Analysis of Differentiation Strategy on Growth of Small and Medium Enterprises in Yagshid District Mogadishu Somalia

International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue VI, June 2022 | ISSN 2454–6186

Analysis of Differentiation Strategy on Growth of Small and Medium Enterprises in Yagshid District Mogadishu Somalia

Ismail Abukar Omar^1*, Kibe Lucy Wairimu²

¹Scholar, School of Business and Economics; Department of Accounting and Finance, Mount Kenya University, PO BOX 342-01000, Thika, Kenya

²Lecturer School of Business and Economics; Department of Accounting and Finance, Mount Kenya University, PO BOX 342-01000, Thika, Kenya

* Corresponding Author

Abstract: The study was underpinned by following theories; resource-based view, dynamic capability theory and the Porters Generic Model. Explanatory survey design was adopted in the study. Population of the study was 81 Small and Medium Enterprise registered operating in Yagshid district Mogadishu, Somalia. 8 Small and Medium Enterprise were selected and used in the pilot testing and they were not included in the final inquiry. Therefore 73 Small and Medium Enterprise were sampled in the study using census sampling techniques. The researcher used quantitative methodology in analyzing the data. Explanatory research design was used. Primary data was gathered with use of the questionnaire that was tested for validity and reliability prior to actual data collection. An interview schedule was used to collect information on growth. The collected date was cleaned edited, checked, coded, and analyzed with the help of statistical package for social science. Regression analysis was used to show the extent of the relationship between variables. Results of this study were presented through figures, graphs and tables. The study established that differentiation strategy (β=.333, P<0.05) had positive and significant effect on growth of Small and Medium Enterprise in Yagshid district Somalia. The study concludes that generic strategy is a key driver of growth of the Small and Medium Enterprise. The study recommends the managers of the Small and Medium Enterprise in Yagshid district Somalia should improve on Various forms of differentiation e.g., pricing, quality, after-sale services features and functionality.

Keyword: Generic Strategies, growth, differentiation and Small and Medium Enterprise

I.INTRODUCTION

Background to the Study

Growth of the Small and Medium Enterprise (SME) enables it to enhance its market share, expand the customer base, branch network and increase the sales revenues generated. In order to survive, enhance the market share and generate more profits, firms need to embrace strategies including the generic strategies (Garkaz, Javanshir, Zandieh & Sahar 2016). Adoption of generic strategies helps the firm to differentiate the product offering relative to other participants in the industry (Islami, Mustafa & Latkovikj, 2020) so as to contribute towards growth. In Nepal, Bhattarai (2018) shared that majority of the firms have embraced differentiation strategy and this has sustainably influenced their growth.
Firms in Ghana have embraced Porters’ Generic strategies, mostly differentiation to enhance their growth (Gyamfi, 2016). Among hotels in Tanzania, Justinian (2015) shared that when customer satisfaction is taken as an indicator of growth of the firm, generic strategies would not have a significant

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