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International Academic Journal of Innovation, Leadership and Entrepreneurship | Volume 2, Issue 3, pp. 486-503

BUSINESS LEVEL STRATEGIES AND PERFORMANCE

OF SELECTED SUPERMARKETS IN NAIROBI CITY
COUNTY, KENYA

Joan Kadenyeka.
Master of Business Administration (Strategic Management), Kenyatta University,
Kenya.
Evans Mwasiaji.
Lecturer, Department of Business Administration, Kenyatta University, Kenya.

©2023

International Academic Journal of Innovation, Leadership and Entrepreneurship

(IAJILE) | ISSN 2518-2382

Received: 18th March 2023

Published: 30th March 2023

Full Length Research

Available Online at: https://iajournals.org/articles/iajile_v2_i3_486_503.pdf

Citation: Kadenyeka, J., Mwasiaji, E. (2023). Business level strategies and performance of
selected supermarkets in Nairobi City County, Kenya. International Academic Journal of
Innovation, Leadership and Entrepreneurship, 2(3), 486-503.

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International Academic Journal of Innovation, Leadership and Entrepreneurship | Volume 2, Issue 3, pp. 486-503

ABSTRACT

Commercial entities operating in a globalized performance and the three business level
and competitive business environment must strategies of cost leaderships (β=0.240 and
adopt a market posture that allows them to p=0.007); differentiation (β=0.629 and
effectively use their strengths, resources and p=0.000) and focus (β=0.212 and p=0.037).
innovations to take advantage of available Analysis of data showed that higher levels of
opportunities in line with organizational strategy implementation led to enhanced
objectives, while simultaneously hedging performance, and vice versa. The position
against potential threats. The chosen market taken by this study therefore is that business
posturing is made possible through effective level strategies are critical in facilitating the
implementation of appropriate strategies at realization of supermarkets’ performance in
the corporate, business, functional and Nairobi City County, Kenya. This study
operational levels. In Kenya, ten therefore recommends that the Government
supermarkets in the retail trade sector within of Kenya ought to review relevant policies to
the last decade have had to close their lower the cost of doing business including
business leading to job losses and negative improvement in infrastructure, while the
impact on the national economy. This study supermarket’s strategies should target
anchored on dynamic capability theory, minimization of operational costs, offer
therefore sought to examine business level lower cost commodities, invest in product
strategies and their effect on the performance innovations, adopt modern technology and
of selected supermarkets in Nairobi City undertake market focused research. The
County in Kenya. Descriptive research expected study output upon successful
design was adopted for this study. The unit of implementation of the given
analysis was nine supermarkets, while the recommendations is enhanced performance
unit of observation selected using census of supermarkets in Nairobi City County.
method was sixty three managerial staff
including senior executives in the areas of Key words: Business Level Strategies,
Finance, Human Resources, Marketing, Performance, Cost Leadership Strategy,
Information Technology, Business Differentiation Strategy, Focus Strategy.
Development, Purchasing and Supply Chain
Management. A self-administered semi-
structured questionnaire was used in
collecting both qualitative and quantitative
data in line with the specific objectives of the
study. SPSS software was used to compute
descriptive statistics to depict the
characteristics of the study variables through
tables and graphs. This study with a 65.07%
response rate, established that there is a
positive link between the supermarket’s

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International Academic Journal of Innovation, Leadership and Entrepreneurship | Volume 2, Issue 2, pp. 486-503

