EFFECTS OF COMPETITIVE STRATEGIES ON PERFORMANCE OF FIRMS IN NIGERIA

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EFFECTS OF COMPETITIVE STRATEGIES ON PERFORMANCE OF FIRMS IN NIGERIA. A STUDY OF GOD IS GOOD TRANSPORT COMPANY

CHAPTER ONE INTRODUCTION

Background of the Study

 

Competitive strategy is concerns what a firm is doing in order to gain a sustainable competitive advantage. It comprises of all those moves and approaches that a firm has and is taking to attract buyers, withstand competitive pressure and improve its market position. In order to survive in the competitive environment, it becomes necessary for the threatened public transport companies to be aggressive in their search and development of strategies that provide competitive advantage as they step up defensive strategies to protect their competitive advantages. The stiff competition among the public transport companies and the entry of other players into the industry following the ban on fourteen seater passenger vehicles necessitate the design of competitive strategies to guarantee their performance. Successful strategies lead to superior performance and sustainable competitive advantage. The ability of a company to command a competitive advantage depends on the sustainability of the competitive advantages that it commands.

The study will be founded on two theories: Open systems theory which holds that organizations as open systems operate from an environment and are therefore affected by the operating environment in equal measure that they affect it. Open system perspectives see organizations both as hierarchical systems and as loosely coupled systems and assume that all large organizations are comprised of multiple subsystems, each of which receives inputs from other subsystems and turns them into outputs for use by other subsystems (Hatch, 1997). The subsystems are not necessarily represented by

 

departments in an organization, but might instead resemble patterns of activity. Environmental influences that affect open systems can be described as either specific or general. The specific environment refers to the network of suppliers, distributors, government agencies, and competitors with which a business enterprise interacts. The general environment encompasses four influences that emanate from the geographic area in which the organization operates. This theory therefore calls on firms to consider the operating environment in their strategy formulation process because any strategy not formulated with the immediate environment in mind may fail. The study will further be anchored on the resource based view theory which defines resource as anything which could be thought of as strength of weakness of a given firm (Wernerfelt, 1984). For any organization to implement a strategy, it needs to have adequate resources otherwise the strategy will fail (Barney, 1991). The resources owned or controlled by a firm form the basis of its competitiveness.

Public transit systems play an important role in providing transportation mobility to a significant portion of the community, while at the same time combating traffic congestion, reducing carbon emissions, and promoting compact, sustainable urban communities (Wardman and Waters, 2001). Public transportation comprises all transport systems in which the passengers do not travel in their own vehicles. God is Good Motor is one of the companies offering public transport services within Nairobi and its environs. The Company has faced many challenges in its operations which affected its competitiveness forcing it to rethink its strategies for it to remain competitive. Some of the notable industry challenges included increase in the number of companies

with large fleets plying on the routes that the Company had initially dominated (Express

 

Connections Limited, 2015). This increased competition thereby negatively affecting the performance. In order to improve the competitiveness and performance of the Company, the management developed a number of competitive strategies which this study will seek to investigate.

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