Competitive strategies adopted by small and medium audit firms in Nairobi city county, Kenya

Abstract

This research study was on the various competitive strategies adopted by small and medium audit firms with specific focus to Nairobi City County. SMEs make important contribution to the economy and social development of any country. Growth of SME sector does affect the economic performance of any country. In all economies they contribute for the majority of business settings and establishments and are responsible for creating one third to two third of the turnover of private sector. Also are responsible for the majority of employment opportunities. Out of all the registered firms in Kenya, SMEs comprise of 80% and accounts for 60 per cent of the GDP. The ability of the SME to have this contribution to the economy is fundamental to their sustained competitiveness. The study had two objectives. They were to establish the various competitive strategies adopted or being applied by small and medium audit firms in Nairobi city County and to determine the challenges encountered by SME audit firms while implementing competitive strategies. The study used a descriptive research design, the major purpose of the descriptive survey design was to describe the state of affairs as they existed in the audit industry and obtain information that describe existing phenomena by analyzing a cross section of the population and gathering data through questionnaire method. Primary data was collected from 108 small and medium audit firms using questionnaires. The drop and pick method as well as mail survey method was used to collect the data. Descriptive statistics was used to summarize the data. This included percentages, frequencies, bar graphs, pie charts,& tabulations. The study concluded that most of the SMEs audit firms in Nairobi City County, had already adopted competitive strategies to respond to ever changing customer needs and competitive marketing nature where by Market penetration, Market development and differentiation strategy was the key competitive strategy adopted by Majority SME audit firms with practice such as increasing more sale to new audit clients, identifying new potential audit service users, and by allowing service customization of offering tailor made services respectively being employed by majority of SMEs audit firms. Further the study concluded that there were various challenges faced by SME audit firms in Nairobi County in implementing the competitive strategies. Majority of SMEs surveyed indicated that insufficient financial resources, need for more compliance by regulatory body ICPAK, too many conflicting priorities, resistance to change, and poor communication as challenges encountered when implementing competitive strategies. The major limitation for this study was that the sample size taken for the study was small, only 108 SMEs audit firms out of 542 SMEs was surveyed. This reduces the reliability of the findings. Therefore similar study should be carried but the researcher increase the sample Size. Secondly the study aimed at establishing the competitive strategies adopted by SMEs audit firms Specifically in Nairobi City County hence not advisable to generalize the findings for the audit industry in Kenya. Future studies should cover several regions. Finally Organization adopts various competitive strategies in order to outperform their competitors by getting above normal return. This study did not link or associate the strategies with the SMEs performance. Finally the study did not associate the strategies with SMES performance which is the ultimate aim of employing competitive strategies. Therefore research should associate the competitive strategies adopted to establish if indeed the strategies applied enables the organization to improve its performance.