INTRODUCTION

The retail trade industry which plays a significant role in the supply chains alongside producers,
distributors and other market intermediaries, has been hailed globally as critical in not only
mobilizing investments and as an economic indicator on consumer spending parameter, but
also as an avenue for job creation, poverty reduction and improvement in the standards of living
of the citizenry (Das Nair, 2020; Gathiru, Khamah & Nyakora, 2019). According to global
market evaluation institutions, manufacturers who were until recently a determinative factor in
supply chains and logistics management have begun to lose their positions to players in the
retailer industry who have become more powerful actors (Oberlo, 2021; Fortune Business,
2021; Abbas, 2021). Despite this critical role that the retail industry plays in supply chains in
support of economic development, supermarkets have had to contend with serious disruptions
occasioned by rapid change in technological advancement, massive new entrants in the market
place, and unconducive business environment due to unfriendly policy framework within the
context of climate change (Business Today, 2022; Mwasiaji, Alaro, Muthinja & Njuguna,
2022). According to Oberlo (2021) and Africa retail report (2020), even though globally there
was in 2019 a slight dip in growth rate as compared to previous years due to effects of COVID-
19 pandemic, the retail market was projected to grow at an annual rate of 4.1% from 2021 to
2027. However across Africa, available data from Oxford Economics indicated that due to
lower levels of demand and considerable pre-pandemic economic challenges, resident based
retail was projected to contract by 5% on average in year 2020, though Harare’s in Zimbabwe
and Johannesburg South Africa’s retail sales were expected to contract more sharply (Africa
retail report, 2020; Fortune Business, 2021). Despite the general market outlook, several large
supermarkets in South Africa that have traditionally been hesitant to enter rural and semi-urban
areas due to business sustainability concerns, somewhat benefitted after small scale retailers
adjusted their focus causing them to lose customers to large supermarkets (Makhitha & Soke,
2021). For instance, due to enhanced technology, Shoprite supermarket in South Africa
increased its profits by 20.3% in 2019 compared to 2018 (Das Nair, 2020).

In sub-Saharan Africa, supermarket’s average growth in certain sectors in Tanzania for

instance, has been linked to market positioning in the face of heightened demand for
commodities, income growth per capita and middle-class growth (Shayo, 2021; Fortune
Business, 2021). Despite this, some multinational retailers in Tanzania have had to close shop
attributing it to unsupportive policy framework within the context of lingering effects of Covid-
19 pandemic (Shayo, 2021). Closure of some of the supermarkets in the retail industry was also
attributed to declining economic conditions in the country due to a multiplicity of factors
including climate change, as is the case for Game Store which exited Tanzania’s market
causing 45 employees to lose their jobs (Malanga, 2022). In the neighboring Zimbabwe,
supermarkets there have of late reported generally good performance, contributed to adoption
of latest technology, increased availability and consumption of food items (Le-roy et al., 2020).
In Kenya, players in the retail and wholesale trade that accounted for 7.9% of Kenya’s GDP in
2021, continue to operate in a highly competitive and turbulent environment (Kenya National
Bureau of Statistics, 2022). Financial challenges and unfavorable economic conditions have
been experienced particularly by some supermarkets in Kenya resulting in some local

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supermarkets such as Uchumi and Tuskys exiting the market, with available data indicating
that about 50% of retail collapse within the initial years of operation (Mutinda & Mwasiaji,
2018; Karimi & Waruguru, 2018). Choppies in Botswana acquired Ukwala supermarket also
resulting in its exit from the market in Kenya (Ouma, 2018), whereas Shoprite also exited the
market after operating for a small duration (Olawoyin, 2020). On its part, Uchumi supermarket
closed 31 stores by 2019 in Kenya and declared 253 staff redundant due to declining
performance (Gathiru, Khamah & Nyakora, 2019). Uchumi also exited Tanzania and Uganda
market (Government of Kenya, 2019) while indebted to a tune of about Kshs 7.6 billion. During
this time, Uchumi supermarket’s stocks were the worst performing at the Nairobi Securities
Exchange even though it first listed in 1992 (Wambu, 2020). In the case of Tuskys, its current
debts are more than Kshs. 10 billion with the management of the retailer having indicated
possible formulation of a new strategic plan and intention to clear all its debts within a period
of 15 years (Wasuna, 2022).

