Abstract:
The success and sustainability of any organization in a competitive environment is determined by
its choice
of strategy.
Most strategies are replicated by competitors and thus a company must
position itself in the minds of the consumer in order to remain competitive.
The significance of
small and medium sized enterprises to world economies and Kenya in particul
ar cannot be over
emphasized. SMEs make up the largest business sector in every econom
y
.
The
lack of proactiv
ity
,
innovativeness, risk taking and overall poor entrepreneurial orientation have negatively impacted
on the SMEs.
The study
sought to
determine w
hether
product innovation and
cost leadership
strategy
were
positively associated with business performance of S
mall and
M
edium
E
nterpris
es
in Nairobi County
Kenya
.
Explanatory research design was used in the study. The target
population of the study
was m
ade up of 7384 SMEs and a sample of 95 SMEs was picked using
systematic random.
Primary data
was
collected using a questionnaire with both
structured and
unstructured questions.
Descriptive statistics such as
mean and frequencies
and inferential
statistics
such as
regr
ession and correlation analysis
was
used to perform data analysis.
The study
found out that product innovation and cost leadership strategy were positively and significant
related to and financial performance.
The study concluded that
that product innovation and
cost
leadership strategy
have
a
positive and significant effect on
the financial performance of SMEs.
The study recommended that to
accomplish the
goals
of SM
Es in the light of growt
h and
profitability, management
need to have a
positive rethink towards the use of strategic management
.