Effect of Generic Strategies on Competitiveness of Private Hospitals in Nairobi City County, Kenya

Abstract

In the current turbulent and competitive business environment occasioned by globalization, technology adoption and changing market dynamics, it is no doubt that organizations have to choose appropriate competitive strategies that enable them to have competitive advantage in the market. In Kenya, the classical strategy approach often used is Porter’s generic strategy framework for cost leadership, differentiation and focus; to understand the particular strategic direction an organization may pursue to counter the five market forces that determine the competitive intensity and therefore its attractiveness or lack of it in a firm’s profitability within an industry. The target population was 85 registered private hospitals in Nairobi.  This study was carried out in 53 private hospitals classified under tier three & four in Nairobi City County. The specific objectives were; cost leadership strategy, differentiation strategy, focus strategy and core value system. The study was a descriptive survey which utilized census sampling. The study found out that private hospitals in Nairobi City County had adopted and implemented a hybrid strategy to compete effectively within the volatile healthcare industry. Indeed, the study found that no hospital implemented a single generic strategy but a combination of cost leadership and differentiation, cost leadership and focus or cost leadership, differentiation and focus. The study also found out that although the concept of strategy was new in healthcare industry, private hospitals in Nairobi County had strived to build capacity of managers to be better implementers of strategy. The study further established that Private hospitals strived to keep the cost of their services affordable by the target market by blending elements of cost leadership and differentiation in a unique way to enable them provide customers with more value and upscale service attributes at lower cost than industry rivals. The study concluded that generic strategies had enhanced competitiveness of private hospitals in Nairobi City County. Further, it was established that Core values had a positive contribution to the effectiveness of the chosen strategy to enhance competitive advantage of Private hospitals in Nairobi City County. The study recommended private hospitals to retain their key staff up to minimum of five years to allow them to effectively implement formulated strategies. Moreover, it was recommended that the hospitals should put strategy formulation and implementation at the center of their business by establishing a department in charge of the same in the organizational structures.

Keywords: Cost Leadership Strategy, Differentiation Strategy, Focus Strategy, Core Value System, Competitiveness, Private Hospitals