Firms’ competitive strategies and profitability among self-employed vocational and non-vocational graduates in Arusha and Dar es Salaam cities, Tanzania

Abstract

The implementation of one or more competitive strategies promises higher profitability for small firms. However, it remains unclear whether self-employed vocational and non vocational graduates adopt any particular strategies to achieve increased profitability. This study aimed at examining the influence of competitive strategies on firm profitability among self-employed graduates. In order to achieve this, a descriptive cross-sectional survey design was adopted, involving a sample of 384 respondents. Quantitative data were analysed using independent samples t-test and multiple linear regression, while qualitative data underwent constant comparison content analysis. The results of the independent samples t-test indicate a significant difference in gross profit and net earnings between the two groups (p < 0.05). Specifically, self-employed vocational graduates' gross profit and net earnings were higher than those of their counterparts. Furthermore, the findings on competitive strategies reveal that both categories of graduates' businesses' overall profitability performance were positively influenced by both cost-leadership and differentiation strategies (p < 0.05). Based on the outcomes of the independent samples t-test, it can be concluded that profitability between vocational and non-vocational graduates differs due to inadequate price control among non-vocational graduates. As a result, efforts to improve competitive price setting are necessary among non-vocational graduates. Moreover, this study concludes that self employed graduates can achieve higher profitability by simultaneously pursuing both cost leadership and differentiation competitive strategies. To enhance firm profitability among self employed graduates, it is recommended that interventions focus on strengthening cost leadership and differentiation strategies for both categories of graduates' businesses. By shedding light on the influence of competitive strategies on profitability performance among firms owned by self-employed vocational and non-vocational graduates, this study significantly contributes to the body of knowledge on profitability performance in the academic literature.