A Study of the Effectiveness of Competitive Strategies Employed by Real Estate Organisations in Lusaka

Abstract

The real estate industry is a positive contributor to the Zambian economy, accounting an average of 3.4% of GDP in 2019. However, real estate players have been faced with challenges in the recent past such as vacancies, businesses closing down, defaults on loans resulting from a poor performing economy and the Covid 19 pandemic. Moreover, the industry generally has low barriers to entry resulting in increased competition. The above have necessitated the need for effective strategy formulation and implementation by individual firms if they are to survive or outperform their competitors. The purpose of this research was to analyse the effectiveness of strategies real estate firms are using to gain competitive advantage. The research objectives were 1) to assess how the real estate industry is gaining competitive advantage, 2) to determine the strategies being used to gain competitive advantage in Lusaka and finally 3) to evaluate the effectiveness of the key strategies in gaining competitive advantage research employed. A literature review highlighted the universal use of Porters generic strategies in the real estate industry in the attainment of competitive advantage. Thus, this study anchored its theoretical and conceptual framework on Michael Porter strategies (i.e cost leadership strategy, differentiation strategy or focus strategy) to help organisations gain competitive advantage over their competitors. Moreover, a quantitative survey was conducted focusing on the real estate firms registered with the Zambia Institute of Estate Agents (ZIEA) in Lusaka. Data was collected through questionnaires that were electronically distributed to 37 real estate firms and analysed using SPSS. Based on analysis and interpretation of the results, the following were established. Firstly, the real estate firms that took part in the survey agreed to using strategies under Porters generic competitive strategies of cost leadership, differentiation and focus strategies in order to gain competitive advantage in the real estate industry, with differentiation strategy being the most utilized generic strategy. However, correlation and regression analyses indicated that the use of these strategies was not effective in leading to competitive advantage as variables were not statistically significant at 95 per cent confidence level.

Keywords: Competitive advantage, Strategy, Cost, Differentiation, Focus