In view of the turbulence experienced by supermarkets in the retail trade industry in Kenya,
senior executives in these businesses have therefore continued to think about how to remain
viable, competitive and profitable in a sustainable manner by effectively exploiting their
resources while bringing value into the market place (Mutinda & Mwasiaji, 2018; Grabowska
and Otola, 2013). The intention is to adopt a market posture that allows them to effectively use
their strengths, resources and innovations to take advantage of available opportunities in line
with organizational objectives, while simultaneously hedging against potential threats. The
chosen market posturing is made possible through effective implementation of appropriate
strategies at the corporate, business, functional and operational levels (Mwasiaji, 2019;
Tapera, 2016; Xhavit, Naim & Marija, 2020). Implementation of strategies entails execution
of plans which are in line with the objectives of the business as well as having the potential to
drive maximum returns on investment, while at the same time operating sustainably (Ikonya,
2015; Mithamo, Marwa, Letting & Nicholas, 2014). Strategic options that business
organizations seek to implement include those related to market or product diversification, as
well as functional or organizational management innovations (Bell, 2018; Mwasiaji, 2019;
Enida & Kume, 2015). This is in line with Pearce and Robinson (2003) recommendation that
commercial enterprises should periodically reconsider their business strategies so as to
effectively manage the greater competitive environment.

Problem Statement

Globally, even though there was in 2019 a slight dip in growth rate as compared to previous
years due to effects of COVID-19 pandemic, the retail market was projected to grow at an
average annual rate of 4.1% from 2021 to 2027 (Africa Retail Report, 2020; Fortune Business,
2021). In Kenya however, the retail trade industry was one of the hardest hit sectors on the
back of supply chain disruptions and government policy measures adopted in the wake of
COVID-19 pandemic (Mwasiaji, Jagongo & Ogutu, 2020;). As a result of many factors
including the economic challenges within the context of climate change, several supermarkets

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in the retail trade sector have within the last decade had to close their business leading to job
losses and negative impact on the national economy (Business Today, 2022). For instance
within the last decade in the retail trade industry in Kenya, ten (10) hitherto giant and renowned
retail operators collapsed, while at the same time quick emergence of new operators to fill in
the perceived void left in the market. For instance Uchumi supermarkets collapsed despite
seemingly serious government intervention in an attempt to revive its operations (Business
Watch, 2022; Mutinda & Mwasiaji, 2018), followed shortly thereafter by Nakumatt
supermarkets, then Deacons Kenya limited which was the largest and oldest fashion retailer,
and later Shoprite and Tuskys supermarkets (Ogero, 2020; Business Watch, 2022). Shoprite
for instance fully exited the Kenyan market by end of January 2021 as a result of losses in
excess of Kshs 3.2 billion in the 2019 – 2020 financial year. It also rendered its employees
redundant, a situation that was heightened by the Covid-19 pandemic which also negatively
impacted its performance. Similarly, Choppies supermarket had earlier taken over Ukwala
supermarket in 2015 (Koigi, 2016) after Ukwala was unable to pay debts of about $120 million
(Fayo, 2019). Surprisingly Choppies subsequently, announced its exit by end of 2019 in Kenya
(Olawoyin, 2020), Mozambique and Tanzania markets after posting a loss of about $500
million after tax during the financial year ending June 2018 (Theuri, 2021), while still required
to pay another $12.4 million debt to its suppliers and banks in Tanzania and Kenya (The East
African, 2021).

Relevant studies that have been undertaken in this area have variously reported that
Supermarkets within the retail trade industry encounter poor management, ineffective
inventory logistics, supply chain challenges and fierce rivalry from international and local
retailers (Abbas, 2021) leading business failures and job losses within the supermarket value
chain, thus negatively impacting the economy of the country (Machocho & Awuor, 2018;
Mutinda & Mwasiaji, 2018). One common observation amongst all the studies is that business
entities globally are currently operating in a competitive environment that requires formulation
and operationalization of a market posture that allows an enterprise to effectively use its
strengths, resources and innovations to take advantage of available opportunities in line with
its strategic objectives, while at the same time hedging itself against potential threats (Oberlo
2021; Bell, 2018). The adopted market posturing is made possible through effective
formulation and implementation of appropriate strategies at the corporate, business, functional
and operational levels (Mwasiaji, 2019; Tapera, 2016; Enida & Kume, 2015). Formulation and
implementation of effective business strategies is therefore critical for any enterprise when
seeking to establish sustainable competitive advantage (Auzair, 2015; Porter, 1985) while
maximize customer’s value (Priem et al., 2018; Njuguna & Waithaka, 2020; Musembi, 2021).
This study therefore sought to examine business level strategies of cost leadership,
differentiation and focus, in terms of their effect on the performance of selected supermarkets
in Nairobi City County in Kenya.

