Competitive Forces Influencing Business Performance of Bicycle Taxis in Kisumu City, Kenya

Abstract

Whether domestically or globally, transport is the movement of people, goods and services from one place to another. It enables trade between people and organizations. Globally, transport is the key necessity for specialization. Domestically, not only is Kenya connected by various categories of transport infrastructure but even by different modes, each competing with the other to get the better of the market. In Kisumu City, for example, there is fierce business competition among minivans, locally known as matatus, rick – shaws, referred to in Kenya as tuk-tuks, motor cycles and bicycle taxis. Started in 1960s in Busia County along the Kenya/Uganda border, the bicycle taxis are significantly affected by the current business competition. Before this study commenced, a preliminary survey in April, 2011 indicated that the number of bicycle taxis in Kisumu City had dropped by 61%. Whereas the decline had been variously attributed to the threat of substitutes, new entrants, consumer bargaining power, supplier bargaining power and rivalry among the current competitors, it was not clear which factors influenced the decline and to what extent. Neither had there been any study done to establish the cause of the decline. This study intended to determine competitive forces influencing the business performance of bicycle taxis in Kisumu City. The study used Porter’s Five Forces Framework, which analyses industry competition. Also, this study used cross sectional survey design to analyze and discover occurrences, since the researcher’s intention was to describe events without manipulating variables. The study population was 632 bicycle taxi riders, 28 of whom came from the lake Market cluster, 90 in the stage market, 26 in Varsity plaza area and 77 in the Oile/Coca Cola square cluster. There were 99 in A-Z Anvi Emporium Cluster, 188 from Kibuye market cluster and 124 from Kondele cluster. A sample of 90 was obtained for analyzing bicycle taxi-riders in Kisumu City. Primary data was obtained through the administration of structured and semi structured questionnaires of the sample of 90 taxi-riders. Secondary data was obtained from journals, publications and from records of the Municipal Council of Kisumu. Quantitative data was analyzed using Chi square and Percentage techniques. The key findings of this study was that 60.97% of bicycle taxi riders in Kisumu City considered substitutes as the main competitive threat. The next most important competitive forces influencing business performance were new entrants at 57.31%, customer bargaining power at 52.43% and rivalry among current competitors at 42.68% respectively. The significance of this study is that it adds towards knowledge about the relevance of Porter’s Five Forces Framework to small-scale business industries in developing countries like Kenya. Stakeholders in public transport, like the Government and researchers with an interest to improve public transport would also find this study useful. This study concludes that substitute public transport services are the major competitive threat to bicycle taxis in Kisumu City.

DOI: 10.5901/mjss.2013.v4n2p719