Competitive advantage and performance of real estate firms in Nairobi, Kenya

Abstract

Competitive advantage is what sets an organization apart, its distinctive edge. That distinctive edge comes from the organization‟s core competencies, which might be in the form of organizational capabilities. The organization does something that others cannot do or does it better than others can do it. An organization that has competitive advantage is therefore likely to have better performance in its industry of operation. This study is about competitive advantage and performance of real estate firms in Nairobi, Kenya. It was guided by the following objectives: (i) to determine competitive advantages enjoyed by real estate firms in Nairobi (ii) to establish whether competitive advantages enjoyed influence performance of a real estate firm. A review of the relevant literature was done in order to provide a clear understanding of existing knowledge base in problem area. The literature review is based on authoritative, recent and original sources such as journals, books, thesis and dissertations. The research adopted the survey design which was most appropriate in attaining the objectives of the study. The sample of the study comprised of 38 real estate firms operating in Nairobi. Respondents were subjected to the study through a semi-structured questionnaire which collected primary data. Statistical Package for Social Scientists (SPSS) was used as an aid in the analysis. The study found out that the real estate firms had adopted various sources of competitive advantages which include; cost leadership which was achieved by offering competitive prices among others, product differentiation which was achieved by the reputation of the firm products, marketing strategies which include a strong brand and efficient customer care service and project infrastructure included all-weather roads in good condition, electric power supply etc. The findings also showed a positive influence of the sources of competitive advantage adopted by real estate firms in Nairobi in their performance with respect to profitability, sales growth, customer satisfaction, market share, employees competencies and innovations to products and services. Recommendations have been made for managerial policy, theory and practice for the real estate firms. The limitations of the study were that it focused on one sector i.e. real estate and the conclusions drawn may not be generalized to other sectors. Also, some of the respondents were cautious about giving away too much information on their sources of competitive advantage. Suggestions for further research include replication of the study on sources of competitive advantage and their influence on performance in other sectors of the economy and conducting empirical studies on the role of company strategy, size and structure on the relationship between core competencies and competitive advantage