Navigating Market Volatility: Competitive Strategies, Growth Drivers, and SME Profitability in Lagos, Nigeria

Author

Oludipe E.O., Umokoro B. O., Odunlami. O. O., Badejogbin F. A., Adesina I. A., Ojelade M.T

Abstract

 Small and medium-sized enterprises (SMEs) are crucial to economic growth and development since they account for a significant amount of a country's GDP. Despite their importance, many of these SMEs still struggle to maintain a high level of profitability. These challenges may be associated with the ineffective implementation of competitive strategies, including differentiation, focus strategy, strategic positioning, and cost leadership strategies. Therefore, this study investigated the effect of competitive strategies on the profitability of selected SMEs in Lagos State, Nigeria. The study adopted a survey research design. The study population consisted of 11,643 registered SMEs in Lagos State, Nigeria, with 426 SME managers serving as the sample size. An adapted questionnaire was used, and data were collected using a valid and reliable questionnaire with a Cronbach alpha reliability coefficient ranging from 0.7 to 0.9. The response rate was 75%. Data were analysed using both descriptive and inferential tools. Multiple Regression Analysis was used to determine the effect of the variables at a 5% significance level, using the Statistical Package for the Social Sciences (SPSS) version 27. Findings from this study revealed that competitive strategies had a significant effect on profitability (Adj.R2= 0.287, F(4, 417) = 43.446, p<0.05). The study concluded that competitive strategies improved the profitability of SMEs in Lagos State, Nigeria. Therefore, the study recommended that SMEs should prioritise competitive strategies, while emphasising effective cost leadership and strategic positioning to improve the profitability of SMEs in Lagos State, Nigeria. 

Keywords

Competitive Strategies, Cost Leadership Strategy, Differentiation Strategy, Focus Strategy, Profitability.

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