An Assessment of the Factors Affecting Competitive Strategies Adopted by Private Universities in Kenya

Abstract

Private University Competitive strategy has been concerns with what they must or ought to do in order to gain a sustainable competitive advantage. The higher education stiff competition among the public and private universities has been the drive behind this research study which sought to assess and determine the factors that influence competitive strategies adopted by private’s university in Kenya. The research study and the researcher sought to determine the various competitive strategies that Private universities in Kenya should adopt in order to gain a competitive niche over other players in the same industry. The research used a survey and case study approach to give an in-depth understanding of the competitive strategy’s adoption on private’s university in Kenya. The research study used both primary and secondary data where primary data, collected using a survey, questionnaire, interview guide and secondary data was collected from sampled audited financial reports and other publications at Privates University in Kenya. Descriptive, Content analysis, Likert Scale and regression analysis was used to analyze this data collected from the questionnaires and interviewees. The study concluded that Private Universities in Kenya must adopt outcome competitive adoption strategies to remain competitive in the competitive market higher education segment. These were: course differentiation, course cost leadership, university students focus, use of internet to market and course delivery, offering e-learning platform, online/Mobile app students registration and real-time and timely release of results, university strategic partnership and alliances, horizontal integration such as acquiring other colleges to ease competition, product development such as introduction of new courses, concentrated growth, course diversification, course market development, and vertical integration.

The research study recommends that private universities should adopt competitive strategic responses to help them gain a competitive advantage or niche over their competitors. They should focus on strategies that benefit their organization through increased profitability at the least cost possible. Through the employment of differentiation strategies, Private Universities should find strengths that enable them to broaden their scope within the Private Universities market and identify a position for themselves. Through focus strategy they should expand into new markets and identify products that can help them compete within the established markets.

Keywords : Course diversification , Competitive Strategy, Private University, Course development.

1.0 Introduction

Over the past years, public universities in Kenya have faced many competitive challenges. Among these challenges are: enrollment beyond their capacity to plan, course allocation and finance, fiscal challenges beyond their control, decline in quality beyond their anticipation, and weak management practices. To help solve some of these problems, private universities have increasingly emerged and gained ground in the country as an alternative to higher education provision (Oketch, 2003).

As the number of higher learning and private universities continue to grow, so does the competition for market survival intensifies. Competition for survival has been the guiding force for existence and it has been associated with the creation of wealth. With the development and progress of civilization, competition has become more complex. The firms are engaged in various activities to minimize their costs and maximize their profits. Thus, the core competencies of the organization are reflected in their commercial activities and the most competent is the winner in grabbing a large chunk of market share and leads the industry (Poddar and Gadhawe, 2007).

In this study, the researcher sought to determine the various competitive strategies that Private universities in Kenya adopt in order to gain a competitive advantage over other players in the same industry. In their study, Poddar & Gadhawe (2007) defines competitive advantage as the advantage that one firm has, relative to competing firms in the industry. It is the advantage a firm has over others, which helps the firm to fight out

Others in the race and trap the consumers. The competitive advantage can be in any form or manner, which helps the firm in increasing and retaining the market share. In simple terms then, competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and services that justifies higher prices.

Competitive strategy was the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs (Porter, 1985). Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition. Johnson, Whittington and Scholes (2011) notes that competitive strategy is concerned with how a business achieves a competitive advantage in its domain of activities. Porter (1996) argues that strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. Competitive strategy is concerned with how a company can gain a competing advantage through a distinctive way of competing. Having a competitive advantage is necessary for a firm to compete but what is more important is whether the competitive advantage is sustainable (Kimando, Njogu, & Sakwa, 2012)

1.2 Research Problem Statement.

Higher competition intensifies in the education sector, players are forced to craft superior competitive strategies that will help them gain a competitive edge against their competitors. Due to shrinking course income streams, higher education competitiveness and under intake of students.

A competitive strategy was aimed at establishing a profitable and sustainable position against the forces that determine industry competition (Porter, 1980).

Previous studies have focused on competitive strategies adopted by universities in Kenya (Kitoto, 2005). The researcher explored the competitive strategies adopted by Kenyan Universities and the challenges experienced in implementing these strategies. Mutua (2004), focused on the responses to changing environment by the University of Nairobi. The researcher found out that the university faces many challenges but the greatest of them all is competition from other institutions. Kagwira (2004), looked at the extent to which Kenyan Universities practice education marketing and the study revealed that it is practiced to different extent. The study explored the various strategies but it did not address how these strategies help the institutions achieve competitive advantage.

In the above studies, it is evident that the researchers have not really narrowed down to focus on the competitive strategies adopted by private universities despite their rapid growth in the past few years. In this study, the researcher concentrated on private universities and the competitive strategies they have adopted in order to survive in this era of great competition.

1.3 Research Objective

1.3.1 General objective: The objective of the study was to determine the competitive strategies adopted by private universities in Kenya.

