Influence of Strategic Management Strategies on Organizational Performance of Private Construction Firms in Nairobi County

Abstract

The main objective of the this study was to investigate the influence of strategic management strategies on performance of construction companies in Nairobi county, Kenya. The specific objective of the study was to evaluate the influence of cost leadership strategies, differentiation strategies and focus strategies on organizational performance of construction companies in Nairobi county. The importance of study was to help the construction firms and their top management to evaluate the influence of strategic management on their overall performance. The study will assist the managers to come up with competitive strategy as it will show the benefits of having a good and effective strategy; The study will help the construction firms to be more effective and efficient, therefore the clients will benefit from saving costs and having a better and improved end products; The academicians and researchers will be able to use this study as a reference point and able to further develop more knowledge about the construction industry in Kenya. This study will further assist organizations to do further research on other similar and relevant areas. The research design was descriptive in nature. The population comprised of owners and top management. Stratified sampling technique was used to select the sample in which 237 respondents were chosen. The employees were categorized into two categories namely owners and management staff. Information was collected using a questionnaire developed by the researcher. The questionnaire developed was pilot tested and refined before being administered to the respondents. The data was analyzed using descriptive statistics and correlation, with the help of SPSS Software as an analytical tool. The study findings suggest that cost leadership strategies needs to be adopted when it comes to the construction sector because the study findings show that this can facilitate competitiveness creation and encourage better overall performance of the construction firms. Differentiation strategies also need to be developed and make sure that the firms are offering unique and quality products and services of high value proposition and this can promote firms in the construction industry. These strategies have the capacity to facilitate development in performance of these construction firms and also boost their sales and profits in the market. The study also found out that focus strategies can be able to transform and grow the construction firms because they enable them to come up with effective strategies. All the resources and energies of the company are directed towards a specific market or segment of the construction market. This can facilitate the comprehension of the firms goals and objectives. This can also develop the general overall performance of construction firm and this will in turn be reflected in their growth. The correlation analysis was done the researcher. There was positive relation between cost leadership, differentiation strategy and focus strategy. The organizational performance was positively correlated with all the independent variables. The highest correlation was with cost leadership strategy with coefficient of 0.452, second was differentiation strategy with coefficient of 0.381 and third was focus strategy with coefficient of 0.280. The findings were all positively correlated though they were not significant. The study concludes that cost leadership contributes the most to the organizational performance and greater advantage is achieved if construction firms combine the generic strategies as opposed to achieving pure strategies. The study has drawn a conclusion that Cost leadership strategy achieved purely can lead to the growth overall organizational performance. In addition, cost leadership strategies combined with differentiation strategies and focus strategies achieve growth in sales, profit and overall performance. The study recommends that construction firms should careful carry out a cost benefit analysis and invest in technology that would encourage development of new products and innovation, which would lead better quality products and services which in turn be a cost saver for firms, which in turn they can charge a premium price to gain higher profits.