Influence of Competitive Strategies on the Performance of Small Manufacturing Enterprises in Kampala Metropolitan, Uganda

Abstract

The effectiveness of competitive strategies in enhancing firm performance has been widely acknowledged. Yet, their applicability and impact in small manufacturing enterprises operating in resource-constrained and competitive environments like Kampala Metropolitan remain underexplored. This study examines the influence of competitive strategies on the performance of small manufacturing enterprises in Kampala Metropolitan, Uganda. Using a cross-sectional research design, data were collected from 96 respondents, including owners, operations managers, and marketing managers of small manufacturing firms. The study employed a quantitative method to analyse the relationship between competitive strategies and firm performance. Results revealed that cost leadership and focus strategies positively and significantly influence firm performance, with cost minimization in production, human resource management, and procurement contributing to increased profitability. The focus strategy, mainly targeting specific market segments, was also found to enhance customer satisfaction and market share. While the differentiation strategy demonstrated a statistically significant positive relationship with firm performance in the correlation analysis, it was not significant under regression analysis. This suggests that although offering unique products and services can foster customer loyalty and premium pricing, the overall impact of differentiation on performance is less pronounced when considering the combined influence of all strategies. The study confirms the relevance of the Resource-Based View (RBV), Institutional Theory, and Dynamic Capabilities Theory in explaining how competitive strategies drive firm performance. Theoretical and practical implications highlight that small firms’ need to implement cost leadership strategically, focus on niche markets, and prioritize differentiation to achieve long-term business growth. The study’s main limitations include its geographical scope and cross-sectional design, suggesting areas for further research.