Specific objectives:

- To examine how course differentiation affects private universities competitive strategies adoption.
- To investigate how course cost leadership, affect private universities competitive strategies adoption.
- To analyze how students, focus culture affect private universities competitive strategies adoption.
- To examine how private universities strategic partnership and alliances affect their competitive strategies adoption.
- To analyze how horizontal and Vertical integration affect private universities competitive strategies adoption.

1.4 Significance/Purpose of the study.

The study sought to determine the various competitive strategies that Private universities in Kenya should adopt in order to gain a competitive advantage over other players in the same industry. The research used a survey and case study approach to give an in-depth understanding of the competitive strategies to be adopted by Privates University in Kenya inorder to remain competitive in the market. The study used both primary and secondary data where primary data, collected using a survey, questionnaire and interview guide and secondary data was collected from sampled audited financial reports and other publications at Privates University in Kenya.

2.0 LITERATURE REVIEW

2.1 Concept of strategy

Strategic management is the art, science and craft of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-term objectives (David, 1989). It is the process of specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives and then allocating resources to implement the policies and plans, projects and programs. Strategic management seeks to coordinate and integrate the activities of the various functional areas of a business in order to achieve long-term organizational objectives.

2.2 Conceptual framework.

Figure 1.0

Independent Variables dependent Variables

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Source: research study

2.2 Theoretical Review

This study was guided by the resource - based view theory to determinants of competitive advantage among private Universities in Kenya. The resource-based view (RBV), suggests that competitiveness can be achieved by innovatively delivering superior value to customers. The extant literature focuses on the strategic identification and use of resources by a firm for developing a sustained competitive advantage (Barney, 1991). International business theorists also explain the success and failures of firms across boundaries by considering the competitiveness of their subsidiaries or local alliances in emerging market. Local knowledge provided by a subsidiary or local alliance becomes an important resource for conceptualizing value as per the local requirements.

Abbildung in dieser Leseprobe nicht enthalten

According to Resource Based Theory resources are inputs into a firm's production process; can be classified into three categories as: physical capital, human capital and organizational capital. A capability is a capacity for a set of resources to perform a stretch task of an activity. Each organization is a collection of unique resources and capabilities that provides the basis for its strategy and the primary source of its returns. In the 21st-century hyper-competitive landscape, a firm is a collection of evolving capabilities that is managed dynamically in pursuit of above-average returns. Thus, differences in firm's performances across time are driven primarily by their unique resources and capabilities rather than by an industry's structural characteristics. The Resource based view theory is used to explain how private Universities gain competitiveness through innovatively delivering superior value to customers, they focus on the strategic identification and use of resources for developing a sustained competitive advantage.

2.3.1 Cost Leadership Strategy

This is Porter's generic strategies known as cost leadership (Malburg, 2000). This strategy focuses on gaining competitive advantage by having the lowest cost in the industry (Porter, 1987, 1996; Cross, 1999). In order to achieve a low-cost advantage, an organization must have a low-cost leadership strategy, low-cost manufacturing, and a workforce committed to the low-cost strategy (Malburg, 2000). The organization must be willing to discontinue any activities in which they do not have a cost advantage and should consider outsourcing activities to other organizations with a cost advantage (Malburg, 2000). For an effective cost leadership strategy, a firm must have a large market share (Hyatt, 2001). There are many areas to achieve cost leadership such as mass production, mass distribution, economies of scale, technology, product design, input cost, capacity utilization of resources, and access to raw materials (Malburg, 2000).

2.3.2 Market Focus Strategy

The focuser’s basis for competitive advantage is either lower costs than competitors serving that market segment or an ability to offer niche members something different from competitors. Focusing is based on selecting a market niche where buyers have distinctive preferences. The niche is defined by geographical uniqueness, specialized requirements in using the product or by special attributes that appeal to members, (Stone, 1995).

2.3.3 Differentiation Strategy

Differentiation strategies are marketing techniques used by a firm to establish strong identity in a specific market; also called segmentation strategy. Using this strategy, a firm will introduce different varieties of the same basic product under the same name into a particular product category and thus cover the range of products available in that category. Differentiation strategy can also be defined as positioning a brand in such a way as to differentiate it from the competition and establish an image that is unique, (Davidow and Uttal, 1989). Differentiation strategy aims to build up competitive advantage by offering unique products which are characterized by valuable features, such as quality, innovation, and customer service. Differentiation can be based on the product itself, the delivery system, and a broad range of other factors. With these differentiation features, firms provide additional values to customers which will reward them with a premium price.

2.3.4 Horizontal and vertical Integration Strategy

Horizontal integration is used when a firm’s long term strategy is based on growth through the acquisition of one or more similar firms operating at the same stage of the production-marketing chain (Pearce and Robison, 2000). Such acquisition eliminates competitors and provides the acquiring firm with access to new markets.

Vertical integration involves the firm expanding the firm’s range of activities backward into sources of supply or forward toward end users (Thompson, Strickland and Gamble, 2005).

3.0 RESEARCH METHODOLOGY

3.1 The Population

According to Cooper and Schindler (2000), a population is the total collection of elements about which we wish to make inferences. The population of interest in this study comprised of all the twenty-seven universities which are operating under either interim or full charter. This was therefore a census study.