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LITERATURE REVIEW

Dynamic Capabilities Theory

Teece, David, Pisano & Shuen (1997), proposed the dynamic capabilities theory as a means to
permitting a firm to design new processes and products in response to shifting market
situations. Dynamic capabilities theory therefore emphasizes the importance of strategic
planning in charting the path to be followed by an entity (Tapera, 2016). Strategic planning
articulates the demands of dynamic capabilities through an improved assessment of a firm’s
external environment, thus enhancing organizational performance (Teece, David, Pisano &
Shuen, 1997). According to Agarwal and Selen (2009), dynamic capabilities put forth a
tradition of evolving over time. This view is supported by David (2017) who reported that
dynamic capabilities theory seemed to be an alternate method in resolving some of Resource
Based View shortcomings by analyzing sustainable competitive advantage and remarkable
performance within a changing environment. It encompasses the process of supporting the
organization to quickly adjust to the dynamic environment through building, assimilating and
redesigning a portfolio of their resources and capabilities (Teece, Pisano & Shuen, 1997).
Dynamic capabilities suggest that organizations may be motivated to pursue mergers and
acquisition options so as to acquire capabilities such as coming up with new processes or
products or entering into new markets (Hesterly & Barney, 2014; Ikonya, 2015; Teece, 2009).
Capabilities theory was found relevant in anchoring the variable of this study in terms of how
a firm can execute them by implementing lower commodity costs or product differentiation to
gain sustainable advantage over its competitors.

Resource-based View

Several studies have been undertaken seeking to establish the usefulness of resources in
promoting firm’s competitiveness (Barney, 1997; David, 2011; Hesterly & Barney, 2014;
Mwasiaji, 2019; Pearce & Robinson, 2003; Tapera, 2016; Thompson, Strickland & Gamble,
2018), hence the Resource Based View (RBV) which defines the features depicted by a firm’s
resources for the purse of realizing sustainable advantage over its competitors (Hameed &
Anwar, 2018). RBV also stresses the role played by internal resources and how they impact a
firm’s strategies and performance (Barney, 1991). Bell (2018) reported that in the short-term,
firms that achieve competitive advantage and enhance their productivity possess have rare and
valuable resources. In this case, competitive advantage denotes a firm’s creation and
implementation of a strategy which contributes to superior performance in comparison to its
rivals within a similar market or industry (Bell, 2018). This allows an enterprise to provide
greater customer value as compared to its rivals (Agarwal & Selen, 2009). Thus, RBV was
found useful to this study because it explains the relevance of an organizations’ possession of
valuable resources as an enabler towards obtaining and sustaining a competitive advantage,
through creation of a link between the resources and the chosen business strategy.

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Porter’s Generic Strategies

Porter (1980) indicates that market focus, cost leadership and differentiation generic strategies
can propel commercial firms to realize competitive advantage. According to Ali & Anwar,
2021), these generic strategies are vital in elaborating a firm’s behavior towards their rivals in
a specified industry. The cost leadership strategy emphasizes on lower cost for firm’s activities,
low-priced and input which is minimal (Atikiya, Mukulu, Kihoro & Waiganjo, 2015;
Akintokunbo, 2018; Sabir et al. 2021; Herbert & Deresky, 1987), taking advantage of
purchasing inputs in large quantities as well as how the process is designed (Saleh et al. 2021).
Minimal input entails partaking cheap labor whilst the location of the raw materials and storage
becomes closer in terms of accessibility (Talim, et al. 2021). Some authors have defined two
different types of low-cost strategy. The first type represents offering services and products in
the market to many customers at the lowermost price. The second type denotes a best-value
strategy that gives the best value market price for products or services to an expansive number
of customers (Thompson et al. 2018; David 2017; Thomas and Hunger 2012). Firms that
continuously implement low-cost strategy do so with a motive of improving their competitive
edge and performance (Enida and Kume, 2015). However, a low-cost strategy doesn’t provide
lasting competitive edge for firms using best-value or low-cost strategies. When pursuing low-
cost strategy, firms need to be careful not to implement aggressive price cuts which could lower
their profits considerably (David, 2017; David, 2019).

