Effects of Competitive Strategies on Organizational Performance in Scania East Africa Limited

Organizational performance in the motor industry has become a major focus of managers due to the stiff competition witnessed in the industry and technology which is changing so rapidly. With this in mind, the issue of competitive strategies of the motor industry has become paramount and organisations are preparing for stiff competition from existing competitors as well as new entrants within the industry. To achieve this objective, these organisations need strategies that are competitive, sound and outstanding to gain a competitive edge and enhance their organisational performance. The purpose of this study was to determine the effects of competitive strategies on organizational performance at Scania East Africa Limited which is in the motor industry, specifically retail and distribution of the heavy commercial vehicles. Four specific objectives formed the basis of study and these were: to examine the effect of differentiation strategy, pricing strategy, focus strategy and innovation strategy on the organizational performance at Scania East Africa Limited. The theoretical framework included theories such as, stakeholder theory, Resource based view theory and competitive advantage theory. The target population consisted of 144 employees of Scania East Africa Limited. However, the respondents were sampled. Quantitative research design was adopted for the study. The sample size of the study was 43 which was calculated by using 30% of the total population. A modified Likert scale questionnaire was developed and divided into four parts. A pilot study was carried out to refine the instrument. The quality and consistency of the study was further assessed using Cronbach's alpha. Data analysis was performed on a PC computer using Statistical Package for Social Science (SPSS Version 23) for Windows 10 computer. Analysis was done using frequency counts, percentages, means and standard deviation, regression, correlation and the information generated was presented in form of tables. The stepwise multiple regression analysis revealed that the competitive strategies namely; differentiation strategy, pricing strategy, focus strategy and innovation strategy explained statistically significant portion of the variance associated with the extent of organizational performance. The stepwise multiple regressions indicated that among the factors influencing organizational performance at Scania East Africa Limited, the variables had more effects on improving organizational performance. This result was an emphasis on the role of differentiation strategy, pricing strategy, focus strategy and innovation strategy and explained statistically significant portion of the variance associated with the extent of organizational performance of Scania East Africa Limited. The study recommended the following: That differentiation should be derived from customer experience in other words the customer‟s suggestions should be central in designing products that meets the customer‟s needs; that the company should continuously use cheaper quality raw materials and skilled labour to create value for the shareholders; that the company should continuously focus on its core business activities: that innovation should be at the centre of all operational activities. Pricing strategy, Innovation strategy and focus strategy also had statistically significant effect on organisational performance at Scania East Africa Limited therefore contributing positively to organisational performance of the company © 2017 Elixir All rights reserved. Elixir Org. Behaviour 110 (2017) 48488-48500 Organizational Behaviour Available online at www.elixirpublishers. com (Elixir International Journal) Lindah Nyambura Maina and Titus Kising’u / Elixir Org. Behaviour 110 (2017) 48488-48500 48489 desire to continue to operate successfully by creating and delivering superior value to their customers while also learning how to adapt to a continuous and dynamic business environment. The external environment is dynamic and often results in uncertainties for the organization (Porter, 2011). Out of the constant interaction between such a dynamic environment and the organization, opportunities and threats emerge. Further turbulent environmental changes can render yesterday‟s winning business solutions and principles obsolete (Porter, 2011). According to research carried out by Rüger, Fredrik & Brash 2014, transportation which leads to demand of heavy commercial trucks and buses is greatly affected by large-scale political, social, environmental, and economic changes, and the major global trends that shape the business environment. Although these trends are similar across the globe, they affect different regions in different ways. Therefore, the road ahead for large commercial vehicles looks different from one country to the next. In that context, each industry player will have its own potential road to success. To help craft an effective competitive strategy factors that should be put into consideration include; the evolving business environment (global trends), the potential demand for trucks in every country (sales and markets, the needs and preferences of truck owners and operators (customers and products), the operational opportunities (production and manufacturing) and importantly the environmental concerns, safety features, and Internet connection (innovation). According to Uzel (2012) a certain degree of competition is generally perceived to be essential and desirable to improve allocative and productive efficiency in the provision of services. An organization does not operate in a vacuum but within an external environment. This environment consists of variables that form the context within which firms exist (Bryman & Bell, 2015). Competitive strategy consists of all the moves and strategies that a firm has and is taking to attract buyers, withstand competitive pressure and improve its market position. Firms need competitive strategies to enable them overcome the competitive challenges they experience in the environment where they operate. A competitive strategy therefore enables a firm to gain a competitive advantage over its rivals and sustain its success in the market. A firm that does not have appropriate strategies cannot exploit the opportunities available in the market and will automatically fail. A company has a competitive advantage whenever it has an edge over its rivals in securing and defending against competitive forces (Bryman & Bell, 2015). Heavy commercial industry players therefore have to be aware of the growth trends in the markets, and at the same time stay alert to the continuous market cyclicality in the mature markets. Sustaining competitive advantage in the markets will require a highly-specific market tailored strategy. A consistent worldwide business model will not be sufficient. Regional needs have to be reflected and effective strategies employed. Innovations will be needed to address technological challenges and the rising importance of total cost of ownership in order to increase the organisations profitability and performance in the industry (Becker, 2011). As the global competition becomes increasingly fierce, how to build sustainable competitive advantage starts obtaining more attention as it is important for the survival and sustainable growth of companies in both developed and developing countries (Kising‟u, Namusonge & Mugambi 2012). The decline in world heavy commercial motor industry has grossly affected motor industry sales and posed a threat to motor industry operators because Kenyan motor industry largely depend on the International heavy commercial motor industry market (Becker, Beutel, SooLee,& Chang 2011). Previous studies have been conducted in Kenya on operations strategy, for example, Mbeche &Nyamwange (2013) conducted a study on the manufacturing strategies pursued by heavy motor manufacturing firms in Kenya as a way of remaining afloat in the turbulent global environment. This study found out that regardless of a company„s characteristics, in order for companies to gain and maintain competitiveness they should pursue the right strategies, which include, high quality, low cost, time/speed, innovativeness and flexibility. Although the study talked about manufacturing strategies it did not look at the operations strategies that will enhance the organization‟s competitive advantage. The global automotive industry, increasingly characterized by global mergers and relocation of production centers to emerging developing economies, is in the grips of a global price-war. The industry is subject to imperfect competition which has resulted in too much of everything such as too much capacity, too many competitors and too much redundancy and overlap. The industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency (Nag, Banerjee & Chatterjee 2007). Motor industries like other businesses are turning to strategies that can boost organisational performance so that they can qualify for international recognition for standardization competition, company of the year awards and other rating as well as membership to professional bodies. Kenya‟s macro environment has undergone several changes. This has made firms to come up with strategies that would help them to be successful in this environment. The motor industry has also been affected by some of these changes like liberalization and globalization which have made the formal motor sector to come up with strategies that will adapt to the changing environment (Wamai, 2011). The Kenya Vehicle Manufacturers (KVM) developed a model called the Organizational Performance Index (OPI) which is a tool that drives organizations in Africa towards excellent performance and competitiveness. The performance of organizations is measured against global standards and benchmarks. The key parameters include systems thinking, competitiveness, standards and cont