3.2 Data Collection

The study used primary data. This was collected using semi-structured questionnaires. Each item on the semi-structured questionnaire addressed a research question. It contained semi-structured questions. These are easy to analyze using statistical techniques and facilitate comparisons to be made across groups. The semi-structured questionnaire are self - completion and were dropped and picked at later date.

The semi-structured questionnaire were divided into three parts. The first part gathered data on the demographic aspect of the private university. This included title, work position ,gender and years of the respondent serving in that post, the private university name, schools in the university, years of operation and the number of campuses it has opened. This information helped to determine the weaknesses and strengths of the private university.

The second part sought to establish the strategies employed by the universities to gain competitive advantage in the industry. This helped to determine the extent to which some strategies are used as opposed to others.

The last section examined the challenges encountered by the private universities in using each of the competitive strategies highlighted.

3.3 Data Analysis

Data analysis generally involved reducing accumulated data to a controllable size, developing summaries, looking for patterns, and applying statistical techniques (Cooper and Schindler 2000).

Data was described and analyzed using descriptive statistics such as frequencies, percentages, mean and standard deviation. Measures of dispersion were used to describe the spread of the data using measures such as range and standard deviation.

4.0 DATA ANALYSIS, INTERPRETATION AND PRESENTATION

4.1 The study was conducted on 27 private university respondents who were served with a questionnaire; out of 27 targeted respondents, 25 respondents filled-in and returned the questionnaires which make a response rate of 92.6 %. Descriptive statistics was used to analyze the data. In the descriptive statistics, relative frequencies were used in some questions and others were analyzed using mean scores with the help of Likert scale ratings in the analysis.

4.2 Table

4.2.1 Summary of the respondent’s students sample public and private sponsored in Private University.

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Source: Research Study, 2018

4.3 Table

4.3.1 Summary of the respondent’s Private University Admin

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Source: Research Study, 2018

4.4 Table

4.4.1 Summary of the respondent’s Private University Management.

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Source: Research Study, 2018

4.5 An Assessment of Competitive Strategies employed By Private Universities in Kenya

4.5 Table

4.5.1 Strategies used by private universities to remain competitive in the market.

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Source: Research findings, 2018

2.0

4.4 Challenges faced by private universities.

Table 4.3 summary of the challenges and Problems faced by private universities

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Source: Research findings, 2018

From the findings on the challenges faced by private Universities for them to remain competitive in the market, the study revealed that those faced to great extent were: meeting Commission of University Education (CUE) requirements as shown by mean of 4.8010, Students strike and course attitude which affect duration of courses and diminish public confidence as shown by mean of 4.4230, maintaining reasonably low fees as shown by men of 4.1332, competition arising from foreign and public universities as shown by mean of 4.1511, high fee default rate among students as shown by mean of 4.0362, huge financial requirement to establish and run the university as shown by of competition from other universities as shown by mean of 3.7464, staff turnover and Imitation of courses by other universities as shown by mean of 3.7319 in each case, lack of enough space as shown 3.6232, Students inability to differentiate your courses from those offered by other universities as shown 3.5507 and Change in market needs as shown by mean of 3.5435 .

The study further revealed that other challenges faced by private for them to remain competitive in the were: market regulation by the government, competition from well-established public universities , lack of student funding by HELB, lack of government support for private universities and shortage of qualified personnel.

5.0 Conclusion

The research study concluded that Private Universities in Kenya must adopt various competitive strategies to remain competitive in the market. These were: course differentiation, course cost leadership, students focus culture, use of internet to market and learning, offering e-learning, online/mobile application registration and release of results, strategic alliances, horizontal integration such as acquiring other colleges to ease competition, product development such as introduction of new courses, concentrated growth, diversification, market development, and vertical integration.

The research study also concluded that private universities faced various challenges in the market. These were: meeting Commission of University Education (CUE) requirements, students strike and students attitude, maintaining reasonably low fees , competition arising from foreign and public universities, high fee default rate among students, huge financial requirement to establish and run the university, increased competition from other universities, staff turnover, limitation of courses by other universities, lack of enough space, students inability to differentiate a university’s courses from those offered by other universities ,change in latest market needs and trends, rules and regulation by the government, competition from well-established public universities and lack of student funding by HELB.

6.0 Recommendations

The study recommends that Private Universities should put in place competitive strategic responses to help them gain a competitive advantage over their competitors. They should focus on strategies that benefit their organization through increased profitability at the least cost possible. Through the employment of differentiation strategies, Private Universities should find strengths that enable them to broaden their scope within the Private Universities market and identify a position for themselves. Through focus strategy they should expand into new markets and identify products that can help them compete within the established markets. This will be done by identifying the segments in the market that suits their products and services.

Through the already established relationship between competitive strategies and performance improvement in response to increased competition, the strategies put in place should be effective. These will help them to establish a profitable and sustainable

position against the forces that determine industry competition. This is because good

strategy can contribute to growth, profitability, market penetration, cost-reduction, cutting-edge differentiation of products and sustainable competitive advantage of business firms.

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