According to Reilly (2002) and Ahmed et al. (2021) differentiation which is another of Porters
(1980) generic strategy involves providing a customer with a valuable commodity through
service or product distinctiveness. Akoi et al. (2021) argued that differentiation can be
accomplished through distinct features, brand image, use of technology, supply chain, crafting
marketing target or message target or through advertising. Through differentiation, a firm seeks
to differentiate itself from its rivals based on its product or service quality (Griffin 2005; Islami
et al. 2020). Differentiation strategy is the firm’s creation of unrivaled special products and
services so as to attain brand customer loyalty (Kitheka & Bett, 2019) leading to attainment of
competitive advantage (Kyengo et al. 2016; Thompson et al. 2018). David (2019) further
indicated that differentiation strategy chooses features perceived by most buyers in the industry
to be vital and uniquely caters to those needs to sustain customer loyalty.

Focus is another of Porters (1980) generic strategy that centers on precise targeted customers
or market section. According to Islami et al. (2020), a firm’s focus strategy involves
concentrating on a specified geographical market, line of a product, or specific consumers. This
view is supported by Akintokunbo (2018) who reported that focus strategy exploits on market
development or penetration to meet the needs of secluded geographic areas. The focus strategy
may be adapted incase differentiation or cost leadership fails (Ali & Anwar, 2021). Porters
(1980) focus strategy assists firms target specific niche in the industry like a group of buyers,
a limited section of a specified line of a product, a regional or geographic market, or a focus
market having different and unique options (Kitheka & Bett, 2019). This can be achieved

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through meeting customer needs such as distinct financing, inventory or resolving service
issues.

Empirical Review

Numerous studies have been undertaken seeking to establish a link if any between Porters
(1980) generic strategies and organizational performance. Njuguna and Waithaka (2020) study
for instance sought to establish the link between cost leadership strategy and performance of
Insurance companies in Nyeri County. Descriptive research design was adopted. Inferential
statistics was used in analysis. This study indicated that cost leadership strategy positively
influenced organizational performance. Another study by Atikiya et. al. (2015), seeking to
examine the effect of cost leadership’s on the performance of Kenya’s manufacturing firms,
using explanatory and descriptive research design, established that manufacturing firms’
performance level were significantly impacted by its cost leadership strategy. A similar study
by Hilman and Kaliappen (2014) on the impact of cost leadership strategy on process
innovation in Malaysia hotel industry, report improvement in performance due to adoption of
cost leadership strategy. Kairu and Kibe (2022) study on the other hand investigated product
differentiation strategy and its impact on supermarket’s performance in Nairobi City in County
Kenya. This study established that product differentiation strategy positively and significantly
impacted the performance of the identified supermarkets. Another study by Musembi (2021)
examined the effect of differentiation strategy on the performance of taxi firms in Nairobi City
County. The findings of this study were that differentiation strategy had a positive and
substantial effect on the performance of taxi firms. A similar finding was by Demba, Ogal and
Muli (2019) study on how performance of car rentals located in Kenya’s County of Nairobi
was impacted by differentiation strategy. The study concluded that differentiation strategy did
not have significant impact on the firm’s performance. Another study by Njuguna, Muchara
and Namada (2019) concluded that focus strategy-firm structure fit had a substantial impact on
the performance Kenya’s star-rated hotels’.

