Cost Leadership Strategy and Performance of Registered Small and Medium Food And Beverage Manufacturing Firms in Nairobi County Kenya.

Abstract

Small and medium manufacturing firms play an integral part in revenue generation in Kenya’s economy and as avenue for employment opportunities for unemployed Kenya youths. With globalization and current economic trends in the market, many of the manufacturing firms face fierce competition that hinders their growth potential. This presents a need for these firms to adopt Cost Leadership Strategy to help them cut a niche the industry. Therefore, this research aimed at determining the influence of Cost Leadership Strategy on performance of small and medium food and beverage manufacturing firms in Nairobi County. This study was grounded on Competitive Advantage theory. The research used descriptive design and targeted 18 registered small and medium food and beverage manufacturing firms in Nairobi County. Simple random sampling was used to select the sample in conjunction with purposive sampling technique to ensure only respondents with desired information were selected in the study. Structured questionnaire was used to collect primary data. Data collected was analyzed using statistical packages for social sciences (SPSS) version 28 and presented in tables, charts and graphs. Multiple linear regressions model was used to establish the relationship between the independent variables and the dependent variable of the study. Findings showed that cost leadership, positively and significantly influence performance of small and medium size food and beverage manufacturing firms in Nairobi County with beta coefficient values ranging from 0.524 respectively. As a result, the researcher determined that Cost Leadership Strategy examined in the study had a substantial impact on the performance of SMEs in Nairobi County. Furthermore, the researcher recommended that SMEs' management should adopt Cost Leadership Strategy in order to meet their performance targets. The study also suggests that further research be conducted to examine policy implications on the adoption of Cost Leadership Strategy in Kenyan manufacturing SMEs, as the current study was mainly oriented towards the adoption of Cost Leadership Strategy and the subsequent influence on their performance.