The Impact of Competitive Strategies on Firm Performance: Evidence from the Nepalese Financial Services Sector

Abstract

This study examines how cost leadership, product differentiation, and focus strategies influence perceived firm performance in Nepal’s financial services sector. Using Porter’s generic strategies and the Resource- Based View as an underpinning, a quantitative approach and cross-sectional research design were adopted to collect data from 219 senior executives and department heads across 31 financial institutions. Data were analysed using SPSS for descriptive analysis and PLS-SEM for structural-model analysis. The results indicate that cost leadership plays a stronger role in improving perceived firm performance than differentiation. The focus strategy did not have a significant impact. The results suggest that strategies based on operational efficiency and extensive market reach are the most effective in a price-competitive market such as Nepal. This study is significant for managers and policy makers as it shows that, in resource-constrained environments focused cost efficiency and differentiation can become sources of competitive, customer value, and strategic decision making.