STUDY METHODOLOGY

Descriptive research design was adopted for this study. The unit of analysis was nine
supermarkets, while the unit of observation was sixty three managerial staff from the Managing
Director to senior executives in the areas of Finance, Human Resources, Marketing,
Information Technology, Business Development, Purchasing and Supply Chain Management.
The study employed census method in selecting six three (63) respondents, while a five-point
likert-type semi-structured questionnaire was used in collecting both qualitative and
quantitative data in line with the specific objectives of the study. SPSS software was used to
compute descriptive statistics to depict the characteristics of the study variables through tables
and graphs

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Study Results
Descriptive Statistics
Descriptive statistics for the both the independent and the independent variables have been
presented in Tables 5.1.1, 5.1.2, 5.1.3 and 5.1.4 as follows.

Table 5.1.1: Cost Leadership Strategy

Very
Less Moderate Large large
Item Description No extent extent extent extent extent Mean Std. Dev
Lowering operational
costs 5.90% 19.60% 3.90% 33.30% 37.30% 3.76 1.31
Lowering product’s
price against its rivals 5.90% 27.50% 3.90% 33.30% 29.40% 3.53 1.33
Offers and promotions 5.90% 3.90% 13.70% 39.20% 37.30% 3.98 1.10
Enhanced product’s
delivery and customer’s
timely access 5.90% 9.80% 9.80% 39.20% 35.30% 3.88 1.18
Reduced product’s
transportation costs 60.80% 13.70% 2.00% 17.60% 5.90% 1.94 1.38
Table 5.1.1 shows that 70.6% of respondents shared that operational cost were lowered to a
large extent or very large extent. Most respondents (62.7%) indicated that supermarkets
lowered product’s prices to a large or very large extent compared to its rivals. The same pattern
was repeated in the next two questionnaire item. However, the study findings revealed the
highest and lowest mean scores results to be; enhanced product’s delivery to customers (Mean
was 3.88 with a Std. Dev of 1.18), lowering operational costs (with a mean of 3.76 and Std.
Dev. of 1.31). Lowest mean score statements comprised of lowered products’ transport costs
(with a mean of 1.94 and Std. Dev. equal to 1.38). The study respondents also indicated that
supermarkets were unable to reduce transport costs due to high fuel prices, but were able to
lower operational costs and deliver products to its customers.
Table 5.1.2: Differentiation Strategy
Moder Very
No Less ate Large large Std.
Item Description extent extent extent Extent extent Mean Dev
Introduced more branches to 27.50
enlarge its market 9.80% 3.90% % 41.20% 17.60% 3.53 1.14
Technology leveraging to
enhance business’ processes 3.90% 2.00% 9.80% 64.70% 19.60% 3.94 0.86
Enhanced customer’s 13.70
commodities offering 2.00% 2.00% % 62.70% 19.60% 3.96 0.77
Customized products to suit exact 15.70 25.50
customer requirements 2.00% % % 49.00% 7.80% 3.45 0.92
Introduction of brand-new 13.70
commodities in the marketplace 0.00% % 9.80% 43.10% 33.30% 3.96 1.00
Some prices of products or
services are more expensive than 29.40
our rivals 39.20% % 0.00% 27.50% 3.90% 2.27 1.34
Some commodity prices
are renovated to improve market 25.50
recognition 11.80% % 2.00% 31.40% 29.40% 3.41 1.44

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Table 5.1.2 shows that 58.8% the study respondents indicated that to a large or very large
extent, the supermarket introduced more branches to enlarge its market base, while about
84.3% respondent that technology adoption enhanced business processes. Likewise majority
of the respondents agreed that their supermarket to a large extent and / or very large extent
enhances customer’s commodities offering (81%); Customized products suit exact customer
requirements (56.8%), while 76.4% indicated that their supermarket introduces brand-new
commodities.

