Operational Strategies and Performance of Small and Medium Enterprises in Nairobi City County, Kenya

Abstract

The Kenyan Vision 2030 envisages a vibrant SME sector as one of the key sectors meant to make the economy industrialized by the year 2030. However, the SME sector has recorded poor performance in the past. Because most SMEs expand naturally and in accordance with the initial entrepreneur’s vision, many enterprises in this sector are run in a haphazard manner. Some organizations lack suitable structures and management processes, while in others, the original director is in charge of everything, from cash receipts, banking, and withdrawals, to more complex entrepreneurial responsibilities. Therefore, this study examined how operational strategies influence small and medium enterprises' performance in Nairobi City County, Kenya. The study specifically sought to examine the influence of supply chain strategy, product development strategy, process design strategy and customer focus strategy. The study was guided by Balance score card model, resource-based view theory, quality management theory and Ansoff Matrix theory. This study adopted a descriptive research design. The study population was SMEs based within the Nairobi City County. The number of SMEs directly targeted was 94. A census of 94 respondents was carried out. This is because the population for each category of the respondents was small. A structured questionnaire was used as a data collection tool to all the respondents. A questionnaire was piloted on 20 respondents to make sure that any error or missing item in it is identified and addressed so as to make sure they are valid and reliable. Validity was assessed using construct and content validity tests. Reliability was assessed with the use of Cronbach’s alpha coefficient. Quantitative data was analyzed using descriptive statistics such as mean and standard deviation and presented in tables, and figures. In addition, the study conducted inferential statistics that involved correlation analysis and multiple regression analysis to test the relationship between independent variables and dependent variable. The study found that supply chain strategy, product development strategy, process design strategy and customer focus strategy had a significant positive influence on the performance of Small and Medium Enterprises in Nairobi City County, Kenya. The study concluded that effective supply chain strategy leads to better collaboration with suppliers, better control quality and improved risk mitigation. Designing processes allows businesses to identify inefficient workflows, structures, and systems, re-design them based on current business needs, and implement the modified processes promptly to improve results. Product development strategy provides an ideal framework for creating new products or improving the performance, cost or quality of existing products. Customer focus strategy leads to improved sales, reduce the cost to serve, increase satisfaction and improve their operational efficiency. The study recommended that the management of Small and Medium Enterprises in Nairobi City County, Kenya should aim to efficiently and effectively implement lean supply chain strategy. In order to increase sales of their products, improve market position, boost customer loyalty, SMEs should generate insights that drive innovation and design user-centered products. When opening a new branch or department, business owners and managers need to understand what process design is, what its objectives are, and how it can improve the performance of their companies. The SMEs should put customer focus values at the heart of their culture that unite employees under common goals even roles that do not have day-to-day customer interactions.