost position. The study also recommends strategy planners to integrate and embrace the differentiation strategy which will enable them to differentiate in various methods such as new technology, brand image, design, network customer service or the number of features. Further, commercial banks are recommended to centre on the existing markets and products or services; they can create competitive edge by getting the best mix between existing products and existing markets.

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The Impact of Strategic Relevance and Assurance of Sustainability Indicators on Investors' Decisions

Auditing A Journal of Practice & Theory ◽

10.2308/ajpt-50738 ◽

2014 ◽

Vol 34 (1) ◽

pp. 131-162 ◽

Cited By ~ 89

Author(s):

Mandy M. Cheng ◽

Wendy J. Green ◽

John Chi Wa Ko

Keyword(s):

Strategic Alignment ◽

Investment Decisions ◽

Company Strategy ◽

Cost Leadership ◽

Nonprofessional Investors ◽

Differentiation Strategy ◽

Leadership Strategy ◽

Strategy Versus ◽

The Impact ◽

Cost Leadership Strategy

SUMMARY In this study, we report two 2 × 2 between-subjects experiments that investigate the effect of strategic relevance of reported sustainability information and its assurance on nonprofessional investors' investment decisions. The first experiment manipulates strategic relevance of reported environmental, social, and governance (ESG) indicators between “high” and “low” by varying the company strategy (sustainability-based differentiation strategy versus cost leadership strategy unrelated to sustainability). The second experiment manipulates the strategic alignment of the ESG indicators (holding strategy constant). We also manipulate the presence (absence) of assurance in both experiments. Results from both experiments document that investors perceive ESG indicators to be more important, and are more willing to invest in the company if ESG indicators have higher strategic relevance. Experiment one also provides evidence that assurance increases investors' willingness to invest to a greater extent when ESG indicators have high relevance to the company strategy. Our findings suggest that the assurance of ESG indicators has a beneficial signaling role in communicating the importance of this reported information to investors.

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