Table 5.1.3: Focus Strategy

Moder Very
No Less ate Large large Std.
Item Description extent extent extent Extent extent Mean Dev
Customer needs in target
market are met through unique
product features 15.70% 0.00% 3.90% 60.80% 19.60% 3.69 1.26
Marketing efforts are focused
on specific sales channel e.g.
online 9.80% 2.00% 9.80% 51.00% 27.50% 3.84 1.16
Design of product’s range for 23.50
all customer groups 29.40% % 9.80% 27.50% 9.80% 2.65 1.41
Branches are extended to
customer’s location 9.80% 0.00% 5.90% 58.80% 25.50% 3.90 1.10
Greater effectiveness and
efficiency 11.80% 5.90% 9.80% 45.10% 27.50% 3.71 1.27

Table 5.1.3 on focus strategy shows that 80.4% of respondents indicated that customer needs
in target market are met through unique product features, while 78.5% others responded that
to a large or very large extent their supermarket’s marketing effort are focused on specific sales
channel. Likewise majority of the respondents agreed that their supermarket to a large extent
and / or very large extent their branches are extended to customer’s location (84%); while about
72% indicated that their supermarket has ensured greater effectiveness and efficiency.
Table 5.1.4: Performance of Supermarkets

Very
Less Moderate Large large Std.
Item Description Not at all extent extent Extent extent Mean Dev
Greater recorded profits 7.80% 7.80% 7.80% 19.60% 56.90% 4.10 1.30
Improved customer base 5.90% 3.90% 3.90% 17.60% 68.60% 4.39 1.13
Greater sales turnover 3.90% 21.60% 5.90% 9.80% 58.80% 3.98 1.38
Improved return on
assets 3.90% 7.80% 23.50% 60.80% 3.90% 3.53 0.86
Minimized complaints
by customers 5.90% 15.70% 17.60% 45.10% 15.70% 3.49 1.12
Heightened retention of
customers 19.60% 15.70% 0.00% 60.80% 3.90% 3.14 1.31
Improved loyalty by
customers 7.80% 5.90% 9.80% 27.50% 49.00% 4.04 1.25

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Increase in number of
customers gained 17.60% 3.90% 11.80% 27.50% 39.20% 3.67 1.48
Greater employee
retention as a result of
job satisfaction 27.50% 43.10% 7.80% 13.70% 7.80% 2.31 1.24
Improved market brand
appreciation 11.80% 5.90% 2.00% 31.40% 49.00% 4.00 1.36
Enhanced growth of
employees, skills and
employee development 27.50% 43.10% 3.90% 7.80% 17.60% 2.45 1.43
Grater growth of firm’s
revenues 7.80% 5.90% 9.80% 17.60% 58.80% 4.14 1.28
Average 3.60 1.26

Table 5.1.4 on performance shows that 76.5% of study respondents at a mean of 4.1 and
standard deviation of 1.3, indicated that to a large or very large extent, there were greater
recorded profits linked to effective implementation of the porters generic strategies. Other
aspects where majority of the respondents agreed regarding the performance of their
supermarkets at a mean of at least 4.0 include Improved loyalty by customers (4.04); Improved
market brand appreciation (4.00); and grater growth of firm’s revenues (4.14).

Regression Analysis

Results of the regression analysis have been presented in Tables 6.2.1, 6.2.2 and 6.2.3 as
follows.

Table 5.2.1: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

a
1 .780 .608 .583 .25493

Table 5.2.1 shows that business level strategies have a positive and statistically significant
relationship to the performance of selected supermarket’s in Nairobi County in Kenya,
considering the indicated Pearson Correlation value of R=0.780.

Table 5.2.2: Analysis of Variance

Sum of Degrees of Means Significanc

Model Squares freedom Squares F e
Regressio 24.3
n 4.745 3 1.582 4 .000b
Residual 3.054 47 0.065
Total 7.8 50

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Table 5.2.2 presents Analysis of Variance (ANOVA) for testing the model’s fitness given the
data that had been collected. The findings revealed that p value was equal to 0.000 and lower
than 0.05 hence proved to be reliable. The calculated F (24.34) was higher than F-critical
proving the model’s fitness in evaluating the effect of business level strategies on the
performance of selected supermarkets in Nairobi City County, Kenya.

