Competitive Strategies and the Financial Sustainability of SMES in Uganda.
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Date
2023
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Abstract
The study purpose was to assess the relationship between competitive strategies and financial sustainability of SMEs in Uganda. The research problem was that SMEs face a high mortality in Uganda and more than 60% of them never celebrate their first anniversary, despite their critical importance as the backbone of the Ugandan economy (UIA, 2020; Aruho, 2021). This is especially true in Mukono district where SMEs continue to fail. The study objectives were to determine the effect of Cost leadership strategies on the financial sustainability of sustainability of SMEs in Uganda, to examine the effect of differentiation strategies on the financial sustainability of SMEs in Uganda, to establish the effect of focus strategies on the financial sustainability of SMEs in Uganda and to explore the relationship between the competitive strategies (as one variable) and financial sustainability.
The study adopted a cross sectional survey design based on quantitative data. The population comprised of 65,000 small and medium enterprises operating in Mukono District and the sample size was 384 SMEs selected using a simple random sampling design. Primary data was collected using a questionnaire. Findings show there is a significant and positive relationship between Cost leadership strategies and financial sustainability (r =.743, p<.01), there is a significant and positive relationship between differentiation strategies and the financial sustainability of SMEs in Uganda (r =.711, p<.01), there is a significant and positive relationship between focus strategies and the financial sustainability of SMEs in Uganda (r =.633, p<.01) and that the three strategies in combination predict 59.1 percent of the variance in financial sustainability (Adjusted R Square = 0.591).
Based on the findings, Ugandan SMEs are advised to adopt cost leadership strategies for financial sustainability, which could involve streamlining operations, leveraging local supply chains, and employing flexible work arrangements. However, maintaining product and service quality should remain paramount to avoid negatively impacting customer relations and business reputation. They are encouraged to implement differentiation strategies to improve their financial standing and the SMEs are recommended to develop focus strategies, targeting niche market segments using their unique capabilities.
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A Dissertation Submitted to Makerere University Business School (Faculty of Graduate Studies and Research) in Partial Fulfilment of the Requirements for the Award of Degree of Master of Business Administration of Makerere University. (PLAN A).
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Richard, W (2023) Competitive Strategies and the Financial Sustainability of SMES in Uganda : A Case Study of Mukono District. Unpublished Masters Dissertation Makerere University Business School. Kampala, Uganda.