Cost Leadership Strategy and Sustainability of Microfinance Institutions in Murang'a County, Kenya
Keywords:
Cost leadership strategy, Sustainability, Microfinance institutionsAbstract
Microfinance institutions play an important role in poverty alleviation because they serve to enable the financial inclusion of the poor people. It is through such institutions that these people can access financial services like credit, savings, money transfer and insurance. The microfinance industry has witnessed intense competition in the recent decades as the industry becomes mature. Attention has now shifted to their sustainability which is important to ensure that the poor would still be able to access these services in the future. To grow and survive, MFIs need to formulate and implement appropriate cost leadership strategy that will assist them in achieving a competitive advantage. This study sought to examine the effect of cost leadership strategy on sustainability of MFIs in Murang'a County, Kenya. Self-administered questionnaires were used to collect data, using the drop-and-pick method which gave respondents ample time to fill the questionnaire. Data analysis was done using both descriptive analysis and inferential analysis with the help of SPSS. The study revealed that the cost leadership strategy had a positive and moderate effect on sustainability of MFIs. For MFIs to achieve sustainability, the study recommends that the MFI managers need to continue adopting cost leadership strategy. The study also suggests that future studies should be conducted in other counties for comparative purposes.
Key words: Cost leadership strategy, Sustainability, Microfinance institutions
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