Table 5.2.3 Regression of Coefficient

Unstandardized Standardized
Models Coefficients Coefficients
B Std. Error Beta t Sig.
(Constant) -0.243 0.46 -0.528 0.6
Cost leadership
strategy 0.240 0.086 0.283 2.801 0.007
Differentiation
strategy 0.629 0.111 0.545 5.672 0.000
Focus strategy 0.212 0.099 0.213 2.147 0.037

Table 5.2.3 shows a positive statistical association between cost leadership strategy and the
organization’s performance (where β = 0.240 and p=0.007). Thus a positive change in cost
leadership strategy causes the supermarket’s performance to increase by 0.024 units. This
finding agrees with Kairu and Kibe (2022) study that reported there is a link between Nairobi
supermarket’s performance and cost leadership strategy. Similarly, there is a positive
relationship between supermarket’s performance and differentiation strategy (where β is equal
to 0.629 while p=0.000). Thus, improvement in one unit in a positive direction for the
differentiation strategy would cause a 0.629 unit increase in supermarkets’ performance. This
finding concurs with Kitheka and Bett (2019) study which concluded that differentiation
strategy positively influenced the performance of Safaricom PLC in Kenya. The current study
findings also revealed a statistically positive link between focus strategy and the performance
of selected supermarkets (where β = 0.212 and p=0.037). Hence, a positive unit change in focus
strategy causes the supermarket’s performance to rise by 0.212 unit. This is in line with Demba,
Ogal and Muli (2019) study on focus strategy, which reported a positive performance in car
rental businesses located in Nairobi County in Kenya.

The following is the regression equation for this study: Y= -0.243+ 0.240 X1+ 0.629 X2+ 0.212
X3, where Y refers to Organization’s Performance, X1 highlights the Cost leadership strategy,
X2 and X3 refers respectively to differentiation and focus strategy. Organizational performance
would be 0.243 given the study is constant and placed at zero. In the absence of business level
strategies, 24.3% of organizational performance would be influenced by other factors exempted
in this study. This study’s findings concur with Gorondutse and Hilman (2019) study which
reported that business level strategies have a positive impact on the performance of hotels.

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Conclusion and Recommendations

The purpose of this study was to examine business level strategies and their effect on the
performance of selected supermarkets in Nairobi City County in Kenya. The study revealed
that even though increased fuel prices had an impact on the supermarkets’ transport costs for
commodities, cost leadership strategy has a significant positive association to supermarket’s
performance, which increased when cost leadership levels improved. The study also
established that differentiation strategy had a significant and positive impact on performance
of supermarkets. Thus, higher differentiation levels lead to increased performance of selected
supermarkets. Innovation and new products introduction by supermarkets enhanced its
performance. Likewise, Focus strategy and performance were found to have a significant and
positive association. Enhancing focus levels was found to improve performance. The position
taken by this study therefore is that business level strategies are critical in facilitating the
realization of supermarkets’ improved performance in Nairobi City County in support of
national economic objectives in Kenya. This study therefore recommends that the Government
of Kenya ought to review relevant policies to lower the cost of doing business including
improvement in infrastructure. For instance, the government needs to consider tax
minimization on fuel products which would in turn lower transport costs for commodities hence
decreasing commodity prices. In addition, functional managers should formulate and
implement strategies to minimize operational costs and reduce commodity prices. Product
innovation should be sustained to fast-track product differentiation, enhance competition and
create barriers to entry in the market. Technology adoption should also be fast tracked in all
supermarkets’ processes so as to enhance efficiency as well as effectiveness. There is also need
to have the Supermarket’s profits reinvested in the business to fund the creation of services and
products that cater to the needs of customers. Market focus research should also be undertaken
to identify potential markets ignored by competitors hence increase market share as well as
supermarket’s performance. The expected study output upon successful implementation of the
given recommendations is enhanced performance of supermarkets in Nairobi City County.

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